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Future-RIL deal: Amazon challenges Delhi  HC order  in Supreme Court

Amazon’s key objective is to prevent Reliance from gaining an edge in India’s retail market.Premium
Amazon’s key objective is to prevent Reliance from gaining an edge in India’s retail market.

In its petition, Amazon has claimed the high court’s 22 March division bench order was illegal, random, inequitable and unfair, and asked the apex court to grant a stay on the order to prevent Amazon from suffering an 'irreparable' damage in its business in India

Amazon.com Inc. has challenged a Delhi high court division bench order that allowed Kishore Biyani’s Future Group to proceed with an asset sale deal with Mukesh Ambani’s Reliance Industries Ltd (RIL).

In its plea in the Supreme Court, Amazon termed the division bench’s 22 March order as “illegal", “random", inequitable and unfair, requesting the apex court to prevent Amazon from suffering “irreparable" damage in its business in India. Mint has reviewed a copy of the special leave petition.

“The (Future) group had earlier unequivocally stated that they will continue to take steps to complete the impugned transaction (the 24,713 crore deal with RIL). The greater the progress made towards the completion of the impugned transaction, the harder it will be to unravel it. Over time, the interests of additional third parties may also become entwined with the impugned transaction and be subsequently compromised. Further, irreparable harm will be caused to the petitioner (Amazon)," Amazon’s petition filed on Wednesday evening said.

On 22 March, the division bench granted Biyani a reprieve from an 18 March single-judge order of the same court that froze his assets and restrained the group he founded from taking any steps to sell its assets to Reliance Industries. Amazon’s key objective is to prevent Reliance Industries from gaining an edge in India’s retail market by acquiring the assets of Future Group, which owns over 1,500 Big Bazaar and fbb stores. If the Reliance-Future deal goes through, Amazon fears it may not be able to serve its customers with the same ease and speed as it was able to after entering into an agreement with Future Coupons Pvt. Ltd.

Amazon agreed to buy a 49% stake in Future Coupons, a part of Future Group, in August 2019 on the condition that Future Group does not forge any alliance with Reliance Industries and 29 other entities without obtaining prior consent from the US e-commerce giant.

On 18 March, Delhi high court’s justice J.R. Midha imposed a monetary penalty on Future Group for breaching the Singapore International Arbitration Centre’s (SIAC’s) October order that restrained Future Group from completing the deal with Reliance Industries. Justice Midha had also ordered the attachment of Biyani’s assets and served a show-cause on the group for his possible detention.

In an interim order following another petition filed by Amazon earlier, the Supreme Court on 22 February directed the National Company Law Tribunal (NCLT) not to give its final approval on a scheme of amalgamation (a part of the deal with RIL) until the top court gives its final verdict.

In the latest petition, Amazon said the division bench does not have the authority to stay the 18 March single judge’s order and pass another order on the matter until the Supreme Court gives its verdict.

“Given that this Supreme Court is already seized of the matter, particularly with respect to the maintainability of an appeal against an order passed under Section 17(2) of the Act, judicial propriety demanded that the division bench should have stayed its hands, and not passed any further orders in the matter," says Amazon’s latest petition.

Interestingly, the same argument was produced by senior advocate Iqbal Chagla, appearing on behalf of the Biyanis in March. “Propriety demanded that since the Supreme Court was seized of the matter, the learned single judge (Midha) ought not have passed such an order, especially when the division bench had stayed the earlier order. On this ground alone, the order dated 18 March 2021 should be stayed," Chagla had argued before the division bench.

Amazon said if the single judge’s order is interfered with, it will reduce the SIAC order to merely a “paper order".

“The important question of law which arises is whether or not an order passed by a validly appointed EA ought to be recognised and enforced under Section 17(2) of the Act. This aspect of the matter has wide ramifications far beyond the present SLP and impacts the desirability of India as an arbitration-friendly jurisdiction," said Amazon, which is competing against rivals including Walmart-led Flipkart and Reliance Industries for gaining a beachhead in India’s burgeoning retail e-commerce space.

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