Kishore Biyani-led Future Retail Ltd (FRL) Thursday told the Delhi High Court that Amazon was not its shareholder and has no say in its affairs and the interim order passed by the Singapore International Arbitration Centre (SIAC) was of no value. The Future Group and Amazon have been locked in a battle after the US-based company took Future Retail Ltd into an emergency arbitration over alleged breach of contract. The SIAC on October 25 had passed an interim order in favour of Amazon barring Future Retail 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 market regulator SEBI, stock exchanges and Competition Commission of India (CCI), urging them to take into consideration the Singapore arbitrator’s interim decision as it is a binding order, FRL had told the high court. Justice Mukta Gupta was told by senior advocate Harish Salve, representing FRL, that the order of the Emergency Arbitrator was of no value and has no efficacy in law.
“I am entitled to ignore it. I am subject to Indian Courts. If a gentleman sitting in Singapore says something, I can bin that order. It is not to show any disrespect. I’m saying as a matter of law..”, Salve contended. He said Amazon only held shares in Future Coupons Ltd (FCL), a shareholder in Future Retail (FRL), and thus had no say in the affairs of FRL.
Amazon is not even a minority shareholder in Future Retail. How can there be rights conferred upon it, he submitted, adding that Amazon is asserting minority rights without holding even a single share in FRL. …thousands may lose jobs, FRL may go bankrupt but this great American giant should not be upset! Compare the figures invested by Amazon and what Reliance is offering. That is the amount needed to rescue FRL from bankruptcy, he said.
The submissions on behalf of FRL will continue on November 19. The court had on November 10 sought response of Amazon on FRL’s plea alleging that the e-commerce major was interfering in its Rs 24,713 crore deal with Reliance Retail on the basis of an interim order by a Singapore arbitrator. The court had also issued summons to Amazon, FCL and Reliance Retail Ltd (RRL) on the FRL suit and asked them to file their written statements within 30 days. It had said that the issue of maintainability of the suit, raised by Amazon, would be kept open.
FCL and its promoters had also supported FRL’s claims and contentions. All three — FRL, FCL and Reliance — contended that if Amazon’s claim — that it indirectly invested in FRL by investing in FCL — was accepted then it would amount to a violation of Indian foreign direct investment laws which permit only 10 per cent investment by a foreign entity in the multi-brand retail sector.
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They had also said that the group company concept cannot be applied in the instant case. Senior advocate Gopal Subramanium, who had appeared for Amazon, opposed FRL’s plea saying all the arguments raised here by it were made before the EA which considered and rejected them. He had said that FRL, being a company of the Future Group, would be governed by the arbitration agreement between FCL and Amazon. He had further argued that FCL has 9.82 per cent stake in FRL and since Amazon holds 49 per cent stake in FCL, the e-commerce major would only have half of the 9.82 per cent stake in its favour.
In August this year, Future had reached an agreement to sell its retail, wholesale, logistics and warehousing units to Reliance. As per the SIAC interim order, a three-member arbitration panel needs to be set up within 90 days (from the date of the judgement) with one judge each being appointed by Future and Amazon, along with a third neutral judge. On November 10, Amazon had told the court that it and FCL have appointed their respective arbitrators.