4 min read.Updated: 02 Feb 2021, 08:36 PM ISTAgencies
The court said it was of the prima facie view that the order of emergency arbitration tribunal in Singapore that asked Future Retail to not proceed with the deal is enforceable in India
Delhi High Court on Tuesday asked Future Retail Ltd to maintain status quo with respect to its ₹24,713 crore deal with Reliance Retail. This should give interim relief to Amazon.com Inc as it battles to foil Future Group's asset sales to a rival.
Amazon, locked in protracted legal disputes with Future, alleges the firm violated contracts by agreeing to sell its retail assets to rival Reliance Industries last year. Future denies any wrongdoing. Amazon alleges that the deal violates its own contract with the Future Group and had filed an urgent petition last week seeking the suspension. The order can be challenged in a higher court.
The High Court judge hearing Amazon's plea on Tuesday said immediate orders were necessary to protect the US company's rights, saying Future should maintain status quo for now.
Justice J.R. Midha said the court was satisfied that an immediate interim order was required to be passed to protect the rights of Amazon.
"Respondents (FRL) are directed to maintain status quo as on today at 4:49 PM till pronouncement of the reserved order," the judge said.
Stock exchanges last month cleared Future's deal with Reliance, despite Amazon's repeated requests to regulators to block the deal.
Amazon had approached the high court seeking direction to order enforcement of the award by Singapore's Emergency Arbitrator (EA) restraining Future Retail from going ahead with its deal with Reliance Retail.
The freeze bolsters the Jeff Bezos-led e-commerce giant, which had also urged the court to jail Future Group’s founder and seize its assets for violating an October order from the Singapore arbitration court. The cash-strapped Indian retailer -- it risks bankruptcy if the deal with Reliance fails -- is caught between two of the world’s richest men as they compete for dominance in India’s estimated $1 trillion consumer retail market.
The court said it was of the prima facie view that the order of emergency arbitration tribunal in Singapore that asked Future Retail to not proceed with the deal is enforceable in India.
Amazon.com NV Investment Holdings LLC, in its plea, also sought detention of the Biyanis, directors of FCPL and FRL and other related parties in civil prison and attaching of their properties for alleged "wilful disobedience" of the emergency arbitrator's order.
It also sought to restrain Future Group from taking any steps to transfer or dispose of FRL's retail assets or the shares held in FRL by the Biyanis in any manner without prior written consent of Amazon.
The Future Group and Amazon have been locked in a battle after the US-based company took FRL into the emergency arbitration over alleged breach of a contract between them.
The three domestic firms -- FRL, 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 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, contended that FRL 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 FRL, 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.
“The majority respondents' action of simply ignoring the order (of EA) and continuing with the impugned transaction (deal) is not only contumacious but calls into serious question their respect for enforceability of contracts, the rule of law and the administration of justice..," it said.
It sought to injunct Future Group and its officials from taking any steps in furtherance of the deal with Reliance.
In August last year, Future had reached an agreement to sell its retail, wholesale, logistics and warehousing units to Reliance.
The SIAC on October 25 last year, 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 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.
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