Delhi HC Issues Notice, Seeks Amazon's Reply On Future Groups's Plea Seeking Injunction On Amazon's 'Interference' In Deal With Reliance Retail

The single judge bench of Justice Mukta Gupta, after hearing Future Retail, Reliance and Amazon Inc issued summons to Amazon Inc subject to the question of maintainability of the suit, directed the parties to file their replies within 30 days and replication within 3 weeks.

The court also said that it would continue hearing Sr. Adv. Gopal Subramanium, appearing for Amazon Inc, on the case tomorrow.

The case relates to a deal between Reliance-Future Retail under which, Future Retail was to sell its retail, wholesale, logistics and warehousing units to Reliance Retail and Fashion Lifestyle Ltd – a wholly owned subsidiary of Reliance Retail Ventures Ltd.

On Amazon's challenge to the deal before an Emergency Arbitrator appointed under the Singapore International Arbitral Tribunal Rules, an injunction was awarded on the deal by the Emergency Arbitrator earlier.

Future Retail claimed before the Delhi High Court today that Amazon has been writing to regulatory authorities including the Competition Commission of India, SEBI, etc mentioning that this order by the Emergency Arbitrator is 'binding' and is thereby trying to hinder approvals to the Future-Reliance deal.

Future Retail submitted before the court that it did not accept the order by the Emergency Arbitrator as binding at all in the first place and therefore there was no question of challenging it. FRL also submitted that Amazon was "content" with the arrangement with Future Coupons Pvt Ltd as it had a call option in the agreement, which Future Retail claimed would allow Amazon into the multi-brand retail sector if the Government of India at some point allowed FDI in the sector.

FRL also argued that Amazon was not a party to its agreement with its own shareholders, and Amazon was not its shareholder – it was merely a shareholder of FCPL, and therefore, it could not deny FRL's right to enter into an agreement with Reliance.

Sr. Adv. Harish Salve appearing for FRL also submitted that in the agreement between FCPL and FRL was the existing shareholders and FCPL jointly warranted that they were recording their inter se obligations and rights.

Salve asserted that FRL has no relationship with Amazon, because if it does, it has violated the law and emphasized that the balance of inconvenience was in its favour because if the deal with Reliance wasn't allowed to go through, it would be "the end of the game" for FRL.

On a concluding note, Salve submitted, "Please do not allow this American giant to kill Future group, that's its game - that if I can't get it, let Reliance not get it too."

Sr. Adv. Mukul Rohatgi appearing for FCPL and others pleaded that the arbitration was illegal as Indian arbitration law was to apply to the case and any injunctive relief could be obtained under Section 17 of the Arbitration Act only. He agreed with FRL that the award was not binding or valid in the first place.

He prayed that the court would ignore Emergency Award while deciding on the question whether Amazon had the right to tinker with the FCPL-FRL amalgamation at all, and submitted that it would deal with Amazon, on the question of Amazon not exercising its call option when the company was sinking, later in an appropriate arbitration.

He concluded stating, "As of today, Amazon has no right to invest in FRL and if they can't invest they have no right to stop Reliance from investing in us."

In elaborate arguments that followed, Sr. Adv. Abhishek Singhvi appearing for Reliance Retail and Reliance Retail & Fashion Lifestyle Ltd submitted that the award of the Emergency Arbitrator was a foreign concept for India, and found no place in Indian law. Further, that Emergency Arbitrator was consciously not included under the Arbitration Act despite the 246^th Law Commission Report's recommendation, and therefore this award passed by an Emergency Arbitrator could not be binding at all.

Sr. Adv. Gopal Subramanium appearing for Amazon submitted that most, if not all, the arguments presented by FRL, FCPL and Reliance had already been dealt with by the Emergency Arbitrator. He also submitted that Amazon had not in the least contradicted or intended to violate any FDI policy of India's as, FCPL being an Indian entity, money coming into FRL from FCPL would not be considered as FDI at all.

He further pointed out that since Amazon had 49% stake in FCPL, which has 9.82% shares in FRL, Amazon's stake in FRL becomes half effectively and would not cross the 10% limit imposed by India's FDI policy in multi-brand retail sector.

He also argued that all FCPL and FRL's Shareholder Agreements under the common umbrella of the Biyanis had already been brought to the notice of the CCI. Against the Law Commission recommendation argument he responded that, Justice Nariman had already noted in a judgment by the Supreme Court that "recommendations by a Law Commission Report need not detain the court from interpreting the words as they are susceptible to being interpreted."

The court will continue hearing Mr. Subramanium's arguments tomorrow.