Amazon Vs Future Retails: Delhi High Court rejects Future Retails petition for interim injunction against Amazon’s reading order


Future Retail Ltd (FRL) suffered a setback on Monday when the Delhi High Court refused to allow its request for an interim injunction to prevent Amazon Inc from writing to Indian statutory authorities objecting to FRL’s proposed sale of assets to the Reliance group.

A single bank of Justice Mukta Gupta refused to grant interim relief at the FRL’s request to order Amazon not to write to legal authorities to inform them of an award from a Singapore-based Emergency Arbitrator.

However, the court found “not null” the resolution of the Future Retail Ltd (FRL) board approving the Reliance Industries Ltd (RIL) deal worth nearly Rs 24 billion and said the legal authorities would decide the approval of the agreement according to the law. However, .

The court was hearing FRL’s petition for Amazon Inc not to seek to stop FRL’s deal with the Reliance group by writing to various authorities including the Competition Commission of India, the Securities Exchange Board of India, etc. about an award of the Emergency Arbitrator that was approved by an arbitrator. Singapore court in favor of Amazon.

The tribunal held that the Emergency Arbitrator did not have a quorum judice, but found the award to be valid. On the issue of Amazon seeking to merge the FRL shareholders agreement agreements and the Amazon-Future Coupons Ltd shareholders agreements, the court has held that such a merger is contrary to FEMA. Judge Mukta Gupta ruled that the ruling in the case relates to an agreement between Reliance-Future Retail Under which, Future Retail was to sell its retail, wholesale, logistics and warehousing units to Reliance Retail and Fashion Lifestyle Ltd, a wholly owned subsidiary of Reliance Retail Ventures Ltd.

The operative part of the order reads as follows:

“TThe trinity of principles for granting provisional precautionary measures, that is, prima facie case, irreparable loss, and balance of convenience, must be proven in terms of principles as noted above. Given that this Court has ruled that the representation of Amazon prima facie based on the allegation that the resolution of August 29, 2020 of FRL is null and that in the merger of FCPL SHA and FRL SHA, the ‘control’ that must Being claimed by Amazon over FRL is not allowed under the FEMA FDI Rules, without government approvals, this Court determines that FRL has presented a prima facie case in its favor for the granting of an interim injunction. However, the main evidence in the present case concerns “balance of convenience” and “irreparable loss”. Even if FRL makes a prima facie case, the balance of convenience is in favor of FRL and Amazon.

If the FRL case is that Amazon’s representation before statutory authorities / regulators is based on illegal premises, Amazon has also based its representation on the alleged breach of FCPL SHA and FRL SHA, as well as instructions in EA’s order . Therefore, the balance of convenience cannot be said to be in favor of FRL and not in favor of Amazon..

It would be a matter of judgment after the parties have presented their evidence or if any other competent forum decides to determine whether Amazon’s representation that the transaction between FRL and Reliance violates the FCPL SHA and FRL SHA would outweigh the FRL claim in the present suit. Also, should Amazon not be allowed to represent your case to legal / regulatory authorities, you will suffer an irreparable loss as Amazon also claims to have created preemptive rights in your favor should Indian law allow it in the future. Furthermore, there may not be an irreparable loss to FRL for the reason, even if Amazon makes a representation based on incorrect facts using illegal means, it will be up to the statutory authorities / regulators to apply their mind to the facts and legal issues therein and reach to the correct conclusion. There is yet another aspect as to why a provisional injunction cannot be granted in this application because both FRL and Amazon have already made their representations and counter-representations to the legal / regulatory authorities and it is now up to the Legal Authorities / regulators make a decision about it. Therefore, this Court concludes that no case of granting precautionary measures is in favor of the LRF and against Amazon “.

On Amazon’s challenge to the agreement before an Emergency Arbitrator appointed pursuant to the Rules of the Singapore International Arbitral Tribunal, the Emergency Arbitrator issued a court order on the deal earlier.
Future Retail claimed before the Delhi High Court that Amazon had written to the regulatory authorities, including the Competition Commission of India, SEBI, etc., mentioning that this order of the Emergency Arbitrator is ‘binding’ and therefore he was trying to block approvals of the Future-Reliance deal. .
Future Retail also claimed that, in the first place, it did not accept the Emergency Arbitrator’s order as binding and therefore there was no possibility of contesting it. FRL further stated that Amazon was “satisfied” with the deal with Future Coupons Pvt Ltd, as it had a call option in the deal, which Future Retail claimed would allow Amazon to enter the multi-brand retail sector if the Government of India allowed. at some point FDI in the sector.

FRL’s main case was that Amazon was not a party to its agreement with its own shareholders and Amazon was not its shareholder, it was simply a shareholder of FCPL and therefore could not deny FRL’s right to enter into an agreement with Reliance .

FCPL, for its part, was represented by Mr. Adv. Mukul Rohatgi, who argued that the arbitration was illegal as the Indian arbitration law had to apply to the case and any injunctive relief could only be obtained under Section 17 of the Arbitration Act. It agreed with FRL that the award was not binding or valid in the first place.

He prayed that the court would ignore the Emergency Award while deciding whether Amazon had the right to play with the FCPL-FRL merger and stated that it would deal with Amazon, on the issue of Amazon not exercising its option to purchase when the company was going under. , later in a timely arbitration.

He concluded by saying, “As of today, Amazon has no right to invest in FRL and if they cannot invest, they have no right to prevent Reliance from investing in us.”
Mr. Adv. Abhishek Singhvi, appearing at Reliance Retail and Reliance Retail & Fashion Lifestyle Ltd, stated that the Emergency Arbitrator award was a foreign concept to India and had no place in Indian law. Furthermore, that Emergency Arbitrator was not knowingly included in the Arbitration Law despite the recommendation of the 246th Report of the Law Commission and, therefore, this award approved by an Emergency Arbitrator could not be binding at all.
Amazon, represented by Mr. Adv. Gopal Subramanium, argued that most, if not all of the arguments presented by FRL, FCPL and Reliance had already been addressed by the Emergency Arbitrator. It also argued that Amazon had not in the least contradicted or intended to violate any Indian FDI policy, as, as FCPL is an Indian entity, money coming into FCPL’s FRL would not be considered FDI at all.

Furthermore, it had noted that since Amazon had a 49% stake in FCPL, which has a 9.82% stake in FRL, Amazon’s stake in FRL is effectively halved and would not cross the limit of the 10% imposed by India’s FDI policy in multi-brand retail sector.

It also argued that all FCPL and FRL Shareholders Agreements under the common Biyanis umbrella had already been made known to the ICC. Against the argument of the recommendation of the Law Commission, it responded that Judge Nariman had already indicated in a judgment of the Supreme Court that “the recommendations of a Report of the Law Commission should not prevent the court from interpreting the words, since that are capable of being interpreted “.

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