Delhi HC bans Reliance deal

In a major victory for US-based e-start giant Amazon, the Delhi High Court on Thursday ruled that Kishore Biyani, including Future Retail Limited (FRL) and its promoters, “knowingly and willfully” ordered an emergency arbitrator (EA) Violated FRL by pursuing deal with Reliance Retail for sale of its property.

Noting that the intent of FRL and its promoters “does not appear to be honest”, the High Court directed attachment of assets of Future Coupons Private Limited (FCL), FRL, Mr. Biyani and 10 other promoters.

Justice JR Midha directed Mr. Biyani and other promoters to appear before the court on the next date of hearing on 28 April. It issued show cause notices to all the promoters “Show cause why they have not been kept in civil custody? Jailed for a period of more than three months for violation of the order of the Emergency Arbitrator.

The High Court also imposed a cost of ₹ 20 lakh on the Future Group which would be deposited in the Prime Minister’s Relief Fund for providing COVID-19 vaccines to below poverty line (BPL) category seniors.

It directed Future Group not to take any further action in violation of the interim order passed by the emergency arbitrator at the Singapore International Arbitration Center (SIAC) on October 25, 2020. The High Court order came on the petition of Amazon, which is 49% stake in FCL, seeking enforcement of the EA award.

Amazon claimed that it had invested ₹ 1,43l crore in FCL, with a clear understanding that FRL would be the sole vehicle for its retail business and that its retail assets would not be displaced without its consent and that of Mukesh Never to a restricted person. Dhirubhai Ambani (MDA) Group.

Amazon said the FRL had taken several steps to move the retail property to the Restricted Person, MDA Group, in violation of the EA’s order and the firm was continuing with it.

‘Broken agreement’

“The respondents (Future Group) have violated the agreements. However, there are no regrets. The intention of the respondents does not appear to be honest, ”the High Court remarked.

The FRL, which holds 9.82% in the FRL, has objected to the enforcement of the EA award on various grounds, including that the EA is not an arbitrator or arbitral tribunal. The High Court declined, stating, “The interim order of October 25, 2020 is legal, valid and enforceable as a court order”.

FRL had also argued that Reliance is acquiring the logistics and warehousing business from the retail and wholesale businesses as well as the Future Group, as sales are declining to consider a lumpsum agreement of ₹ 24,713 crore. The High Court, however, rejected FRL’s argument that if the scheme collapsed, it was inevitable that FRL would go into liquidation.