SC bars NCLT from finalising orders allowing $3.4 bn Future-Reliance deal

The Supreme Court on Monday sought a response from Future Retail Limited (FRL) in a plea by e-commerce giant Amazon challenging the Delhi High Court order which had stayed the implementation of status quo direction passed by single-judge of the High Court with respect to the $3.4 billion Future-Reliance deal.

A bench headed by Justice Rohinton Nariman also ordered that while the proceedings before National Company Law Tribunal (NCLT) can go on, they should not culminate in any final order of sanction of the scheme.

“Issue notice. Dasti in addition. To come up after three weeks. Rejoinder to be filed two weeks thereafter. List thereafter,” the court ordered, according to law platform Bar & Bench. “Meanwhile, the NCLT proceedings will be allowed to go on but will not culminate in any final order of sanction of scheme.”

The apex court also clarified that the Division Bench of Delhi High will not proceed with the matter further after a Senior Counsel brought the same to the Court’s attention.

This month Amazon moved the Supreme Court challenging the Delhi High Court order which had stayed the implementation of status quo direction passed by single-judge of the High Court for the Future-Reliance deal.

Jeff Bezos-led Amazon is locked in a legal dispute with Kishore Biyani-headed Future. It has alleged that the retail conglomerate violated an agreement with the American e-commerce firm by agreeing to sell its assets to Mukesh Ambani-owned Reliance Industries last year. Future denies any wrongdoing.

The Delhi High Court had stayed its single-judge direction to Future Retail Ltd (FRL) and various statutory authorities to maintain the status quo with regard to the Rs 24,713-crore ($3.4 billion) deal with Reliance Retail in a setback for Amazon, which has challenged the transaction. Amazon then filed the petition before the Supreme Court.

“Because the impugned interim common order passed by the Hon’ble High Court is illegal, and arbitrary apart from being without jurisdiction, therefore the same is liable to be set aside on this ground alone,” Amazon had said in its Special Leave Petition before the Supreme Court.

The petition had said the Hon’ble High Court has acted illegally and arbitrarily, firstly in failing to appreciate much less consider the oral submissions made by the Petitioner, and the catena (a series of things connected with each other) of judgments relied upon by the Petitioner. In taking upon itself to adjudicate the Appeal, even though it did not fall within the jurisdiction of the Hon’ble High Court, the petition said the Impugned Interim Common Order suffers from illegality and arbitrariness and is also against the principles of natural justice, equity and fair play.

The order under challenge and which had lifted the status quo on the Future-Reliance deal was passed by a Division Bench of the High Court in an appeal filed by FRL against the court’s order related to protecting the rights of Amazon.

The division Bench had noted that FRL was not a party to an arbitration agreement with Amazon and prima facie the “group of companies” doctrine could not be invoked in the present case as the three agreements — Future Retail Shareholding Agreement (SHA), Future Coupons Pvt Ltd (FCPL) SHA, and FCPL Share Subscription Agreement — were distinct in nature.

The court had observed that there was no reason to seek a status quo order from the single judge. It stated that statutory authorities like the Securities and Exchange Board of India (Sebi) and the Competition Commission of India (CCI) could not be restrained from “proceeding in accordance with law”.

Amazon’s petition had said the Division Bench failed to take note of the fact that repeated and brazen breaches of the EA (Emergency Arbitrator) Order were undertaken by all the Respondents. It had said Respondents had persisted with the applications relating to the impugned transaction between FRL and entities of the Mukesh Dhirubhai Ambani Group (“Impugned Transaction”) and obtained approvals on “false representations” by repeatedly suggesting to the statutory authorities that the EA Order was worthless and had made false claims that the Suit Order had effaced the EA Order.

In August 2020, the Future group struck a $3.4-billion asset sale deal with RIL. Amazon then sent a legal notice to Future, alleging that the deal breached an agreement with the e-commerce firm.

In 2019, Amazon had acquired a 49 per cent stake in Future Coupons (FCPL), the promoter entity of FRL, for about Rs 1,500 crore. The deal specified any disputes would be arbitrated under the Singapore International Arbitration Centre (SIAC) rules. An arbitration tribunal has been formed at the SIAC to look into the dispute. A final ruling by the arbitrator in the matter is pending.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor