Amazon moves SC challenging Delhi HC order on Future-Reliance deal

The e-commerce giant has contended that the Division Bench order is illegal, and arbitrary apart from being without jurisdiction

E-commerce giant Amazon has moved the Supreme Court challenging the Delhi High Court order which had stayed the implementation of status quo direction passed by single-judge of the High Court with respect to the $3.4 billion Future-Reliance deal, according to the sources.

Jeff Bezos-led Amazon is locked in legal disputes with Kishore Biyani-headed Future. It has alleged that the retail conglomerate violated an agreement with the American e-commerce firm by agreeing to sell its assets to Mukesh Ambani-owned Reliance Industries last year. Future denies any wrongdoing.
 

The Delhi High Court on Monday had stayed its single-judge direction to Future Retail Ltd (FRL) and various statutory authorities to maintain the status quo with regard to the Rs 24,713-crore ($3.4 billion) deal with Reliance Retail in a setback for Amazon, which has challenged the transaction. Amazon has now filed the petition before the Supreme Court.
 

“Because the Impugned Interim Common Order passed by the Hon’ble High Court is illegal, and arbitrary apart from being without jurisdiction, therefore the same is liable to be set aside on this ground alone,” said Amazon in its Special Leave Petition before the Supreme Court and which has been seen by Business Standard.
 

The petition said the Hon’ble High Court has acted illegally and arbitrarily, firstly in failing to appreciate much less consider the oral submissions made by the Petitioner, and the catena (a series of things connected with each other) of judgments relied upon by the Petitioner. In taking upon itself to adjudicate the Appeal, even though it did not fall within the jurisdiction of the Hon’ble High Court, the petition said the Impugned Interim Common Order suffers from illegality and arbitrariness and is also against the principles of natural justice, equity and fair play.
 

Salman Waris, managing partner at technology law firm TechLegis Advocates and Solicitors said Amazon has now filed an appeal in the Supreme Court against Delhi High Court order passed earlier this week, revoking its previous order that effectively blocked the Future-Reliance deal. He said this was on the grounds that the latest order by the Delhi High Court court was “illegal” and “arbitrary” and it would face “irreparable harm” if the Supreme Court did not intervene.

Future group has reportedly already filed a caveat petition before the Supreme Court requesting it be heard if any plea is filed by Amazon.
 

The order under challenge and which lifted the status quo on the Future-Reliance deal was passed by a Division Bench of the High Court in an appeal filed by FRL against the court's order passed last week. It was related to protecting the rights of Amazon.
 

However, on Monday, the division Bench noted that FRL was not a party to an arbitration agreement with Amazon and prima facie the “group of companies” doctrine could not be invoked in the present case as the three agreements — Future Retail Shareholding Agreement (SHA), Future Coupons Pvt Ltd (FCPL) SHA, and FCPL Share Subscription Agreement — were distinct in nature. The court observed that there was no reason to seek a status quo order from the single judge. It stated that statutory authorities like the Securities and Exchange Board of India (Sebi) and the Competition Commission of India (CCI) could not be restrained from "proceeding in accordance with law".
 

“Amazon‘s main plea in its Supreme Court appeal is that the October 2020 Singapore Arbitration order that put the Future-Reliance deal on hold remains valid,” said Waris.

Amazon’s petition said the Division Bench failed to take note of the fact that repeated and brazen breaches of the EA (Emergency Arbitrator) Order were undertaken by all the Respondents. It said Respondents had persisted with the applications relating to the impugned transaction between FRL and entities of the Mukesh Dhirubhai Ambani Group (“Impugned Transaction”) and obtained approvals on “false representations” by repeatedly suggesting to the statutory authorities that the EA Order was worthless and had made false claims that the Suit Order had effaced the EA Order.
 

The petition said the Hon’ble High Court failed to appreciate the fact the FRL, by way of the Appeal has attempted to mount a collateral challenge to the EA Order. It submitted that the FRL has acted in complete disregard of the rule of law and procedure prescribed by law. It stated that the division Bench hastily proceeded to issue the Impugned Interim Common Order.
 

In August 2020, the Future group struck a $3.4-billion asset sale deal with RIL. Amazon then sent a legal notice to Future, alleging that the deal breached an agreement with the e-commerce firm.
 

In 2019, Amazon had acquired a 49 per cent stake in Future Coupons (FCPL), the promoter entity of FRL, for about Rs 1,500 crore. The deal specified any disputes would be arbitrated under the Singapore International Arbitration Centre (SIAC) rules.
 

Timeline:

• August 2019: Amazon acquires a 49% stake in Future Coupons, the promoter entity of Future Retail, for about Rs 1,500 crore.
• August 2020: Future group strikes a $3.4-billion asset sale deal with RIL.
• October 2020:  Amazon sends legal notice to Future, alleging breach of the agreement.
• October 2020: Amazon gets favourable ruling for its plea in Singapore International Arbitration Centre (SIAC) against the deal.
• November 2020: Future moves Delhi HC against Amazon, alleges interference by US firm in the deal with RIL.
• December 2020:  Delhi High Court refuses to restrain Amazon from interfering in Future Retail’s deal with Reliance by writing to statutory authorities.
• January 2021: Arbitration tribunal formed at the SIAC to look into the dispute.
• January 2021:  Delhi HC serves a notice on Future Retail (FRL), Reliance Retail, and the Biyanis, seeking their views on a plea by Amazon against some of the observations by a single judge Bench.
• January 2021: Amazon files a petition in the Delhi HC, asking for the detention of Future Group’s founder and his family members.
• February 2021: Delhi HC orders status quo on the deal
• February 2021: Setback for Amazon as Delhi HC lifts status quo on the deal.
• February 2021: Amazon moves SC challenging Delhi HC order that lifted status quo on the deal.