In a major setback to the Future-Reliance deal, the Delhi High Court on Thursday has supported the upheld decision of a Singapore-based single judge arbitration panel judgement. The high court has stopped the current deal as requested by Amazon. It is known that the arbitration panel gave the final decision against a Rs 24,713 crore deal between Reliance Retail and the Future Group. It is a big legal victory for Amazon.
What Delhi High Court Judge Said about the Deal?
As per the decision order issued by The single-judge bench of Justice JR Midha, it is confirmed that the ‘Emergency Award’ passed against the deal in October 2020 was applicable under Indian law, and the Future Group was therefore liable for consequences under relevant sections of the Code of Civil Procedure. Entrackr got access to the court judgement.
Justice Midha also issued a show-cause notice to the Future Group entities and their promoter. Under this notice, Midha asked why Future Group entities should not go to the civil prison for there months. The notice further stated that these entities violated the Emergency Arbitrator’s decision. Respondents should reply to this show cause notice in two weeks.
Justice Midha further added that Future Group intentionally violated the Singapore court order. The group also raised a vague plea to nullify it without a proper procedure. The court also ordered to attach the assets and properties of Future Retail, Future Coupons, Kishore Biyani, and others.
Justice Midha said:
“The Emergency Arbitrator is an Arbitrator for all intents and purposes; order of the Emergency Arbitrator is an order under Section 17(1) and enforceable as an order of this Court under Section 17(2) of the Arbitration and Conciliation Act.”
The court also directed the Future Group to pay Rs 20 lakh to the Prime Minister Relief Fund within two weeks as a punishment.
Midha further added:
“The respondents have taken Rs. 1431 crore from the petitioner solely on the basis of the rights provided by FRL [Future Retail] to FCPL [Future Coupons] that they would not transfer their retail assets without the prior consent of the petitioner [Amazon] and never to a Restrict Person. Admittedly, the respondents have breached the agreements.”
Future Group did not say anything related to the High Court order when contacted. Amazon was also unavailable for any comments. SEBI(Securities and Exchange Board of India) also approved the Future Group-Reliance Industries merger in January 2021.
Series of Events Related to Future-Reliance Deal
In October 2020, Singapore’s single judge arbitration panel directed the Reliance and Future group to not proceed further with the deal until the panel hears the matter. The panel also told that the deal violated Amazon contractual rights.
As per the contractual agreement between Amazon and Future Group, the later can’t sign an agreement with 30 firms including Reliance Industries Limited(RIL). If it does so, Future Group should take prior approval from Amazon.
The case took a U-turn when the Competition Commission of India legalised the deal in November 2020 which would have meant Reliance taking over 1,800 stores of Big Bazaar, EasyDay, FBB and Food Hall, and the Rs 19,000 crore debt and liabilities of the Future Group.
After this approval, Amazon accelerated the legal process further and filed a plea in Delhi High Court to take a stay on the deal. Single Judge bench gave the judgement in support of Amazon. Future Group filed a new plea in Delhi High Court against the order and the division bench vacated the order passed by the single-judge bench.
Later, Amazon knocked on the Supreme Court door challenging the High Court’s order where it got some relief when the top court allowed the National Company Law Tribunal or the NCLT to hear the case but not give its final order. Reliance is still claiming that the deal is as per the rules and regulation of the industry.