In a ruling where both the parties can claim some relief as well as disappointment, the Delhi High Court on Monday rejected Future Group’s plea that Amazon be restrained from writing to regulatory authorities not to accord approval to the former’s deal with Reliance Retail. However, the court’s order also said that the Future-Reliance Retail deal was in accordance with Indian laws, thus dealing a blow to Amazon’s claim. What can be more damaging to Amazon is that the court also said that its deal with Future Coupons – prior to Future-Reliance deal – is in the nature of control and therefore required prior government approval in the absence of which it is in violation of FEMA/FDI rules. The basis of Amazon’s complaint regarding the deal with Reliance Retail was its prior deal with Future Coupons where it had veto powers and if that is seen as illegal then it surely is a setback for the e-commerce firm, legal observers maintain.
Amazon, which owns 9.83% equity in Future Retail, while contesting the latter’s deal with Reliance Retail had argued that it has veto power over any sale of Future Coupons, in which it owns a 49% stake.
In brief, the court has upheld the interim award by Singapore International Arbitration Centre in favour of Amazon as legal. It has also declared the Future-Reliance deal to be legal and left the final decision to the regulatory authorities before which the deal is under examination before a final approval is given. Legal observers said that since the ruling is by a single judge bench, the parties are sure to challenge it before the division bench as the next course of action.
“..both FRL (Future Retail) and Amazon have already made their representations and counter representations to the statutory authorities/regulators and now it is for the statutory authorities/regulators to take a decision thereon.. Consequently, the present application is disposed of, declining the grant of interim injunction as prayed for by FRL, however, the statutory authorities/regulators are directed to take the decision on the applications/objections in accordance with the law,” the court said.
“On two counts, FRL has been able to make out a prima facie case of tortious interference by Amazon. It is clarified that it is not the making of the representation by Amazon to the statutory authorities or the regulators, which is an actionable wrong but making a representation based on incorrect assertions which makes the act based on unlawful means,” the order said.
FRL had moved the HC seeking to restrain Amazon from approaching regulatory bodies to stall the Future Group’s transaction with Reliance Retail. Future sold its retail assets to Reliance in August, but Amazon said the deal breached agreements Future made with the e-commerce firm in 2019.
Thereafter the US-based company took FRL into an emergency arbitration over alleged breach of contract. The SIAC on October 25 passed an interim order in favour of Amazon barring FRL from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party. Subsequently, Amazon wrote to Sebi, stock exchanges and CCI, urging them to take into consideration the Singapore arbitrator’s interim decision as it is a binding order.
In the meantime, the Competition Commission of India (CCI) has approved the acquisition of the retail, wholesale, logistics, and warehousing businesses of Future Group by Reliance Retail.
The SIAC has rejected Future Group’s appeal against the interim order and since December 4 has commenced final hearings in the matter after which it would pass the final order.
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