In a significant win for Amazon.com Inc., the Delhi High Court has upheld the Emergency Arbitrator’s award that went in favour of U.S. e-commerce giant Amazon in its fight against Future Retail Ltd.
A single-judge bench of Justice JR Midha held that the order of the Emergency Arbitrator was valid and capable of being enforced under Indian law. It concluded that the respondents, Future Group entities and promoter Biyanis, who were made a party to the case, had willfully violated the Emergency Arbitrator’s order. Rejecting objections raised by Future Group entities, the court awarded costs against them of Rs 20 lakh.
It also passed the following directions:
- Assets of Future Retail, Future Coupons, Kishore Biyani and others to be attached.
- They have been directed to file details of their assets as on today within 30 days.
- A show-cause notice has been issued to Kishore Biyani and others.
- The court has asked them to show cause why they should not be detained in civil prison.
- The court has directed that no further action in violation of the Emergency Arbitrator’s order should be taken.
- The court has directed that competent authorities to be approached for recall of the orders passed on their applications in violation of the Emergency Arbitrator’s order.
- Kishore Biyani and others have been directed to be present before the court on the next date of hearing.
The next date of hearing is Apr. 28.
The respondents have taken Rs.1,431 crore from the petitioner solely on the basis of the rights provided by FRL to FCPL that they would not transfer their retail assets without the prior consent of the petitioner and never to a Restrict Person. Admittedly, the respondents have breached the agreements.Delhi High Court - Justice Midha Order
In October last year, the Emergency Arbitrator constituted under the Singapore International Arbitration Centre Rules, had passed an interim award in favour of Amazon. The Emergency Arbitrator had directed Future Retail to put on hold its transaction with Reliance Retail on grounds that it violated Amazon’s contractual rights borne out of an agreement to invest Rs 1,431 crore in Future Coupons Pvt. Ltd.
Subsequently, Amazon.com NV Investment Holdings LLC approached the Delhi High Court and sought the recognition and enforcement of the Emergency Arbitrator’s order under section 17(2) of the Arbitration and Conciliation Act, 1996. The provision allows a party to seek enforcement of an interim order passed by an arbitral tribunal in the same manner as it would for a court order.
The high court bench of Justice Midha heard the arguments and reserved its judgment last month. In the interim, it passed a status-quo order which put on hold the transaction between Reliance Retail Ltd. and Future Group.
This interim order was appealed in front of a division bench of the Delhi High Court headed by Chief Justice DN Patel which vacated the interim order of status quo.
The appeal against that order is currently pending in the Supreme Court.
Meanwhile, the scheme of arrangement between Reliance Retail and Future Group entities passed muster with Competition Commission of India, stock exchanges and Securities and Exchange Board of India, and has been filed with the National Company Law Tribunal.
Last month, the apex court directed the NCLT to continue hearing the case but not give a final nod till further orders. Future Group has sought NCLT’s nod to hold shareholders’ vote on consolidation of its entities—the first step in its ultimate sale to Reliance Retail.
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