The Delhi High Court rejected Future Retail Ltd.’s request that Amazon.com Inc. should be prevented from writing to legal authorities. Statutory authorities and regulators must decide in accordance with the law, the higher court said.
Future Retail, led by Kishore Biyani, had approached the court to direct the US online retailer to refrain from interfering with the approval process of the 27,513 crore deal between Future Retail and Reliance Retail Ventures Ltd., led by Mukesh Ambani.
Amazon, which invested in Future Coupons Pvt. Ltd, a Future Retail developer company, had won a temporary stay in October in the Future Group-Reliance Retail deal. This was an interim order approved by the Emergency Arbitrator of the Singapore International Arbitration Center.
Post this, Amazon had written to the market regulator and exchanges to consider the interim order while it reviewed the outline of the deal and the deal with Reliance Retail.
The two Future Group companies later moved to Delhi High Court to prevent Amazon from writing to statutory authorities against granting approval to the transaction.
Amazon may suffer irreparable loss, says Delhi High Court
The higher court noted that Future Retail and Amazon have already made their representations and counter-representations to statutory authorities / regulators. And now it is up to these authorities to make their decision.
In its order, the court said, there needs to be a trinity of principles – prima facie case, irreparable loss and balance of convenience – to grant relief from an interim injunction. It rejected Future Retail’s request for this relief for the following reasons:
‘No Amazon Claim Lies Against Future Retail’
Future Retail in this case was represented by Senior Counsel and former Attorney General Harish Salve, as well as Senior Counsel and former Attorney General Mukul Rohatgi, who argued extensively on three main points;
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Indian arbitration law does not recognize the orders of an emergency arbitrator
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Amazon cannot claim investor protection rights against Future Retail
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No contract can prevent the directors of Future Retail from fulfilling their fiduciary obligations.
Future Retail’s lawyers called for the emergency arbitrator’s order, which suspended the deal between Future Retail and Reliance, a role that was not recognized under Indian law.
Lead attorney Mukul Rohatgi told the court that the order was not proven in any judicial forum and was a total nullity.
In any event, Future Retail argued that Amazon had invested in Future Coupons and Future Retail (the company that makes the Reliance deal) has no contractual obligation to Amazon as that would be a violation of India’s FDI policy.
Future Retail told the court that the agreement between these two parties (FCPL and Amazon) cannot dilute the fiduciary duties of the directors of Future Retail who took all measures, in this case a scheme in accordance with Reliance Retail, to save the company that was sinking. The promoters of Future Retail, Salve argued, had the right to update the list of a restricted person with whom the company could transact and Amazon had no role in that.
The hearing also compared Amazon’s shares with those of the East India Company, which was trying to further its illegitimate interests.
Please don’t let this American giant kill Future Group just to further its illegitimate interest in ensuring that Reliance doesn’t get into its hands. That’s their game plan: if I can’t get it, let Reliance not get it. too, ” Harish Salve asked the court.
‘We are not an East Indian company’: Amazon
Arguments in favor of Amazon were presented by lead attorney and former attorney general Gopal Subramanian.
Subramanian defended the emergency arbitrator’s interim award, arguing that the concept is well recognized in Indian law, as the Delhi, Mumbai and Madras arbitration center rules also have provisions for emergency arbitrators.
In this case, both parties agreed to follow the rules of the Singapore International Arbitration Center that make the emergency award final and binding, Subramanian argued.
Subramanian also argued that Future Coupon’s shareholders agreement had specified that Future Coupons cannot transfer or encumber its securities in Future Retail Ltd without the mutual written consent of Future Coupons and its existing shareholders.
Therefore, there was nothing wrong with Amazon writing to authorities to draw their attention to the award, Amazon argued, adding that the emergency arbitrator’s interim order is equal to a court order under Section 17. of the Indian arbitration law. .
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