On Tuesday Supreme Court commenced hearings on amazon’s pleas aga the amalgamation. Amazon told the Supreme Court that Singapore’s Emergency Arbitrator (EA) award, restraining Future Retail Ltd (FRL) from going ahead with its Rs 24,713 crore merger deal with Reliance Retail, is ‘valid’ and needs to be executed.
The plea was heard by a two-judge bench and Supreme Court arguments from senior advocate Gopal Subramaniam was appearing for Amazon.com Investments Holdings LLC. Mr. Subramaniam apprised record of the facts and legal proceedings so far in the case
Amazon said that the single-judge bench of the Delhi high court rightly given interim order and its favor granting a stay on the ongoing amalgamation and that the Singapore international arbitration center was enforceable.
Subramaniam 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.
Supreme Court to commence hearing on the pleas on next Tuesday.
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.
What has happened earlier?
The Supreme Court, in its interim order, had asked the national company law tribunal not to pass the final order on the amalgamation, on February 22.
The future group had moved the tribunal to seek regulatory approval regarding their Rs24713 crore deal with reliance.
“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.”
Reliance, in August 2020, made the deal with the Future Group to buy by all its retail, wholesale, logistics, and warehousing units.
Then, Amazon took FRL into EA before the SIAC over the alleged breach of contract by the Future group.
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 did not stay 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 a suit for the enforcement of the EA award.
FRL moved to 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, 2020, 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.