E-commerce giant Amazon on Friday succeeded in getting a Supreme Court verdict on its plea against the merger of Future Retails Ltd (FRL) of Kishore Biyani with Reliance Retail of Mukesh Ambani.
In a big win for Amazon against Ambani, a bench of Justices Rohinton Fali Nariman and Bhushan R Gavai trashed the Rs 24,731-crore ($3.4 billion) merger of the Future Group with the Reliance, holding as valid and enforceable an emergency order by a Singapore arbitrator in October that put the deal on hold after finding merit in Amazon's objections.
Justice Nariman, heading the bench, is finishing off the pending cases before his retirement on August 12. The bench had reserved the judgment on July 29. It halted the sale of indebted, cash-starved Future Retail Ltd to the Reliance Industries Ltd.
The Future Group was embroiled in a bitter legal fight with the American firm Amazon, which accused it of violating their pre-existing contracts in selling its assets to rival Reliance. Amazon had told the bench that it had invested in the Future Group of Biyanis in 2019 as partners as per certain agreements and so it cannot sell the business to Reliance without its approval. The US company had invested in Future Group, acquiring a 49% stake in Future Coupons Ltd that holds 9.82% in Future Retail. It cited the 2019 deal with a Future unit that says the Indian group can't sell its retail assets to anyone on a “restricted persons” list, including Reliance.
The verdict was keenly awaited since it deals with the legality of an emergency arbitration (EA) award of a foreign country in India since the term EA does not find place in the Indian Arbitration and Conciliation Act. It holds that the award is enforced under Section 17(2) of the Act, which provides that the arbitral tribunal may require a party to provide appropriate security in connection with an interim measure so ordered.
In its filing of the petition in the Supreme Court, Amazon had said that the company, which has committed $6.5 billion in investments in India, would face “irreparable harm” if the top court did not intervene. The legal fight was between two of the world's richest men -- Amazon's Jeff Bezos and Reliance's Mukesh Ambani.
The top court, which had earlier asked the National Company Law Tribunal (NCLT) not to pass the final order related to regulatory approvals for the Future-Reliance amalgamation, had commenced hearing the final arguments on July 20. Senior advocate Harish Salve, appearing for the Future, insisted that EA non-existent under the Indian Act “cannot be done by the process of construction”.
Salve was challenging a single-judge order of Delhi High Court on February 2, holding the EA award as valid. On February 8, the division bench of the High Court had stayed the single-judge direction to FRL and various statutory authorities to maintain the status quo on the mega deal.
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