Delhi HC upholds the Emergency Award passed against Future-Reliance deal

The Delhi High Court stopped Future Group from going ahead with the sale of its retail assets to Retail, upholding Amazon’s argument that the Emergency Award of the Singapore International Arbitration Centre (SIAC) should be adhered to.

The single-judge bench also asked why Future Group founder Kishore Biyani and others shouldn’t be sent to civil prison, imposed costs of Rs 20 lakh on Future Group and told the latter to approach the authorities to recall all approvals granted to the Future-Reliance deal.

The court held that Future Retail Ltd (FRL), Future Coupons Pvt Ltd (FCPL), Kishore Biyani and others were in violation of the October SIAC Emergency Award that had halted the Future-Reliance transaction until the arbitration was completed. The court was hearing Amazon’s plea seeking a direction to order the enforcement of the SIAC ruling.

Future Group had announced in August last year that Reliance Retail Ventures Ltd (RRVL) would acquire its retail assets on a slump-sale basis for about Rs 25,000 crore. Amazon, which owns a 49% stake in Future Coupons, a Future Group holding company, objected to the deal.


Next Hearing in April

Amazon said Future Group had breached a contract that gave the ecommerce giant right of first refusal and barred a sale to entities including Reliance.

Future Group and Amazon didn’t respond to queries.

Lawyers for Future Group and Reliance Retail had argued that the SIAC doesn’t have jurisdiction and that the interim ruling wasn’t valid in India. However, justice JR Midha rejected the argument.

“The respondents have pleaded the interim order to be nullity without pleading the law on nullity; what are the essential ingredients of law on nullity and how the essential ingredients of the law on nullity are satisfied in the present case,” read the court’s order. “At the outset, this court finds the submission to be vague and unsubstantiated.”

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The court also issued a show-cause notice to Biyani and others, asking why they should not be detained in civil prison and directed them to file affidavits detailing their assets. He also directed Biyani and others to be present before the court at the next hearing in April. The Rs 20 lakh costs are to be deposited with the Prime Minister’s Relief Fund, the judge said.

Amazon had taken its ongoing legal tussle with Future Group to the Supreme Court last month, seeking to restore justice Midha’s interim order that had put the deal on hold and was subsequently quashed by a division bench of the Delhi High Court on February 8.

The Supreme Court appeal is among several cases filed by both sides over the past few months. The Supreme Court had directed Midha to deliver a judgment independent of the other cases. The Supreme Court had on February 22 sought a response from Future Retail Limited (FRL) in a plea by Amazon Investment Holdings challenging the Delhi High Court order that had stayed the implementation of status quo direction issued by the single judge. The next Supreme Court hearing will be in April.

“The genesis of the special leave petition before the Supreme Court was an interim order passed by the single judge of the Delhi High Court. If a final order is passed in a matter in which the interim order has been appealed against, the Supreme Court is bound to take into consideration the final order passed by the high court. This is certainly a material change in circumstances,” said Ashish K Singh, managing partner of Capstone Legal. “If the emergency SIAC award has been deemed to be enforceable by the Delhi High Court, then it would mean that the parties will have to wait for the final outcome of the arbitration, which is scheduled to commence in the coming months, before proceeding forward with the transaction.”

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