The Delhi High Court Friday reserved order on an application by Kishore Biyani led Future Retail Ltd (FRL) seeking to injunct Amazon from interfering in the Rs 24,713 crore Reliance-Future deal on the basis of an interim order passed by the Singapore International Arbitration Centre (SIAC).
Justice Mukta Gupta heard arguments for five days and asked the parties to give written submissions, if any, by November 23. The Future Group and Amazon have been locked in a battle after the US-based company took FRL into an emergency arbitration over alleged breach of contract.
The SIAC on October 25 had passed an interim order in favour of Amazon barring FRL from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party.
Subsequently, Amazon wrote to market regulator SEBI, stock exchanges and Competition Commission of India (CCI), urging them to take into consideration the Singapore arbitrator's interim decision as it is a binding order, FRL had told the high court.
FRL has also sought an ad-interim injunction against Amazon from writing to SEBI, CCI and other authorities to consider the emergency arbitrator's interim order. Amazon opposed the plea for interim relief saying no case for it is made out.
During the hearing, senior advocate Gopal Subramanium, who represented Amazon, said that under the SIAC rules emergency award is binding on the parties subject to a challenge.
Until the parties get it set aside, it is like an order of the court and suppose the order was against me then this order would be with jurisdiction, he argued.
Subramanium submitted that all the defendants except Reliance were party to the arbitration and the promoters who were represented before the emergency arbitrator did not question the jurisdiction at all.
Senior advocate Harish Salve, appearing for FRL, said an arbitrator is one who is entitled to decide the dispute and an emergency arbitrator cannot act as an arbitrator.
Emergency arbitrator thus cannot be an Arbitrator under the Act, he contended.
He added that Amazon has an agreement with Future Coupons Ltd (FCL) and it then says controllers are common.
The obligation of the promoter to Amazon cannot be attributed to the company. I am not bound by the commitment made by the promoter to a third party, he said.
Salve further said that Amazon has no right to control any voting in FRL and its representations are false and need to be injuncted.
He had earlier argued that the order of the emergency arbitrator was of no value and has no efficacy in law.
He had said Amazon only held shares in FCL, a shareholder in FRL, and thus had no say in the affairs of FRL.
The high court had on November 10 sought response of Amazon on FRL's plea, filed through advocate Harshvardhan Jha, alleging that the e-commerce major was interfering in its Rs 24,713 crore deal with Reliance Retail on the basis of an interim order by a Singapore arbitrator.
The court had also issued summons to Amazon, Future Coupons and Reliance Retail Ltd (RRL) on the FRL suit and asked them to file their written statements within 30 days.
It had said that the issue of maintainability of the suit, raised by Amazon, would be kept open.
FCL and its promoters had also supported FRL's claims and contentions.
All three -- FRL, FCL and Reliance -- contended that if Amazon's claim -- that it indirectly invested in FRL by investing in FCL -- was accepted then it would amount to a violation of Indian foreign direct investment (FDI) laws which permit only 10 per cent investment by a foreign entity in the multi-brand retail sector.
They had also said that the group company concept cannot be applied in the instant case.
Amazon had opposed FRL's plea saying all the arguments raised here by it were made before the emergency arbitrator which considered and rejected them.
It had said that FRL, being a company of the Future Group, would be governed by the arbitration agreement between FCL and Amazon.
It had further argued that FCL has 9.82 per cent stake in FRL and since Amazon holds 49 per cent stake in FCL, the e-commerce major would only have half of the 9.82 per cent stake in its favour.
In August this year, Future had reached an agreement to sell its retail, wholesale, logistics and warehousing units to Reliance.
As per the SIAC interim order, a three-member arbitration panel needs to be set up within 90 days (from the date of the judgement) with one judge each being appointed by Future and Amazon, along with a third neutral judge.
On November 10, Amazon had told the court that it and FCL have appointed their respective arbitrators.