The Delhi High Court’s division bench on Monday stayed the single judge’s order passed on February 2, which had directed Future Group to maintain status quo till further orders with regard to its `24,713-crore deal with Reliance Retail wherein it has sold certain retail assets to the latter.
The division bench also rejected the request of the counsel of the party opposing the deal, Amazon, to keep the order in abeyance for a week so that it could explore alternative remedies.
The order comes as a big relief for Future as it can now go ahead with the formalities related to completing the transaction as the concerned regulatory authorities can go ahead and give their nod to the deal.
So far, the Competition Commission (CCI) and the Securities and Exchange Board of India (Sebi) have given their approval for the deal. The deal now requires the approval of the National Company Law Tribunal (NCLT), which was effectively stalled by the single judge’s February 2 order.
A division bench comprising Chief Justice DN Patel and Justice Jyoti Singh, while staying the single judge’s order, said Future Retail (FRL) was not a party to the arbitration agreement with Amazon. Prima facie, Amazon had no reason to seek a status quo order from the single judge when it was not interested in the deal and statutory authorities like Sebi and CCI could not be restrained from proceeding in accordance with law, Justice Patel said.
It also said the “group of companies” doctrine could not be invoked in the present case as the three agreements — Future Retail Shareholding Agreement, Future Coupons Pvt Ltd SHA and FCPL Share Subscription Agreement — were distinct in nature.
However, the bench said it was not inclined to adjudicate the case at this stage as the single judge was yet to pronounce its order. Besides, its Monday’s order shall not come in any way in the pronouncement of the order by the single judge, the division bench stated.
Hearings in the matter by the division bench would now commence from February 26.
The Future-Reliance deal has been objected to by Amazon which is seeking enforcement of an award by Singapore’s Emergency Arbitrator (EA) which has restrained Future Group from going ahead with the transaction. The single judge’s order had stated that EA had rightly passed the order and the same is enforceable in the same manner as that of an arbitrator. It had said it is of a clear view that the EA rightly proceeded against Future Retail and its award was not a nullity.
Following the order, Future Retail had last week moved the division bench challenging it.
Alleging that the single judge’s order will “jeopardise” the entire amalgamation scheme and will affect public at large, the Future group in its petition had stated that it would bring the merger scheme between FRL, Reliance Retail Ventures and Reliance Retail and Fashion Lifestyle to a standstill and will “effectively derail the entire scheme; much less when the scheme has been approved by statutory authorities in accordance with law”.