Future Retail moves HC against order to maintain status quo on deal with Reliance

Kishore Biyani-led Future Retail Ltd (FRL) moved the Delhi High Court on Wednesday against its single judge order directing the company to maintain status quo on its Rs 24,713 crore deal with Reliance Retail, which has been objected to by US-based e-commerce giant Amazon.

FRL's appeal was mentioned before a Joint Registrar of the high court who allowed it to be listed for hearing on Thursday, a lawyer associated with the case said.

Senior advocate Darius Khambata, appearing for FRL, also mentioned the matter before a bench of Chief Justice D N Patel and Justice Jyoti Singh urging it to hear the matter during the day.

The request was opposed by senior advocate Rajiv Nayar, who appeared for Amazon, saying there was no urgency in the matter.

The bench, subsequently, said the matter will be heard on Thursday in due course.

FRL has challenged the single judge's February 2 order on the ground that it has brought the scheme of amalgamation between FRL, Reliance Retail Ventures Limited and Reliance Retail and Fashion Lifestyle Limited to a standstill.

FRL, in its plea filed by Naik and Naik and Company and advocate Harshvardhan Jha, has contended that the February 2 status quo order will effectively derail the entire scheme which has been approved by statutory authorities in accordance with law.

''The scheme will avert FRL's insolvency in circumstances where banks and other investors, including Amazon, have refused to provide funds,'' the company's appeal has said. It has also said that if the scheme falls through, it will push FRL towards insolvency.

''The magnitude of damage that may be caused to the public at large is unimaginable, as livelihoods of more than 25,000 employees of FRL and 25,000 employees of other Future group companies will be lost,'' it has claimed.

It has contended that the relief granted by the single judge was beyond the scope of the suit filed by Amazon for enforcement of the Emergency Arbitrator (EA) order of the Singapore International Arbitration Centre (SIAC).

FRL has sought setting aside of the February 2 order. The single judge had on Tuesday said the court was satisfied that an immediate interim order was required to be passed to protect the rights of Amazon.

''Respondents (FRL) and other respondents are directed to maintain status quo as on today at 4:49 PM till pronouncement of the reserved order,'' the judge had said.

In August last year, Future had reached an agreement to sell its retail, wholesale, logistics and warehousing units to Reliance.

Amazon has approached the high court seeking direction to order enforcement of the award by Singapore's Emergency Arbitrator (EA) restraining FRL from going ahead with its Rs 24,713 crore deal with Reliance Retail.

It has sought to restrain Kishore Biyani-led Future Group from taking any steps to complete the transaction with entities that are a part of the Mukesh Dhirubhai Ambani (MDA) Group.

Amazon.com NV Investment Holdings LLC, in its plea, has 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.

The high court, which heard the matter for four consecutive days, reserved its order on Tuesday on the main petition and also directed all other concerned authorities to maintain status quo in relation to the matters which are in violation of the emergency award and to file status report with regard to the present status within 10 days.

While pronouncing the interim order, the high court said it was of the prima facie view that the emergency arbitrator is an arbitrator and he has rightly proceeded against FRL and its order was not in nullity.

The court said it was clear that the October 25, 2020 order of the emergency arbitrator passing the award was enforceable and appealable under the relevant provisions of the Arbitration and Conciliation Act.

The high court directed FRL to file an affidavit stating the steps and actions taken by it from october 25, 2020, when the emergency award was passed, till now in connection with the deal with Reliance.

Amazon has 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 SIAC Rules is enforceable under Section 17(2) of the Arbitration and Conciliation Act.

The SIAC had on October 25 last year 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.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)