The Supreme Court on Friday, August 6, upheld the appeal filed by Amazon in the matter pertaining to Reliance Retail’s acquisition of Future Retail, and said the Singapore's Emergency Arbitrator (EA) interim award, restraining the Rs 24,713 crore deal, was valid under Indian law and can be enforced. The order was delivered by Justices R F Nariman and B R Gavai, which had reserved it on July 29.
The court's judgment did not look into the merits of the dispute itself, but into the enforceability of the award. The court held that an award of an Emergency Arbitrator (EA) of a foreign country is enforceable under the Indian Arbitration and Conciliation Act despite the fact that the term EA is not used in arbitration laws here. The EA Order is an order within section 17 (1) and can be enforced under Section 17(2) of the Arbitration and Conciliation Act, it said. The award can be challenged in a High Court in the country.
Earlier, a single-judge bench of the Delhi High Court also held that the EA award was enforceable and the HC gave an interim order in Amazon’s favour granting a stay on the ongoing amalgamation. On February 8, a division bench had stayed the single-judge direction to Future Retail and various statutory authorities to maintain the status quo on the mega deal. The interim direction was passed on FRL's appeal challenging the February 2 order of the single judge. Amazon moved the top court against the order of the Delhi High Court division bench which paved the way for the Reliance-FRL deal.
On February 22, in its interim order, the apex court had asked the National Company Law Tribunal (NCLT) not to pass the final order on the amalgamation. The Future group had moved the tribunal seeking regulatory approvals to the Rs 24,713 crore deal with Reliance.
This comes nearly a year after Future Group’s acquisition by Retail Retail was announced in August 2020. Reliance Retail had acquired Future’s logistics, warehouse, retail and wholesale businesses.
Amazon had acquired a 49% stake in Future Retail’s promoter entity Future Coupons in August 2019 and following the announcement of the acquisition of Future Retail by Reliance Retail, took the matter to SIAC, and has said that Future Retail was in breach of contract. Future Coupons holds 7.3% stake in Future Retail, which led to Amazon indirectly holding a stake in Future Retail. In addition, Amazon’s deal with Future Coupons also gave it a call option, allowing it to buy a partial or controlling stake in Future Retail, starting three years from the deal, up to 10 years, subject to FDI norms.
During its court battle, Amazon contended that its deal with Future Coupons barred the latter from entering into share sale agreements with 15 companies which included Reliance, Walmart, Softbank and others.
However, the FRL-Reliance Retail In, the deal received approval from CCI, SEBI and the stock exchanges.
The slump sale to Reliance Retail came after the Future Group was impacted due to the lockdown last year.