In a major setback for the Mukesh Amban-Kishore Biyani deal, the Delhi High Court on Thursday upheld the decision of a Singapore-based single judge arbitration panel, which had ruled against the Rs24,713-crore acquisition of Future Retail by Reliance Retail.
In his judgement, Justice JR Midha of the high court said that Future Retail, Future Coupons, Kishore Biyani and others violated the Emergency Award, and also questioned ‘why should they not be detained in prison,’ legal news platform Bar & Bench reported on Friday.
The high court asked Biyani’s Future Group to place on record any action taken by it in connection with the Reliance deal after 25 October 2020 and also directed the group to approach authorities to recall all approvals granted to the Future Retail-Reliance deal.
The single-judge bench of Justice JR Midha also slapped Rs20 lakh fine on the company.
The court held that the ‘Emergency Award’ passed against the deal in October 2020 was applicable under Indian law, and the Future Group was therefore liable for consequences under relevant sections of the Code of Civil Procedure.
Justice Midha issued a show-cause notice against respondents the promoters of the Future Group entities, the Biyanis as to why they should not be detained in a ‘civil prison’ for three months for violating the Emergency Arbitrator’s decision. The respondents have been asked to reply to the notice in two weeks.
Justice Midha said that the Future Group had “deliberately and willfully violated the interim order” and raised a vague plea of ‘nullity’ without substantiating it. The court also directed to attach the assets and properties of Future Retail, Future Coupons, Kishore Biyani, and others.
“The Emergency Arbitrator is an Arbitrator for all intents and purposes; order of the Emergency Arbitrator is an order under Section 17(1) and enforceable as an order of this Court under Section 17(2) of the Arbitration and Conciliation Act,” Justice Midha said.
The court also directed the Future Group to pay Rs 20 lakh to the Prime Minister Relief Fund within two weeks.
“The respondents have taken Rs1,431 crore from the petitioner solely on the basis of the rights provided by FRL [Future Retail] to FCPL [Future Coupons] that they would not transfer their retail assets without the prior consent of the petitioner [Amazon] and never to a Restrict Person. Admittedly, the respondents have breached the agreements,” Justice Midha held.
The case has been listed for hearing on 28 April, for reporting compliance.
A single-judge arbitrator in Singapore had ruled that Reliance Retail and Future Group should not proceed with the deal until it hears the matter. In its order, the panel had said that the deal between Future and Reliance violated Amazon’s contractual rights.
Amazon has been referring to a non-compete clause that it had with the Future Group which barred it from any deal with 30 companies, including RIL, without Amazon’s approval.
However, despite the outcome of the arbitration, India’s competition watchdog the Competition Commission of India had approved the deal in November 2020, which meant that Reliance taking over 1,800 stores of Big Bazaar, EasyDay, FBB and Food Hall, and the Rs19,000 crore debt and liabilities of the Future Group was legal.
In its response, Amazon had moved the Delhi High Court in January to get the emergency arbitration award recognised in India and a single-judge bench had then stayed the deal. However, the Future Group had since moved the Delhi High Court again where a division bench vacated the order passed by the single-judge bench.
Amazon then moved the Supreme Court challenging the High Court’s order where it got some relief when the top court allowed the National Company Law Tribunal or the NCLT to hear the case but not give its final order.