Companies

Delhi HC rejects Future’s plea to stay arbitration order

Our Bureau | | Updated on: Oct 29, 2021

FILE PHOTO: A man walks inside the Big Bazaar retail store in Mumbai, India, November 25, 2020. REUTERS/Niharika Kulkarni/File Photo | Photo Credit: NIHARIKA KULKARNI

Order comes on the back of Supreme Court's direction on September 9

The Delhi High Court, on Friday, rejected a plea by Future Retail to stay Singapore arbitration’s order that held that the Indian company is bound by the agreement it had signed with Amazon in 2019.

Future Retail has been arguing that it was not a party to this agreement that had specifically barred asset sale to certain entities, including Reliance. Amazon had claimed that the ₹25,000-crore deal between Future Retail and Reliance was in violation of an agreement done in August 2019 when the American online retailer had picked up 49 per cent stake in Future Coupons Ltd, which owns 7.3 per cent of Future Retail. That deal also gave Amazon roughly 3.6 per cent in Future Retail.

The American e-commerce player argued that the deal with Future Coupons is linked with the agreement with Future Retail. The Singapore International Arbitration Centre (SIAC) upheld Amazon’s view earlier this month. Future Retail had contested this decision and had sought a stay from the Delhi High Court. On Friday, Justice Suresh Kumar Kait who heard the matter asked Amazon to file its response before the next hearing on January 4.

Plea to hold meetings

Senior counsel, Harish Salve, appearing on behalf of Future group, appealed to the court to pass an interim order to give permission to proceed with shareholders’ and creditors’ meetings to seek their approval for the proposed asset sale by Future Retail to Reliance Retail.

The court, however, rejected this request in light of the Supreme Court's direction on September 9. The top court had ordered all concerned authorities, including Sebi, and NCLT, not to not pass any orders in matters connected to the dispute.

After facing an acute cash crunch post-Covid last year, the Kishore Biyani-owned Future Retail decided to sell its assets to Reliance Retail. The sale included the acquisition of the retail, wholesale, and logistics and warehousing business of Future Group for ₹24,713 crore.

This deal was contested by Amazon, which invested ₹1,400 crore in Future Retail’s sister concern Future Coupons Private Limited. The American e-commerce giant dragged the retail chain into arbitration at the Singapore International Arbitration Centre (SIAC) and got an interim stay from an Emergency Arbitrator.

This essentially barred Future Retail from taking any step to dispose off or encumber its assets or issuing any securities to secure any funding from a restricted party.

Amazon later moved the Indian courts to seek an enforcement order and cease Biyani’s assets as a penalty. The matter is now in the Supreme Court, putting a halt to all further proceedings

Published on October 29, 2021
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