The Delhi High Court on Monday lifted the status quo on the $3.4 billion (about Rs 24,700 crore) deal between Kishore Biyani-headed Future Group and Mukesh Ambani-owned Reliance. This is a setback for Jeff Bezos-led e-commerce giant Amazon and a partner of Future, which has challenged the deal. The e-commerce giant’s request to suspend Monday’s order for a week was turned down by the Court.
The Delhi High Court was hearing the appeal filed by Future Retail Limited (FRL) against the Court's order passed last week. It had asked FRL to maintain the status quo with respect to its $3.4 billion deal with Reliance Retail. The court had said it was satisfied that an immediate interim order was required to be passed to protect the rights of e-commerce firm Amazon.
On Monday, the Court noted that Future Retail Ltd (FRL) was not a party to an arbitration agreement with Amazon and prima facie opined that "group of companies" doctrine could not be invoked in the present case as the three agreements i.e. Future Retail Shareholding Agreement (SHA), Future Coupons Pvt Ltd (FCPL) SHA and FCPL Share Subscription Agreement are distinct in nature, according to law platform Bar & Bench.
The Court observed that there was no reason to seek a status quo order from the Single Judge. It stated that statutory authorities like Securities and Exchange Board of India (SEBI) and Competition Commission of India (CCI) could not be restrained from "proceeding in accordance with law".
The order was passed by a Division Bench of Chief Justice DN Patel and Justice Jyoti Singh.
In August 2020, the Future group struck a $3.4-billion asset sale deal with RIL. Amazon then sent a legal notice to Future, alleging the retailer’s deal breached an agreement with the American e-commerce firm. In 2019, Amazon had acquired a 49 per cent stake in Future Coupons (FCPL), the promoter entity of Future Retail, for about Rs 1,500 crore. The deal specified any disputes would be arbitrated under Singapore International Arbitration Centre (SIAC) rules.
In a letter addressed to Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE) on Monday, Future Retail Limited (FRL) said the company is pleased to update the stock exchanges that a Division Bench comprising of the Hon’ble Chief Justice D. N. Patel and Hon’ble Justice Jyoti Singh has stayed the operation and effect of order passed by the Ld. Single Judge. This was due to "inter alia’ (among other things), for the prima facie reason" that the Company (FRL) is not a party to the Shareholders Agreement dated August 22, 2019, executed between Amazon, Future Coupons Private Limited (FCPL) and the Promoters of FRL, under which arbitration was initiated by Amazon in Singapore. “The Hon’ble Court also observed that statutory authorities cannot be restrained in private litigation from acting in accordance with the law,” said the letter.
Earlier, Senior Advocate Harish Salve who appeared for FRL had highlighted the disruption caused due to the Covid-19 pandemic on Future's business and had informed the court that the retail firm may go bust and thousands may lose jobs due to Amazon's interference. He had argued how the deal with Reliance would take all the liabilities and save thousands of jobs and provide security to the banks and shareholders of Future. Salve had told the court that Amazon is opposing the deal as Reliance is a competitor.
“Reliance will pay future salaries. Reliance will give cash to Future,” Salve had contended.“In today's time when people are looking at this glimmer of light.. you want to kill this company. You have a deal in hand.”
Salve had contended that Amazon has a deal with FCPL (Future Coupons Pvt Ltd) and it is their dispute. He had argued that FRL has no agreement with Amazon and there is no Arbitration Agreement between the two.
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