Delhi HC order: setback for Future Group but bigger shake up for Amazon

In a ruling in which both sides can claim some relief and disappointment, the Delhi High Court on Monday rejected Future Group’s request that Amazon refrain from writing to regulatory authorities not to approve the former’s deal with Reliance Retail. However, the court order also said that the Future-Reliance Retail deal was in accordance with Indian law, dealing a blow to Amazon’s claim. What may be more damaging to Amazon is that the court also said that its agreement with the future coupons, prior to the agreement with Future-Reliance, is in the nature of control and therefore requires prior government approval in the absence of which violates FEMA. / FDI standards. The basis of Amazon’s complaint regarding the Reliance Retail deal was its previous deal with Future Coupons where it had veto power and if that is deemed illegal, it is surely a setback for the e-commerce firm, legal observers contend.

Amazon, which owns a 9.83% share capital in Future Retail, although it challenged the latter’s deal with Reliance Retail, argued that it has veto power over any sale of Future Coupons, in which it owns a 49% stake.

In summary, the tribunal has confirmed as legal the interim award of the Singapore International Arbitration Center in favor of Amazon. He also declared the Future-Reliance deal to be legal and left the final decision to regulatory authorities, before the deal is reviewed before final approval is given. Legal observers said that since the ruling is by a single judge, the parties will surely challenge it in divisional court as the next course of action.

“… both FRL (Future Retail) and Amazon have already made their representations and counter-representations to statutory authorities / regulators and it is now up to the statutory authorities / regulators to make a decision in this regard … Consequently, this application is deleted , rejecting the granting of an interim injunction as requested by FRL, however, legal / regulatory authorities must make the decision on requests / objections in accordance with the law, ”the court said.

“For two reasons, FRL has been able to distinguish a prima facie case of unlawful interference from Amazon. It is clarified that it is not the performance of the representation by Amazon before the statutory authorities or regulators, which is an actionable offense, but to make a representation based on incorrect statements that makes the act based on illegal means ”, says the order.

FRL had moved the HC which sought to prevent Amazon from approaching regulatory bodies to stop Future Group’s transaction with Reliance Retail. Future sold its retail assets to Reliance in August, but Amazon said the deal violated agreements Future made with the e-commerce firm in 2019.

The US-based company subsequently took FRL into emergency arbitration for alleged breach of contract. On October 25, the SIAC approved an interim order in favor of Amazon prohibiting FRL from taking any action to dispose of its assets or encumber them or issue securities to secure any financing from a restricted party. Subsequently, Amazon wrote to Sebi, the stock exchanges and CCI, urging them to consider the provisional decision of the Singapore arbitrator, as it is a binding order.

Meanwhile, the Competition Commission of India (ITC) approved the acquisition of Future Group’s retail, wholesale, logistics and warehousing businesses by Reliance Retail.

SIAC has rejected Future Group’s appeal against the provisional order and has started final hearings on the matter since December 4, after which it would approve the final order.