The high court directed the Future Group and its directors to deposit Rs 20 lakh cost in Prime Minister's Relief Fund for providing COVID-19 vaccines to senior citizens of Below Poverty Line (BPL) category.
The Delhi High Court Thursday upheld the Singapore Emergency Arbitrator’s (EA) order restraining Future Retail Ltd (FRL) from going ahead with the Rs 24,713 crore deal with Reliance Retail to sell its business, which was objected to by US-based e-commerce giant Amazon.
Justice J R Midha directed Kishore Biyani-led FRL not to take further action on the deal with Reliance and held that the group willfully violated the EA’s order.
The high court rejected all the objections raised by Future Group and imposed a cost of Rs 20 lakh on it as well as its directors.
It directed them to deposit the amount in Prime Minister’s Relief Fund within two weeks for being used for providing COVID-19 vaccination to senior citizens of Below Poverty Line (BPL) category of Delhi.
The high court’s 134-page judgement came on Amazon’s plea seeking direction to order enforcement of the award by Singapore’s EA on October 25, 2020, restraining FRL from going ahead with its Rs 24,713 crore deal with Reliance Retail.
Future Group and Amazon have been locked in a battle after the US-based company took FRL into the emergency arbitration over alleged breach of a contract between them.
The court, which directed the presence of Biyani and others before it on April 28, also ordered attachment of their properties and asked them to file an affidavit detailing their assets as on today within one month.
It also asked them to show cause as to why they be not detained under civil prison for a term not exceeding 3 months for violating the emergency arbitrator’s order and file reply within two weeks.
The court, which listed the matter for April 28 for reporting compliance of its order, held that the EA is an arbitrator for all intents and purposes and he had rightly invoked the ‘Group of Companies’ doctrine in relation to the Future Group companies.
It said the respondents have raised a vague plea of nullity without substantiating the same and it was done to mislead this Court.
It also directed the Future Group to approach authorities for recalling the approvals granted for the FRL-Reliance deal and also asked them not to violate the EA’s October 25 last year order.
The high court also asked the Future Group to place on record the details of action taken by it in connection with the Reliance deal after the October 25, 2020 order.
Amazon, in its interim plea, sought to restrain FRL from taking any steps to complete the transaction with entities that are a part of the Mukesh Dhirubhai Ambani (MDA) Group.
Justice Midha had earlier, in an interim order, directed FRL to maintain status quo in relation to its deal with Reliance. However, it was stayed by the division bench of the high court.
Amazon challenged the division bench’s order before the Supreme Court where the plea is pending.
Amazon.com NV Investment Holdings LLC, in its plea before Justice Midha, has also sought detention of the Biyanis, directors of Future Coupons Pvt Ltd (FCPL) and FRL and other related parties in civil prison and attaching of their properties for alleged “wilful disobedience” of the emergency arbitrator’s order.
The high court, in its verdict, said Amazon invested Rs 1,431 crore solely on the basis of the protective rights of FCPL in FRL that the retail assets of FRL would not be alienated without the US-based company’s written consent and never to a ‘restricted person’.
“According to the petitioner (Amazon), the investment of Rs 1,431 crore is based on the primary inducement by the respondents (Future Group) that they would protect, implement and enforce the special and material rights provided by FRL to FCPL but for the aforesaid inducement, the petitioner would not have parted with such a substantial amount,” it said.
The court said the Future Group has violated the conditions and have breached the agreements but there is no remorse.
It noted that despite the restrain order of the EA, the Future Group was continuing with the violation and, therefore, Amazon has approached this court for enforcement of EA’s interim order.
“The intention of the respondents does not appear to be honest. The whole thrust of the respondents before this court is that the petitioner is a trillion dollar company and Rs 1,430 crore invested by them in the present case is peanuts for them and they should forget about this money as it is worth zero today,” the court said.
Amazon has also sought to restrain Future Group from taking any steps to transfer or dispose of FRL’s retail assets or the shares held in FRL by the Biyanis in any manner without prior written consent of Amazon.
The three domestic firms—FRL, FCPL and Reliance—however had 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.
In August last year, Future had reached an agreement to sell its retail, wholesale, logistics and warehousing units to Reliance.
The SIAC on October 25 last year, had passed an interim order in favour of Amazon barring FRL 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 SEBI, stock exchanges and Competition Commission of India, urging them to take into consideration the Singapore arbitrator’s interim decision as it is a binding order, FRL had earlier told the high court.