Delhi high court’s division bench lifts stay on Future-ril deal plan
The HC noted that Amazon was not a party to the deal between FRL and RIL, and has no reason to seek status quo
NEW DELHI: The Delhi high court on Monday allowed Kishore Biyani’s Future Retail Limited to pursue its planned $3.4 billion sale of retail assets to Reliance Industries Limited, ruling that US online retailer Amazon had prima facie no reason to stall the deal.
A bench of chief justice DN Patel and justice Jyoti Singh stayed a February 2 order by a single judge of the high court that Future Retail maintain status quo {existing state} on its assets, barring the company from taking any steps to dispose of or encumber its assets or issue any securities to seek any funding against them.
The HC noted on Monday that Amazon was not a party to the deal between Future Retail and Reliance Industries, controlled by India’s richest man Mukesh Ambani, and has no reason to seek status quo.
NEW DELHI: The Delhi high court on Monday allowed Kishore Biyani’s Future Retail Ltd to pursue its planned $3.4 billion sale of retail assets to Reliance Industries Ltd, ruling that US online retailer Amazon.com Inc. had prima facie (at first sight) no reason to stall the deal.
A bench of Chief Justice DN Patel and Justice Jyoti Singh stayed a February 2 order by a single judge of the high court that Future Retail maintain status quo {existing state} on its assets, barring the company from taking any steps to dispose of or encumber its assets or issuing any securities to seek any funding against them.
“We hereby stay the implementation and execution of the order passed by the single judge till next date of hearing,” the bench said.
The judges rejected a plea by Amazon to keep its order in abeyance for a week, and said they saw no reason to maintain status quo on the Future Retail assets.the single judge bench had ordered the status quo on an appeal by Amazon, which said
the planned sale was in violation of an agreement it had with the Kishore Biyani group.
The bench noted that Amazon was not a party to the deal between Future Retail and Reliance Industries, controlled by India’s richest man Mukesh Ambani, and has no reason to seek status quo. It also said Amazon has “no intent to procure” Future Retail, which can be gauged from the agreement it had with a separate Future Group company.
The bench said that Future Retail did not have anything to do with the deal signed between Amazon and Future Coupons Pvt. Ltd, in which the latter acquired a 49% stake last year by investing ₹1,500 crore. The court said that different agreements
had been signed between the three disputing entities—future Retail, Amazon and Future Coupons, and hence the doctrine of a “group of companies” cannot be invoked. Future Retail was not a party to the deal between Amazon and Future Coupons, and Amazon was not a party to the deal between Future Retail and RIL, the court held.
A spokesperson for Amazon declined to comment, while a Reliance spokesperson didn’t immediately respond to an email seeking comment.
On February 2, a single judge of the Delhi high court granted interim relief to Amazon and asked Future Retail not to dispose of its retail assets, The single judge also directed authorities like Sebi and National Company
Law Tribunal to maintain status quo on the deal.
The court also asked Future Retail to list all the steps and actions it had taken after the order by an Emergency Arbitrator (EA) of Singapore. On October 25, 2020, the Singapore International Arbitration Centre (SIAC) had passed an interim order in favour of Amazon, barring Future Retail from taking any step to dispose of or encumber its assets or issue any securities to secure funding from a restricted party.
Citing this order, the single judge bench had said that the order dated October 25, 2020 was “appealable” under Section 37 of the Arbitration and Conciliation Act as and was also “enforceable” in India.
The single judge’s order had come on Amazon’s plea seeking detention of Future Group founders, including CEO Kishore Biyani, and the seizure of their assets as it sought to block Future Group from selling retail assets to RIL.
Challenging this order, Future Retail appealed before the division bench of the Delhi high court, which heard arguments for over three days from both sides.
The court also said that a statutory body like NCLT should not be stopped from proceeding in accordance with the law. It said the dispute pertained to whether the Singapore arbitrator’s order was enforceable in India and it will be decided when the single judge gives his order, which he has reserved.
Future Retail said in a statement to the stock exchanges: “The Company is pleased to update the stock exchanges that today a Division Bench comprising of the Hon’ble Chief Justice D. N. Patel and Hon’ble Justice Jyoti Singh has stayed the operation and effect of order passed by the Ld. Single Judge, inter alia, for the prima facie reason that the Company is not a party to the Shareholders Agreement dated August 22 2019 executed between Amazon, Future Coupons Pvt. Ltd and the Promoters of FRL, under which arbitration was initiated by Amazon in Singapore. The Hon’ble Court also observed that statutory authorities cannot be restrained in private litigation from acting in accordance with law.”