Regulators will decide Future-Reliance deal: Delhi HC
Dec 21, 2020
New Delhi [India], December 21 : The Delhi High Court on Monday held that the statutory authorities or regulators will decide on the approval of the Future-Reliance deal as per the law and declined a plea of Future Retail Ltd to restrain Amazon from interfering in its deal with Reliance Retail on the basis of an interim order of Singapore International Arbitration Centre.
A single-judge bench of Justice Mukta Gupta, while passing a detailed judgement said that the Securities and Exchange Board of India (SEBI) and the Competition Commission of India (CCI) will decide on Amazon's objections to Future Retail-Reliance Group deal.
The court ruled that Future Retail has been able to make out "prima facie case of tortious interference by Amazon" and observed that Amazon's attempt to control Future Retail without government's approval is violative of the Foreign Exchange Management Act (FEMA) and Foreign Direct Investment (FDI) rules.
This is a prima facie finding of the court as the case remains open for further consideration, and any final order will depend upon the evidence submitted by all parties to the case.
The bench left it for regulators to decide if the Rs 24,713 crores Future Retail-Reliance Group deal can be permitted under the law. However, the High Court upheld Future Retail's August 29 board resolution where it announced a deal with Reliance.
On November 20, the CCI had cleared the Future-Reliance deal saying, "Commission approves acquisition of retail, wholesale, logistics and warehousing businesses of Future Group by Reliance Retail Ventures Limited and Reliance Retail and Fashion Lifestyle Limited."
The online giant had claimed before the CCI that the so-called "injunction" of the emergency arbitrator was binding on the CCI and that the CCI should stop processing the application and should not give its approval.
On August 29 this year, Future Group had announced the sale of its retail and wholesale business to Reliance Retail in a Rs 24,713 crores deal. It had also 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, on the other hand, has argued that a 2019 pact it signed with Future prevented the Indian company from selling its retail assets to certain parties. It had also won an interim award against the transaction between RIL and the Future group after a Singapore-based single judge arbitration panel put the transaction on hold.
The plea filed by Future Retail Ltd had sought to restrain Amazon from interfering in the Reliance Retail-Future deal on the basis of an interim order passed by the Singapore International Arbitration Centre (SIAC). Amazon had taken Future Retail into an emergency arbitration over an alleged violation of the contract.
