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Delhi HC Reserves Order on Future Retail's Plea to Injunct Amazon from Interfering in Reliance Deal

By Richa Shah      23 November, 2020 05:47 PM      0 Comments
Delhi HC Reserves Order on Future Retail's Plea to Injunct Amazon from Interfering in Reliance Deal

On Friday (20th November, 2020), the Delhi High Court reserved order on an application by Kishore Biyani led Future Retail Ltd (FRL). 

The order was given to stop Amazon from interfering in the Rs 24,713 crore Reliance-Future deal on the basis of an interim order passed by the Singapore International Arbitration Centre (SIAC).

This was heard by a bench of single judge consisting of Justice Mukta Gupta. 

The parties were told to give written submissions by November 23, 2029.

Since Amazon took FRL into an emergency arbitration over alleged breach of contract, a battle is going on between The Future Group and Amazon.

The SIAC had passed an interim order on October 25, 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 SEBI, stock exchanges and Competition Commission of India to take into consideration the Singapore arbitrator's interim decision as it is a binding order.

An ad-interim injunction was also asked for against Amazon from writing to SEBI, CCI and other authorities to consider the emergency arbitrator's interim order by the FRL.

The plea was opposed by Amazon. Senior Advocate Gopal Subramanium represented Amazon said that under the SIAC rules emergency award is binding on the parties subject to a challenge.

He also said that until the parties get it set aside, it is like an order of the court and suppose the order was against me then this order would be with jurisdiction, he argued.

All the defendants except Reliance were party to the arbitration according to Subramanium and the promoters who were represented before the emergency arbitrator did not question the jurisdiction at all.

Appearing for FRL was Senior advocate Harish Salve. He said that an arbitrator is one who is entitled to decide the dispute and an emergency arbitrator cannot act as an arbitrator.

He added that Amazon has an agreement with Future Coupons Ltd (FCL) and it then says controllers are common.

The obligation of the promoter to Amazon cannot be attributed to the company. I am not bound by the commitment made by the promoter to a third party, he said.

Salve further said that Amazon has no right to control any voting in FRL and its representations are false and need to be injuncted.

The order of the emergency arbitrator was of no value and has no efficacy in law, stated Harish Salve.

He had said Amazon was merely a shareholder in FCL and thus had no say in the affairs of FRL.

On November 10, 2020, the high court had sought response of Amazon on FRL's plea, filed through advocate Harshvardhan Jha, who alleged that the e-commerce major was interfering in its Rs 24,713 crore deal with Reliance Retail on the basis of an interim order by a Singapore arbitrator.

Summons were also issued to Amazon, Future Coupons and Reliance Retail Ltd (RRL) on the FRL suit and asked them to file their written statements within 30 days.

The issue of maintainability of the suit which was raised by Amazon would be kept open and FRL’s claims and contentions were supported by FCL and its promoters.

FRL, FCL and Reliance contended that it would amount to a violation of Indian foreign direct investment (FDI) laws if Amazon's claim that it indirectly invested in FRL by investing in FCL was accepted.

The group company concept cannot be applied in the instant case according to them.

FRL's plea saying all the arguments raised here by it were made before the emergency arbitrator which considered and rejected them was opposed by Amazon.

It had said that FRL, being a company of the Future Group, would be governed by the arbitration agreement between FCL and Amazon.

FCL has 9.82 per cent stake in FRL and since Amazon holds 49 per cent stake in FCL, it was argued that the e-commerce major would only have half of the 9.82 per cent stake in its favour.

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