Reliance Retail and Future group deal legal battle is on for the last few months. The matter has gone to Supreme Court. Due to all these unwanted developments, Reliance has extended the timeline for a long stop for the Future Group deal by another six months.
As per the long stop concept, if the deal doesn’t get clear within this time frame, Reliance has a right to withdraw from the deal. In such a scenario when deal terms and conditions are not fulfilled in the coming 6 months, Future Group has to pay all the transaction amount to Reliance Retail Ventures.
Latest Long Stop is the Last Hope?
Reliance Retail acquired the Future Group retail assets with a whopping amount of Rs 25000 crore. The deal was announced in August 2020. Both agreed to fulfil all terms and conditions latest by 31 March 2021. But Amazon changed the scenario completely. The retail giant knocked on the doors of different legal organizations to stop the deal.
Amazon has a 49% stake in Future Coupons Private Limited, a subsidiary of Future Group Holdings Company. As per the signed contract between Amazon and Future Group, the deal is illegal. Future Group should take clearance from Amazon before signing such a deal.
To clear all these legal issues, Reliance has extended a long stop to September 30, 2021. Talking about the long stop, Future Retail said:
“Under the provisions of the scheme and other transaction documents executed in relation thereto, RRVL has in exercise of the right provided thereunder, extended the timeline for Long Stop Date from March 31, 2021, to September 30, 2021.”
Recent Developments Related to Reliance-Future Group Deal
Two weeks ago, Delhi High Court Bench led by Justice JR Midha gave a big relief to Amazon when the court declared the current deal illegal.
Justice Midha also passed an order against Future Group and issued a notice. As per the issued notice, Midha asked Future Group that why no legal action should be taken against you. As per the judgment, Future Group ignored earlier court orders and the Future Group chairman should be behind bars.
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.”
justice Midha also penalized the Future Group and asked them to pay Rs 20 crore in Prime Minister Relief Fund.
Midha further added:
“The respondents have taken Rs. 1431 crore from the petitioner solely based on 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.”
The next hearing related to the Reliance-Future Group deal will take place on April 27, 2021.