Future Group companies on Monday moved the Delhi High Court seeking a direction to the arbitration tribunal, which is adjudicating Amazon’s objections against their deal with Reliance, to decide their application seeking termination of arbitral proceedings before moving any further.
Justice Amit Bansal said he would pass an order on petitions by Future Coupons Pvt Ltd (FCPL) and Future Retail Ltd (FRL) on Tuesday and refused to interfere with a case management hearing in the matter which was scheduled for later in the day.
“Arguments heard. List for pronouncement at 4:30 tomorrow,” said the judge.
Amazon and Future have been locked in a bitter legal tussle after the US e-commerce giant dragged Future Group to arbitration at the Singapore International Arbitration Centre (SIAC) in October 2020, arguing that FRL had violated their contract by entering into the deal for the sale of its assets to billionaire Mukesh Ambani’s Reliance Retail on a slump sale basis for Rs 24,500 crore.
Senior advocate Mukul Rohatgi, appearing for FCPL, argued before the high court that a three-member arbitration tribunal was acting perversely by not deciding the issue of termination of the ongoing arbitration on a priority basis.
He argued that the ongoing proceedings were a “pursuit in illegality” and ought to be terminated in view of the anti-trust regulator holding that the approval granted to Amazon for its agreement with FCPL, which formed the basis of the arbitration, was facilitated by fraud.
The senior lawyer informed the court that in December last year, the Competition Commission of India (CCI) suspended its more than two-year-old approval for Amazon’s deal to acquire a 49 per cent stake in FCPL, FRL’s promoter, and also imposed a Rs 202 crore penalty on the e-commerce major for “fraudulent misrepresentation”.
He claimed that since the agreement between FCPL and Amazon ceased to have any legal effect due to the CCI order, nothing survived in the arbitration proceedings.
“I am not asking for injunctive relief or saying that you decide the future of the arbitration (proceedings). There is a Section 32 (of Arbitration Act) application before the tribunal … I want the tribunal to decide it. The tribunal is not deciding it. They are putting the cart before the horse,” senior lawyer Rohatgi stated.
“I can’t be asked to go into the merit of the case (when I’m seeking the termination of proceedings). I want the court to compel the tribunal to decide the application at the earliest,” he added.
Senior advocate Harish Salve, appearing for FRL, submitted that the tribunal, which is scheduled to hear issues concerning damages from January 5-7, should instead first take up the termination application and defer proceedings on other issues.
He also claimed that the arbitral tribunal has shown “scant regard to Indian law” and highlighted that half of the legal team was down with COVID-19.
Senior advocates Gopal Subramanium and Amit Sibal, appearing for Amazon, argued that there was no denial of equal treatment by the tribunal which has scheduled the termination application for hearing on January 8 and contended that the tribunal has the discretion to conduct its own proceedings.
The senior lawyers explained that the majority of proceedings were over and the dates of January 5-7 were fixed in October last year after keeping in mind the availability of experts who are expected to join the proceedings.
Subramanium said that an arbitration clause does not perish even if the main agreement perishes and informed the court that a complaint to CCI with regard to grant of approval was made by FCPL itself.
Amazon is objecting to the sell-off plans, accusing Future Group of breaching its 2019 investment pact. Future Coupons was founded in 2008 and is engaged in the business of marketing and distribution of gift cards, loyalty cards, and other reward programmes to corporate customers.
In October last year, the high court had refused to stay the arbitration tribunal order refusing to interfere with the Emergency Award (EA) which restrained Future Group from going ahead the deal with Reliance.
Several issues arising from the Amazon-Future legal battle are pending before the Supreme Court.