Supreme Court halts Future Retail’s Rs 24,713 crore deal with Reliance on Amazon’s plea

The apex court said the proceedings before the National Company Law Tribunal (NCLT) will go on and but will not culminate into any final order on an amalgamation of FRL with Reliance

Press Trust of India February 22, 2021 16:50:52 IST
Supreme Court halts Future Retail’s Rs 24,713 crore deal with Reliance on Amazon’s plea

File image of the Supreme Court of India. PTI

New Delhi: The Supreme Court Monday sought responses from Future Retail Ltd (FRL) and others on Amazon's plea against the Delhi High Court direction staying its single judge order to maintain status quo on the Future-Reliance amalgamation deal.

The apex court said the proceedings before the National Company Law Tribunal (NCLT) will go on and but will not culminate into any final order on an amalgamation of FRL with Reliance.

A bench comprising Justices R F Nariman and B R Gavai issued notices to FRL, Chairperson Kishore Biyani and others and sought their replies.

The reply is filed in three weeks and a rejoinder to it after two weeks thereafter, the bench said, adding that the appeal will be listed for hearing after five weeks.

The Delhi High Court on February 8 had stayed its single judge direction to FRL and various statutory authorities to maintain the status quo with regard to the Rs 24,713 crore deal with Reliance Retail.

The interim direction was passed on FRL's appeal challenging the February 2 order of the single judge.

The HC bench had also declined Amazon's request to keep its order in abeyance for a week so that it can explore appropriate remedies.

Amazon had first filed a plea before the single judge for enforcement of the 25 October, 2020, Emergency Arbitrator (EA) award by the Singapore International Arbitration Centre (SIAC) restraining FRL from going ahead with its Rs 24,713 crore deal with Reliance Retail.

In the interim order, the high court had said it was staying the single judge order as firstly, FRL was not a party to the share subscription agreement (SSA) between Amazon and Future Coupons Pvt Ltd (FCPL) and the US e-commerce giant was not a party to the deal between FRL and Reliance Retail.

The bench further said it was of the prima facie view that the shareholding agreement (SHA) between FRL and FCPL, the SSA between FCPL and Amazon and the deal between FRL and Reliance Retail "are different" and "therefore, the group of companies doctrine cannot be invoked".

Another reason given by the court for its interim order was that there was prima facie no reason to seek a status quo order before the single judge.

The bench said there were a lot of contentious issues involved in the matter and it was not going to adjudicate on them at this stage.

It also said that its observations were only prima facie and the single judge ought not to be influenced by them when pronouncing the order on Amazon's plea for enforcement of the October, 2020 Emergency Arbitrator (EA) award by the Singapore International Arbitration Centre (SIAC) restraining FRL from going ahead with its Rs 24,713 crore deal with Reliance Retail.

The order by the division bench had come after the conclusion of arguments, over a period of three days, by FRL and Amazon on Future Retail's plea challenging the single judge's February 2 order.

FRL, in its appeal, has claimed that if the 2 February order has not stayed it "would be an absolute disaster" for it as the proceedings before the National Company Law Tribunal (NCLT) for approving the amalgamation scheme have been put on hold.

It has contended that the single judge's status quo order will effectively derail the entire scheme which has been approved by statutory authorities in accordance with the law.

In its suit before the single judge for enforcing the EA award, Amazon has sought to restrain FRL from taking any steps to complete the transaction with entities that are a part of the Mukesh Dhirubhai Ambani (MDA) Group.

Amazon 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 EA order.

In August last, Future had reached an agreement to sell its retail, wholesale, logistics and warehousing units to Reliance. Subsequently, Amazon took FRL into an emergency arbitration before the SIAC over the alleged breach of contract.

After the SIAC's EA order of 25 October, 2020 was passed, Amazon wrote to the SEBI, stock exchanges and CCI, urging them to take into consideration the arbitrator's interim decision as it is a binding order.

FRL, thereafter moved the high court to restrain Amazon from writing to SEBI, CCI and other regulators about SIAC''s order, saying it amounts to interfering with the agreement with RIL.

A single judge on Dec 21, last had on FRL''s plea passed an interim order allowing Amazon to write to the statutory authorities, but also said that prima facie it appeared the US e-commerce giant's attempt to control Future Retail was violative of FEMA and FDI rules.

Against the observations, Amazon moved an appeal before a division bench and during its pendency, Amazon filed the suit for the enforcement of the EA award.

Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media and Investments Ltd.

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