In a big win for the US-based ecommerce giant Amazon, the Delhi High Court, on Thursday, upheld the emergency award passed by the Singapore International Arbitration Centre (SIAC) in October last year against the deal for the sale of Future Retail to Reliance Retail.
The court, while rejecting Future Group’s argument that SIAC’s decision was legally invalid, imposed a cost of INR 20 lakh on Future, to be deposited with the Prime Minister’s Relief Fund.
While pronouncing its verdict, the court observed that Future Retail, Future Coupons and Kishore Biyani had violated the emergency award, and issued a show-cause notice to Future Group founder Biyani and the company’s other promoters, also asking why they should not be detained in civil prison.
The next date of hearing in the matter is April 28, 2020.
Hours before the Delhi HC ruling, source-based media reports had suggested that Future Group had approached SIAC, urging it to review its October ruling and exclude Future Retail from the scope of the order.
In August last year, Reliance and Future had signed a deal, whereby the former would acquire Future’s retail and other businesses for over INR 24K Cr.
Later, Amazon objected to the deal and served Future a legal notice. It argued that by agreeing to the sale of its business to Reliance, Future was violating the non-compete clause in its contract with Amazon.
Amazon, which in 2019 had bought a 49% stake in Future Coupons, the promoter-entity of Future Retail, has contended that according to its contract with Future, the sale of the business to certain companies, including Reliance is barred.
In October last year, SIAC had ordered to put the INR 24,713 Cr Reliance-Future deal on hold in response to arbitration proceedings initiated by Amazon.
The major focus of Amazon’s arguments against the deal in Indian courts has been that the SIAC order is binding on Future Group.
In January, Future Group founder Kishore Biyani had said that the Reliance deal was a saviour for the company, its employees and stakeholders. He accused Amazon of leaving Future Group in a lurch. Biyani added that Future Group had reached out to Amazon eight times in the past few months seeking financial help, but no support was provided.
Previously, legal experts have told Inc42 that of late, Indian courts have held that SIAC’s decisions are applicable in the Indian scenario as well.
“In an earlier judgement in 2016 — Raffles Design International India Private Limited ANR vs Educomp Professional Education Limited & ORS, the Delhi High Court had held that SIAC’s decisions aren’t enforceable under India law. However, in Steer Engineering Private Limited vs GlaxoSmithKline Consumer Healthcare decided by the Delhi High Court in 2019, the court chose to respect the decision of SIAC. I believe that the 2019 case would serve as a precedent and that the court would uphold the decision of the Singapore-based arbitration panel,” Manoj K Singh, founding partner of New Delhi-headquartered law firm Singh and Associates, had said in October 2020.