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Kishore Biyani-promoted Future Group is ‘mischaracterizing’ a Delhi high court order on their dispute, alleged Amazon (Mint)
Kishore Biyani-promoted Future Group is ‘mischaracterizing’ a Delhi high court order on their dispute, alleged Amazon (Mint)

Future Group is misleading regulators, alleges Amazon

The Delhi HC should dismiss Future Group’s suit and stay further proceedings, said Amazon has alleged that Kishore Biyani-promoted Future Group is misleading Indian regulators and the general public by “mischaracterizing" a Delhi high court order on their dispute over Future’s 25,000 crore deal with Reliance Industries Ltd.

The US e-commerce company made the claim on Monday while requesting the high court to review its 21 December order and stop hearing the lawsuit filed by Future Group against Amazon.

On 21 December, the Delhi high court ordered against Future Group’s suit by allowing Amazon to approach any regulator regarding the RIL-Future deal.

“Future Retail Ltd has been mischaracterizing certain prima facie observations in the impugned order in an attempt to mislead the statutory regulators/authorities as well as the general public," Amazon said in its application to the court.

Amazon also asked the court to stay further proceedings in the matter.

On 29 August, Future Group announced that RIL has entered into an agreement with Future Retail Ltd and other Future Group firms to buy the latter’s retail, wholesale, logistics and warehouse assets for 24,713 crore.

Amazon challenged this at the Singapore International Arbitration Centre (SIAC) on 5 October, stating that since Future Group did not take Amazon’s consent before forging an alliance with RIL, it breached contractual agreements that were made with Amazon in August 2019, when Future Coupons Pvt. Ltd (FCPL, a promoter of FRL) sold a 49% stake to Amazon.

On 25 October, the SIAC restrained Future Group from taking any steps to sell assets or forge any deal with RIL.

Amazon on Monday claimed that just two days after the court passed its order, on 23 December, FRL issued letters to exchanges and Sebi, submitting a purported summary of the order stating that the “entire legal basis of the EA (emergency arbitrator, that is SIAC) order stands vitiated".

“This was patently incorrect as nowhere in the impugned order did the learned single judge make any observation on the merits of the EA order," said Amazon.

"In fact, the court on 21 December found that neither the merits of the EA order nor its legality was an issue in the suit that was filed by Future Group to restrain Amazon from interfering in the RIL-Future deal or approaching any regulator in this regard," said Amazon.

“However, on account of several extraneous observations, FRL continues to misrepresent the true effect of the learned single judge’s directions to the statutory authorities," said Amazon.

On 31 December, FRL wrote another letter to Sebi alleging that the substratum of the EA order stood invalidated by the impugned order of the court.

Amazon stated that FRL too agreed to participate in the arbitration proceedings and therefore it is entitled to take appropriate recourse against the EA order as per SIAC rules and the Arbitration and Conciliation Act. “In fact, the arbitral tribunal has already been constituted," said Amazon.

Amazon, in its appeal, said the court should rectify its 21 December order and specifically direct Future Group and Amazon to pursue the case at SIAC since the court itself has upheld the interim order of SIAC’s emergency arbitrator to be valid and binding.

In a separate application, Amazon, citing Section 8 of the Arbitration Act, has asked the court to stop hearing on the matter for the time being and avoid intervening in the Amazon-Future dispute until the time SIAC passes its final judgment.

Amazon said since the SIAC is already in the process of hearing the case and has formed an arbitral tribunal to pass the final judgment, the Delhi high court should dismiss Future Group’s suit against Amazon and stay further proceedings. It said the 21 December order made observations that are contradictory in nature and hence the order should be reviewed.

The arbitration proceedings were initiated on account of disputes that have arisen between the parties in connection with the shareholders’ agreement dated 22 August 2019, the share subscription agreement dated 12 August 2019 and another shareholders’ agreement dated 22 August 2019.

The arbitration agreement is an integral part of the agreements and constitutes the chosen mode of dispute resolution between the parties under the aegis of the SIAC.

Amazon told the Delhi high court to dismiss Future Group’s suit and ask both parties to act as per SIAC’s directions since Section 8 of India’s own Arbitration Act states that any judicial authority (in this case Delhi high court) before which an action is brought in a matter relating to an arbitration agreement, is compelled to refer the parties to arbitration (in this case SIAC) only, irrespective of any judgment, decree or order of the Supreme Court or any other court.

“The learned single judge erroneously observed the suit to be maintainable, contrary to Section 5 and Section 8 of the Arbitration and Conciliation Act, 1996; and while declining to interfere with the merits of the EA order and upholding its legal validity, the learned single judge made certain prima facie observations on the very same issues which were adjudicated in the EA order," said Amazon, adding that these observations (made by the Delhi court) are being relied upon by FRL to mount a collateral challenge to the EA order, which is contrary to the observations contained in the initial part of the high court’s order.

Amazon also said that the court’s observations in the order are contrary to settled law that a suit seeking prayers against the initiation/continuation of arbitration proceedings is not maintainable.

“By observing the suit to be maintainable, the learned single judge ignored the salutary principles of non-interference with arbitration proceedings, enshrined in Section 5 read with Section 8 of the A&C Act," said Amazon.

“The observations in the court’s order suffers from nonapplication of mind… the judge gravely erred by not rendering a finding on the existence of a jurisdictional fact, despite the invocation of the arbitration agreement by the appellant (Amazon) in the oral arguments and the written submissions placed before the judge. In the absence of a finding on this jurisdictional fact, the judge could not have proceeded any further in the suit. The Judge failed to dismiss the Suit and refer parties to arbitration despite the existence of a valid and operative arbitration agreement which had not been challenged," says Amazon’s appeal, which will come up for hearing on Wednesday.

By ignoring the settled position of law, the judge has passed observations on matters which are within the sole remit of the arbitration proceedings.

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