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Future-Reliance deal: Singapore EA award valid, needs to be executed, Amazon tells SC

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Singapore’s Emergency Arbitrator (EA) award, restraining Future Retail (FRL) from going ahead with its Rs 24,713 crore merger deal with Reliance Retail, is “valid” and needs to be executed, Amazon on Tuesday told the Supreme Court which commenced hearings on its pleas against the amalgamation. A bench comprising justices R F Nariman and B R Gavai started hearing the arguments from senior advocate Gopal Subramanium, appearing for Amazon.com NV Investment Holdings LLC, who apprised the apex court of the facts and legal proceedings so far in the case.

The US-based e-commerce giant said the EA award of Singapore International Arbitration Centre (SIAC) was enforceable and the single-judge bench of the Delhi High Court rightly gave an interim order in its favour granting a stay on the ongoing amalgamation.

Subramanium said a division bench of the high court erred in entertaining the Future group’s appeal and granting it relief by paving the way for the deal.

Assailing the order, the senior counsel for Amazon said, “the emergency arbitrator (EA) is not a ‘coram non judice’ (not before a judge)” and hence the award of EA is enforceable and the high court under a provision of the Arbitration and Conciliation Act has to act to execute it and not sit in appeal against the interim award.

The top court would recommence hearing on the pleas either on Thursday or next Tuesday.

On February 22, in its interim order the apex court had asked the National Company Law Tribunal (NCLT) not to pass the final order on the amalgamation.

The Future group had moved the tribunal seeking regulatory approvals to the Rs 24,713 crore deal with Reliance.

Amazon moved the top court against the order of the Delhi High Court division bench which paved the way for the Reliance-FRL deal.

On February 8, the division bench had stayed the single-judge direction to FRL and various statutory authorities to maintain the status quo on the mega deal.

The interim direction was passed on FRL’s appeal challenging the February 2 order of the single judge.

In August last year, the Future group had reached an agreement to sell its retail, wholesale, logistics, and warehousing units to Reliance.

Subsequently, Amazon took FRL into EA before the SIAC over alleged breach of contract by the Future group.

Amazon had first filed a plea before the high court (single judge) for enforcement of the October 25, 2020, EA award by SIAC restraining FRL from going ahead with the deal with Reliance Retail.

The high court division bench had however said that it was staying the single-judge order as FRL was not a party to the share subscription agreement (SSA) between Amazon and Future Coupons Pvt Ltd (FCPL) and the US e-commerce giant was not a party to the deal for amalgamation between FRL and Reliance Retail.

It had further said it was of the prima facie view that the shareholding agreement (SHA) between FRL and FCPL, the SSA between FCPL and Amazon, and the deal between FRL and Reliance Retail “are different” and “therefore, the group of companies doctrine cannot be invoked”.

Another reason given by the court for its interim order was that there was prima facie no reason to seek a status quo order before the single judge.

The high court had said there were a lot of contentious issues involved in the matter and it was not going to adjudicate on them at this stage.

It had also said that its observations were only prima facie and the single judge ought not to be influenced by them when pronouncing the order on Amazon’s plea for enforcement of the EA award by SIAC restraining FRL from going ahead with the deal.

FRL, in its appeal, had claimed that if the February 2 order was not stayed it “would be an absolute disaster” for it as the proceedings before the NCLT for approving the amalgamation scheme have been put on hold.

It had contended that the single judge’s status quo order will effectively derail the entire scheme which has been approved by statutory authorities in accordance with the law.

In its suit before the single judge for enforcing the EA award, Amazon has 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.

Amazon has also sought detention of the Biyanis, directors of FCPL and FRL and other related parties in civil prison and attaching of their properties for alleged “wilful disobedience” of the EA order.

After the SIAC’s EA order, Amazon wrote to the Securities and Exchange Board of India (Sebi), stock exchanges and CCI, urging them to take into consideration the arbitrator’s interim decision as it is a binding order.

FRL thereafter moved the high court to restrain Amazon from writing to Sebi, CCI, and other regulators about SIAC’s order, saying it amounts to interfering with the agreement with Reliance.

A single judge on December 21 last year had on FRL’s plea passed an interim order allowing Amazon to write to the statutory authorities, but also observed that prima facie it appeared the US e-commerce giant’s attempt to control Future Retail was violative of FEMA and FDI rules.

Against the observation, Amazon moved an appeal before a division bench and during its pendency, it filed the suit for the enforcement of the EA award.

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