Future Retail-Amazon Case: Amazon's Objections No Longer Relevant As SEBI To Give Final Approval To FRL Scheme

Amazon Inc. has written to statutory authorities, including market regulator SEBI, competition watchdog the Competition Commission of India (CCI), citing that the Emergency Arbitrator's order is 'binding,' a move that may delay the Billion dollar deal.

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In a setback to Kishore Biyani led Future Retail, the Delhi High Court on Monday rejected Future Retail's (FRL) plea for an interim injunction against Jeff Bezos led Amazon Inc, for restraining the e-commerce giant from writing to statutory authorities to stall the RS 24,713 crore deal with Mukesh Ambani led Reliance Retail. "The present application is disposed off, declining the grant of interim injunction as prayed for by FRL, however, the Statutory Authorities/Regulators are directed to take the decision on the applications/objections in accordance with the law," said the judgement pronounced by Justice Mukta Gupta on Monday. ABP Network has reviewed the copy of the order. Future Group approached the Delhi High Court after an Emergency Arbitrator of the Singapore International Arbitration Centre (SIAC) restrained Future Group from taking any steps in furthering the transaction with Reliance Retail. Amazon Inc. has written to statutory authorities, including market regulator SEBI, competition watchdog the Competition Commission of India (CCI), citing that the Emergency Arbitrator's order is 'binding,' a move to stall the Billion dollar deal. FRL Board Resolution approving Scheme and sale of business to Reliance is Valid and in accordance with statutory provisions -- not void as claimed by Amazon. Amazon has violated FEMA and FDI Rules. The Shareholders agreements read together show Amazon has acquired "control" rights over FRL. In the absence of Government approvals this is contrary to FEMA and FDI Rules.  Amazon has committed Civil Wrong against FRL and Reliance which is actionable by both FRL and Reliance in case they suffer loss.  The Statutory authorities -- SEBI are directed to take the decision on the applications/ objections in accordance with law. In view of the above order, SEBI has to approve the Scheme submitted by FRL so long as the scheme is ion compliance with statutory provisions of companies act and other SEBI regulations. Amazon's objections is no longer relevant for approval of Scheme by SEBI, reported news agency IANS. Prima facie, the Court observed that the suit filed by Future Retail was maintainable, the Emergency Award was valid, and that Future Retail's resolution approving the transaction with Reliance was also correct. "In case Amazon is not permitted to represent its case before the statutory authorities/Regulators, it will suffer an irreparable loss as Amazon also claims to have created preemptive rights in its favour in case the Indian law permitted in future," the Court noted. According to Amazon's contention, most of the arguments submitted by Future Retail and Reliance had already been dealt with by the Emergency Arbitrator in Singapore. Amazon had not violated any FDI rules as Future Coupons Private Limited (FCPL) is an Indian entity, and the money coming from FCPL to Future Retail would not be considered FDI. Amazon also contended that it had a 49% stake in FCPL, which has 9.82% shares in FRL. Amazon's stake in FRL becomes half effective and would not cross the 10% limit imposed by India's FDI policy in the multi-brand retail sector. "Further there may not be irreparable loss to FRL for the reason even if Amazon makes a representation based on incorrect facts thereby using unlawful means, it will be for the statutory authorities/Regulators to apply their mind to the facts and legal issues therein and come to the right conclusion," said the judgment. According to Future Retail, the Emergency Award was of no consequence as it was not enforceable in India and prayed that Amazon be prevented from writing to statutory authorities to stall the deal. Reliance Industries supporting Future Group case before the Court, said that Amazon was playing mischief by stalling the deal. Citing why no interim injunction can be granted, the Court said both FRL and Amazon have already made their representations and counter representations to the statutory authorities/regulators, and now it is for the Statutory Authorities/Regulators to take a decision thereon. "Therefore, this Court finds that no case for grant of interim injunction is made out in favour of the FRL and against Amazon," the order said. An Amazon spokesperson was not immediately available for comments as its legal team was studying the order. Future Group chairman Kishore Biyani didn't immediately respond to text messages by ABP Network. It may be noted that the CCI had already approved the Reliance-Future deal last month, while the deal needs approval from SEBI and other statutory approvals. (With additional information from IANS)