Future Retail on Monday moved the Delhi High Court seeking to declare the ongoing arbitration proceedings in Singapore with Amazon over its Rs 24,500-crore merger deal with Reliance Retail as “illegal” and “contrary to law”.
It argued that the 2019 deal by which the e-commerce firm acquired a 49% stake in Future Coupons (FCPL), and which formed the basis for it to assert its rights over Future Retail had been kept in abeyance by the Competition Commission of India (CCI) last month. Hence, Amazon can no longer object to its merger deal with Reliance Retail. Future Retail said “the continuation of the entire arbitration proceedings is a perpetuation of illegality in allowing Amazon to assert rights contrary to Indian law”.
After a three-hour long hearing, Justice Amit Bansal reserved the order and said the same will be pronounced on Tuesday at 4.30 pm.
As reported earlier, the CCI had on December 17 suspended its approval accorded more than two years ago to the e-commerce firm to acquire a 49% stake in Future Coupons (FCPL) following a review of allegations of concealment of information while seeking regulatory nod for the deal. The antitrust regulator had also imposed a `202-crore penalty, which Amazon is required to pay by mid-February.
Armed with CCI’s order that suspended its clearance given to the Amazon’s 2019 deal with Future, the latter had filed an application for termination of the arbitration proceedings before the Singapore International Arbitration Centre (SIAC). However, the tribunal on December 30 refused to consider the request before starting the final hearing on January 5, thus prompting the Future companies to move the HC to stay the proceedings.
“… the tribunal has now jettisoned the hearing of the applications to terminate the arbitrations, for reasons that would not bear scrutiny. This is the first element which creates serious prejudice to the Future Group, since it is now having to fight the case defending a claim for damages where the very basis of the legal relationship has been put under serious cloud by the findings of the CCI,” FRL said in its petition, adding that the schedule set down for hearing the cross-examination of the expert witnesses, set out by the tribunal from January 5 to 8 is “a complete travesty”.
“The CCI order destroys the agreement. If nothing under the agreement can go on, then no arbitration exists. How can we shut our eyes to it,” Future Retail lawyers argued before the HC.
Senior counsel Gopal Subramanium, appearing for Amazon, said that arbitration clauses and agreements are independent of the main contracts and “would not perish” simply because a regulatory approval had been suspended.
The two sides have been embroiled in a legal battle for more than a year now over Future Retail’s move to sell its retail assets to Reliance Retail for `24,500 crore.
Meanwhile FRL recently missed the due date for payment of
3,494.56 crore to banks and lenders as it could not sell assets due to its ongoing litigation with Amazon, impacting its monetisation plans. The company had last year entered into a one-time restructuring (OTR) scheme for Covid-19 hit companies with a consortium of banks and lenders and was to discharge “an aggregate amount of3,494.56 crore” on or before December 31, 2021.
Last month, Amazon had moved the HC challenging the probe initiated by the Enforcement Directorate (ED) into the deal. The company had termed the investigation a “fishing and roving” inquiry, adding that the ED had sought details information not connected with the Future Group deal.
In November, independent directors of FRL had alleged that Amazon had misled CCI as it was earlier in talks to invest directly in the retail company, but changed plans only after the government came up with the Press Note 2 rules that tightened norms for foreign e-commerce entities operating in India.