Reliance Deal: Delhi High Court rejects FRL plea for stay on tribunal order

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October 30, 2021 4:00 AM

Justice Suresh Kumar Kait, while seeking response of Amazon on FRL’s appeal against the Singapore International Arbitration Centre’s (SIAC) interim order, posted the matter for further hearing on January 4.

FRL further urged the HC to allow the company to conduct a meeting of shareholders and creditors for approval to sell its retail assets to Reliance Retail in accordance with the directions given by the National Company Law Tribunal, Mumbai, on September 28.FRL further urged the HC to allow the company to conduct a meeting of shareholders and creditors for approval to sell its retail assets to Reliance Retail in accordance with the directions given by the National Company Law Tribunal, Mumbai, on September 28.

The Delhi High Court on Friday dismissed Future Retail’s plea seeking a stay on the Singapore arbitration tribunal’s October 21 order that refused to allow Future Group to go ahead with its Rs 24,713-crore merger deal with Reliance Retail.

Justice Suresh Kumar Kait, while seeking response of Amazon on FRL’s appeal against the Singapore International Arbitration Centre’s (SIAC) interim order, posted the matter for further hearing on January 4.

Last week, dismissing Future’s plea to vacate the interim stay on its deal with Reliance Retail, SIAC also held that FRL is a party to the merger. Following the SIAC order, Future had moved the HC seeking a stay on the interim order and a nod to proceed with shareholders and creditors meet for its proposed asset sale to Reliance Retail, for which it has already got clearance from the NCLT.

Challenging the tribunal’s order, FRL in its fresh appeal stated that the arbitration tribunal had refused to “vacate its Emergency Arbitrator’s order, as a result of which, Future Group had been restrained from taking any steps, including filing or pursuing any application before regulatory bodies or agencies in India or requesting for approval at any company meeting, to complete a transaction involving a scheme of arrangement by which FRL and certain other companies are to be amalgamated with Future Enterprises (FEL) and subsequently a part of the business of FEL is to be sold by way of a slump sale to Reliance Retail Ventures and Reliance Retail and Fashion Lifestyle. The scheme was approved by the board of directors of FRL on August 29, 2019…”

Senior counsel Harish Salve, appearing for FRL, requested the HC to stay the SIAC’s preliminary findings which restrain FRL from acting in furtherance of its board resolution, from pursuing any applications before Indian regulators and from taking any steps to complete the scheme. He asked the HC to pass the order in line with the SC’s September order that directed the regulatory authorities, including Sebi, CCI and National Company Law Tribunal not to pass final orders on giving approval to the deal for four weeks. The SC had stayed all proceedings in the Delhi High Court for a period of four weeks related to the issue of enforcement of EA’s interim award which had restrained FRL from going ahead with its deal with Reliance.

FRL further urged the HC to allow the company to conduct a meeting of shareholders and creditors for approval to sell its retail assets to Reliance Retail in accordance with the directions given by the National Company Law Tribunal, Mumbai, on September 28.

It told the HC that while Amazon is making “song and dance about the Rs 1,400 crore invested years ago,” the proposed deal with Reliance Group is of around Rs 26,000 crore. He argued that the company can’t be expected to remain at the mercy of American companies to survive, when it is already trying to conduct a deal as per law.

The single judge, however, said it is unable to pass an interim order as the matter is pending before the Supreme Court and he would need a clearance before passing any stay order.

The spat between Future Group and Amazon has been on since October 25, 2020 when the Singapore’s EA passed an interim order restraining FRL from going ahead with its deal with Reliance Retail. Amazon, which had acquired an indirect minority stake in Future Group in 2019, has alleged that Future’s sale of its retail, wholesale, logistics and warehousing businesses to Reliance Retail breached its pre-existing contract, which included a right of the first offer and a non-compete clause.

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