In setback to Amazon, Delhi HC stays status quo on Future-Reliance deal

New Delhi [India], February 9 : The Delhi High Court on Monday stayed single judge bench order which had directed Future Retail Limited (FRL) to maintain the status quo with respect to its deal with Reliance and issued notice to Amazon on Future Retail Ltd plea. The court listed the matter for further hearing on February 26, and issued notice to respondents including Amazon.
A division bench of Chief Justice DN Patel and Justice Jyoti Singh order came after hearing the appeal filed by FRL.
The court said that as far as the maintainability of the appeal filed by FRL is concerned, the prima facie view that the appeal is maintainable as the impugned order has been passed on a petition filed by Amazon and the applicant's appeal were filed under different orders.
High Court bench said that after having heard Senior Counsels for the parties, "it is satisfied that the appellant FRL has made a prima facie case for grant of interim relief and the balance of convenience also lies in favour of the appellant."
"We hereby stay the operation, implementation and execution of the impugned order dated February 2, passed by the learned Single Judge, till the next date of hearing," it stated.
The court also observed that the appellant FRL is not a party to the agreement between Amazon and Future Coupons Pvt Ltd (FCPL) and that in an agreement between Reliance Retail Ltd (RRL) and FRL, Amazon is not a party.
"Prima facie all the three agreements, as stated hereinabove, are different and therefore, 'Group of Companies Doctrine' cannot be invoked," said the court.
The court also noted that a reading of the clause evidences that Amazon has no intent to exercise control over FRL and thus, prima facie there was no reason to seek a status quo order before the Single Judge.
The court also made it clear that statutory authorities, like the Securities and Exchange Board of India (SEBI), National Company Law Tribunal (NCLT) should not be restrained from proceeding in accordance with the law.
The court also made it clear that the observations made in this order are only a prima facie view for the purpose of grant of interim relief and shall not come in the way of the Single Judge in passing the final order.
The single judge was hearing Amazon's plea where the petitioner has submitted that the respondents including FCPL have deliberately and willfully violated and are continuing further with the violation of the order dated October 25, 2020, of the Emergency Arbitrator. The petitioner has sought an immediate interim order to protect its rights till the pronouncement of the reserved order.
To which, the single-judge bench had said that the High Court was satisfied that immediate orders were necessary to protect the rights of the petitioner till the pronouncement of the reserved order.
"In that view of the matter, the respondents are directed to maintain status-quo... till the pronouncement of the reserved order," it had said.
The respondents are objecting to the enforcement of the order dated October 25, 2020, passed by the Emergency Arbitrator on various grounds, including that the "Emergency Arbitrator is not an Arbitrator/ Arbitral Tribunal, and the order dated October 25, 2020, is not an order under Section 17(1) and is not enforceable under Section 17(2) of the Arbitration and Conciliation Act, as the respondent is not a party to the arbitration agreement and the order dated October 25, 2020, is a nullity."
The Future Group announced the sale of its retail and wholesale business to Reliance Retail in a Rs 24,713 crore deal on August 29 last year.
It announced plans to merge key group companies, including Future Retail, Future Lifestyle Fashions, Future Consumer, Future Supply Chains and Future Market Networks into FEL.
Amazon had argued that a 2019 pact it signed with Future prevented the Indian company from selling its retail assets to certain parties. Amazon had taken Future Retail into an emergency arbitration over alleged violation of the contract.