Future Group Retrained from Selling Assets in Rs. 24,713-Crore Reliance Deal
The Delhi High Court Thursday upheld the Singapore Emergency Arbitrator’s (EA) order restraining Future Retail (FRL) from going ahead with its Rs. 24,713 crore deal with Reliance Retail to sell its business, which was objected to by US-based e-commerce giant Amazon.
Justice J R Midha directed Kishore Biyani-led Future Retail not to take further action in relation to the deal with Reliance and held that the Future Group willfully violated the EA’s order.
The high court imposed a cost of Rs. 20 lakh on the Future Group and others associated with it and directed them to deposit the amount in Prime Minister’s Relief Fund within two weeks for providing COVID-19 vaccines to senior citizens of Below Poverty Line (BPL) category.
The high court’s order came on Amazon’s plea seeking direction to order enforcement of the award by Singapore’s EA on October 25, 2020, restraining Future Retail from going ahead with its Rs. 24,713 crore deal with Reliance Retail.
Future Group and Amazon have been locked in a battle after the e-commerce giant took Future Retail into the emergency arbitration over alleged breach of an earlier contract between them.
The court, which directed the presence of Biyani and others before it on April 28, also ordered attachment of their properties and asked them to file an affidavit detailing their assets within one month.
Besides, it asked them to show cause as to why they be not detained under civil prison for 3 months for violating the emergency arbitrator’s order.
The court held that the EA is an arbitrator for all intents and purposes and had rightly invoked the ‘Group of Company” doctrine in relation to the Future Group companies.
It said the respondents have raised a vague plea of nullity without substantiating the same.
It directed the Future Group to approach authorities for recalling the approvals granted for the Future Retail-Reliance deal and asked them not to violate the EA order.
The high court also asked the Future Group to place on record the details of action taken by it in connection with the Reliance deal after the EA order.
Amazon, in its interim plea, has sought to restrain Future Retail from taking any steps to complete the transaction with entities that are a part of the Mukesh Dhirubhai Ambani (MDA) Group.
Justice Midha had earlier, in an interim order, directed Future Retail to maintain status quo in relation to its deal with Reliance. However, the interim order was stayed by the division bench of the high court.
Challenging the division bench’s order, Amazon had approached the Supreme Court where the plea is pending.
Amazon NV Investment Holdings LLC, in its plea before Justice Midha, has also sought detention of the Biyanis, directors of Future Coupons (FCPL) and Future Retail and other related parties in civil prison and attaching of their properties for alleged “wilful disobedience” of the emergency arbitrator’s order.
Amazon has also sought to restrain Future Group from taking any steps to transfer or dispose of Future Retail’s retail assets or the shares held in FRL by the Biyanis in any manner without prior written consent of Amazon.
The three domestic firms – Future Retail, FCPL, and Reliance – have however contended before the high court 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 laws which permit only 10 per cent investment by a foreign entity in the multi-brand retail sector.
According to Amazon, the EA award passed under the Singapore International Arbitration Centre (SIAC) Rules is enforceable under Section 17(2) of the Arbitration and Conciliation Act.
It had referred to an order passed by the high court on December 21, 2020, prima facie holding that the EA’s award was valid under the Indian law.
Senior advocate Gopal Subramanium, representing Amazon, had contended that Future Retail has deliberately and willfully violated and continues violating the October 25, 2020 order of the EA and immediate interim order be passed to protect them.
Senior advocate Harish Salve, representing Future Retail, had earlier submitted that Amazon had a deal with FCPL and signed an agreement with Biyani. FCPL has a shareholding agreement with FRL which has no agreement with Amazon.
In the petition, Amazon has alleged that Future Group, Kishore Biyani and other promoters and directors have “deliberately and maliciously disobeyed” the EA award despite it being binding on them and not having challenged it in accordance with the law.
In August last year, Future had reached an agreement to sell its retail, wholesale, logistics, and warehousing units to Reliance.
The Singapore International Arbitration Centre (SIAC) on October 25 last year, had passed an interim order in favour of Amazon barring Future Retail 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, Future Retail had earlier told the high court.
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, 2020, Amazon had told the court that it and FCL have appointed their respective arbitrators.
Has the Redmi Note 10 Series raised the bar in the budget phone market in India? We discussed this on Orbital, our weekly technology podcast, which you can subscribe to via Apple Podcasts, Google Podcasts, or RSS, download the episode, or just hit the play button below.
For all the Latest Technology News Click here
For Latest News & Update please Follow us on Google News
Also, if you like our efforts, consider sharing this story with your friends, this will encourage us to bring more exciting updates for you