In a major win for Amazon, the Delhi High Court on Thursday upheld the decision of a Singapore-based single judge arbitration panel, which had ruled against a Rs 24,713 crore deal between Reliance Retail and the Future Group.
The single-judge bench of Justice JR Midha held 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, according to a copy of the court’s order accessed by Entrackr.
In fact, Justice Midha issued a show-cause notice against the respondents in the case—the Future Group entities and their promoter, the Biyanis—asking why they should not be detained in a ‘civil prison’ for three months, for violating the Emergency Arbitrator’s decision. As per the order, the respondents will have to reply to the notice in two weeks.
Justice Midha said that the Future Group had “deliberately and willfully violated the interim order” and raised a vague plea of ‘nullity’ without substantiating it. The court also directed to attach the assets and properties of Future Retail, Future Coupons, Kishore Biyani, and others.
“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 said.
The court also directed the Future Group to pay Rs 20 lakh to the Prime Minister Relief Fund within two weeks.
“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,” Justice Midha held.
The case has been listed on April 28, for reporting compliance.
Future Group did not have a comment to offer on the Delhi High Court’s order, a spokesperson told Entrackr. Amazon did not respond to our queries until publication.
Last October, a Singapore-based single judge arbitration panel had ruled that Reliance Retail and Future Group should not proceed with the deal until it hears the matter. In its order, the panel had said that the deal between Future and Reliance violated Amazon’s contractual rights.
Amazon has been referring to a non-compete clause that it had with the Future Group which barred it from any deal with 30 companies, including RIL, without Amazon’s approval.
However, despite the outcome of the arbitration, India’s competition watchdog the Competition Commission of India had approved 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.
In its response, Amazon had moved the Delhi High Court in January to get the emergency arbitration award recognised in India and a single-judge bench had then stayed the deal. However, soon after, the Future Group moved the Delhi High Court again where a division bench vacated the order passed by the single-judge bench.
Amazon then moved the Supreme Court 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.