SC stalls Future Retail deal with Reliance; Group stocks tumble up to 16%

Shares of Future Retail tanked 10 per cent to hit a low of Rs 52.55 on the BSE in intra-day session on Friday after the Supreme Court ruled in favour of Amazon in its tussle with the company.

The apex court allowed the appeal filed by Amazon against a Delhi High Court order staying attachment of properties of Future Group companies and Kishore Biyani in relation to the Rs 24,713-crore Future-Reliance deal. This came as a big boost to Amazon.

Amazon and Future had been locked in legal battles over the deal, with the US-based firm accusing the Future Group of violating pre-existing contracts when it sold its assets to rival Reliance Industries. Future Group, however, has denied any wrongdoing.

The Bench of Justices Rohinton Fali Nariman and BR Gavai held that the order of an emergency arbitrator is enforceable in India, under Section 17(2) of the Arbitration Act. "We have framed two questions and answered them as Emergency Arbitrator's award holds good and can be enforced under Section 17(2). The appeal is allowed," Justice Nariman said reading out the judgment, according to law platform Bar & Bench.

A Division Bench of the Delhi High Court had stayed an order passed by the single judge. The single judge order of the high court had upheld the award of an emergency arbitrator, directed attachment of the properties and restrained Future Retail Limited from going ahead with the Rs 24,713 crore merger with Reliance Retail, according to Bar & Bench.

This order was subsequently stayed by a Division Bench, prompting the appeal by Amazon. READ HERE

Following this development, shares of Reliance Industries also took a hit. The scrip tanked 2.53 per cent to Rs 2079.20 on the BSE. At 11.44 am, the stock was down 2.4 per cent at Rs 1,082 while the BSE barometer Sensex was trading 0.41 per cent lower at 54,271.

The stocks of other Future Group companies also took a hit. Future Enterprises, Future Supply Chain Solutions and Future Lifestyle Fashions were locked in 10 per cent lower circuits on BSE. Future Consumer stock, meanwhile, tanked 16 per cent to Rs 6.66 at the same time.

On July 29, the Supreme Court had reserved its judgment in Amazon’s appeal against a Delhi High Court order staying a previous order directing the attachment of properties of Future Group companies and Kishore Biyani in relation to the Future-Reliance deal.

Earlier, the Supreme Court had on February 22 barred a final ruling by a tribunal reviewing Future Group’s $3.4-billion sale of retail assets until the Court heard objections from Amazon.