No interim relief for Future Group, statutory authorities to decide approval as per law

A single bench judge of Justice Mukta Gupta refused to grant any interim reliefs on Future Group plea asking it to direct Amazon not to write to statutory authorities. The Court held as “not void” FRL board resolution approving Reliance Industries Ltd’s deal worth nearly Rs 24,000 crore, and said that statutory authorities would decide approval on the deal as per law.

It held that the Emergency Arbitrator was not quorum judice but has held the award to be valid. The Court was hearing FRL’s challenge to Amazon Inc. seeking to stall the deal by writing to various authorities, including the Competition Commission of India, Securities Exchange Board of India, etc. with an Emergency Arbitrator award which was passed by an arbitral tribunal in Singapore in Amazon’s favor.

Future Retail claimed that Amazon had written to regulatory authorities, and said that the order by the Emergency Arbitrator is ‘binding’ and was thereby, trying to hinder approvals to the Future-Reliance deal. FRL also submitted that it did not accept the order by the Emergency Arbitrator as binding at all in the first place, and therefore there was no question of challenging it. It submitted that Amazon was ‘content’ with the arrangement with Future Coupons Pvt Ltd as it had a call option in the agreement, which Future Retail claimed would allow Amazon into the multi-brand retail sector if the Government of India at some point allowed FDI in the sector.

FRL argued that Amazon was not party to its agreement with its own stakeholders, and Amazon was not its shareholder. The global e-commerce giant was merely a shareholder of FCPL, and therefore, it could not deny FRL’s right to enter into an agreement with Reliance.

Also Read: Future Group restrained from furtherance of transaction with Reliance Retail

Sr. Adv. Mukul Rohatgi, representing FCPL, pleaded that the arbitration was illegal as Indian arbitration law was to apply to the case and any injunction relief could be obtained under Section 17 of the Arbitration Act only. He agreed with FRL that the award was not binding or valid in the first place. Rohatgi said, “As of today, Amazon has no right to invest in FRL, and if they can’t invest they have no right to stop Reliance from investing in us.”

Sr. Adv. Gopal Subramanium, representing Amazon, argued that most, if not all the arguments presented by FRL, FCPL and Reliance had already been dealt with by the Emergency Arbitrator. He submitted that Amazon had not in the least contradicted or intended to violate any FDI policy of India’s as, FCPL being an Indian entity, money coming into FRL from FCPL would not be considered as FDI at all. Subramanium also pointed out that Amazon had 49 per cent stake in FCPL, which has 9.82 per cent shares in FRL. As such, Amazon’s stake in FRL becomes half effectively and would not cross the 10 per cent limit imposed by India’s FDI policy in multi-brand retail sector.