Delhi High Court Declines to Restrain Amazon From Writing to Statutory Authorities

Delhi High Court declines to prevent Amazon from interfering in the Kishore Biyani-owned company's deal with Reliance Retail by writing to statutory authorities. 

The statutory authorities are free to make their own opinion: Delhi HC  

A Single Judge Bench of Justice Mukta Gupta announced in the suit by Future Retail Limited after an Emergency Arbitrator of the Singapore International Arbitration Centre (SIAC) restrained Future Group from taking any steps in furtherance of the transaction with Reliance Retail. The Bench was of the view that according to law, the statutory authorities are free to make their own opinion.  

It also observed that the suit filed was maintainable and the Emergency Award was valid. 

Further, the bench held that the fusion of the three agreements i.e., Future Coupons Pvt Ltd (FCPL) Future Retail Shareholding Agreement (SHA), SHA and FCPL Share Subscription Agreement granted disproportionate rights to Amazon, which required government approvals under FEMA FDI Rules. 

The bench further suggested that it was "a matter of trial" to decide whether Amazon's case outweighed FRL's claim and for now, it was for the statutory authorities to make their own conclusion. 

FRL had pronounced its deal with Reliance Retail Ventures Limited earlier this year

FRL had pronounced its deal with Reliance Retail Ventures Limited this year only. Amazon possesses a stake in Future Coupons Pvt Ltd, which is, in turn, a 9.82% shareholder in FRL. The retail giant invoked arbitration on the ground that the Mukesh Ambani Group of companies featured in the negative list of 30 entities with which Future Group can’t transact. 

FRL without challenging the Emergency Award had prayed before the High Court to prevent Amazon from approaching the Securities and Exchange Board of India in an attempt to stall the deal. 

FRL also declared that since the Emergency Award was not enforceable in the Indian regime, it was of no consequence. Also, Amazon not being a  shareholder in FRL but in Future Coupons Pvt Ltd it doesn’t have right or say  in between a  transaction of FRL and Reliance. 

In support of FRL's case Reliance submitted before the bench that Amazon was playing mischief by stalling the deal that would save FRL from going under. Reliance further assured that all-important parties had already given their consent to the scheme of transfer of assets. 

The FRL SHA and FCPL SHA were in the nature of “single integrated transaction” which would give Amazon control over FRL 

On the other hand, Amazon, submitted before the Bench that the present suit is not maintainable before the court because of the “ship of arbitration has sailed” in the current matter. 

Moving ahead Amazon argued that the Emergency Award was binding on all parties as it was duly recognised under Part I of the Arbitration Act. 

The e-commerce giant further argued before the court that the FRL SHA and FCPL SHA were in the nature of "single integrated transaction" which would eventually give Amazon control over FRL. 

It is pertinent to note that CCI gave consent to the acquisition of the wholesale, retail, warehousing and logistics businesses of Future Group by Reliance Retail Ventures Limited and Reliance Retail and Fashion Lifestyle Limited last month.