SUMMARY
Salve argued that as per the Companies Act 2013, entities with less than 10% shareholding cannot object to the scheme of arrangement
Former solicitor general says that Amazon is looking to hinder Reliance as it fears competition
Future Retail’s lawyer says his client wasn’t challenging the award by the Singapore emergency arbitrator
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Resuming after a Diwali break, fireworks continued in the Delhi high court on Thursday after it resumed hearing into the Future Group-Reliance Retail vs the Amazon case.
Kicking off his arguments on behalf of Future Retail, former solicitor general and senior advocate Harish Salve said Amazon wasn’t entitled to object to the deal because it didn’t have skin in the game.
Salve argued that as per the Companies Act 2013, entities with less than 10% shareholding cannot object to the scheme of arrangement.
Amazon doesn’t have a direct stake in Future Retail. It holds 49% in Future Coupons which in turn holds 9.8% in Future Retail. But it contends that the Indian group breached agreements, which forced the ecommerce giant to get an injunction from an emergency arbitrator in Singapore. The American behemoth bought a stake in Future Coupon in the process securing some rights, giving itself effective veto power over Future Retail.
In August this year, Future Group presented a scheme of arrangement which envisioned a slump sale of assets to Reliance for around INR 25,000 Cr.
A “passive holding of less than 10% does not entitle one to object to such schemes. Amazon is misrepresenting to the world that FRL (Future Retail) has flouted a dishonest agreement. Amazon has no rights over FRL and cannot control its board. FRL was free to act,” Salve stated.
He further argued that Amazon’s claims, if any, lie against the Biyanis and Future Coupons and through the current process is only Amazon looking to cause delays – which will hurt employees, public shareholders and stakeholders.
“Emergency arbitrator award is a piece of paper, nothing more, but Amazon is acting like the East India Company of 21st Century – their idea is that you either do business with me or shut down,” he said, and accused Amazon of “trying to kill competition.”
The Future Group employs 50,000 people and owes INR 18,000 Cr to financial institutions and INR 7,500 Cr to suppliers and vendors.
“This is an anti-competition move. Amazon is trying to show that it has the power to bring FRL to a grinding halt. Since competition law prevents companies from selling cheaply and running competition into the ground… once the competition is gone, you are free to act as per your whims,” Salve told the court.
He further said that Amazon is looking to hinder Reliance as it fears competition.
“In India, Reliance is a muscular company, it will give you a run for your money. What stops Reliance from launching its own digital marketplace? It will cause direct competition between Amazon and Reliance, Indian consumers will gain,” the eminent advocate said.
He asked the court to step in and set the tone. “I’m inviting the court to hold that the basic assertion that Amazon has rights in FRL is wrong. Please declare that my board is free to act. If Amazon has been backstabbed by Biyanis, let it act against them,” he reiterated.
He also noted that even though recommended, Emergency Arbitration has not yet been brought in Indian law. “It may be done tomorrow. The endeavour behind Arbitration Centres is to make it attractive for international arbitration. To say rules of Arbitration Centres should be read into Arbitration Law is too much,” he added.
“I have not come here challenging the award. This is also not a proceeding to enforce the award. Amazon is saying that it (the arbitration award) concludes the issue. I’m not saying anything,” Salve stated.
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