Amazon-Future: Delhi High Court dismisses petitions by Future companies for direction to hear termination application

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The Delhi High Court on Tuesday dismissed petitions filed by Future Group companies seeking a direction to a Singapore tribunal to deal with its termination applications in relation to its 2019 deal with Amazon [Future Retail Limited v NV Investment Holding LLC and Ors].

The order was pronounced by Justice Amit Bansal, who had reserved orders on Monday after hearing at length the pleas filed by Future Retail Limited (FRL) and Future Coupons Limited (FCRL).

An arbitration tribunal in Singapore has been hearing Amazon’s case against Future Group related to the 2019 deal between the two companies. While hearing this case, the tribunal had passed an interim order stalling the sale of Future Retail’s assets to Reliance Industries.

Future Retail had petitioned the Tribunal arguing that continuing proceedings there would be illegal in view of the Competition Commission of India (CCI) ruling against Amazon.

The CCI had suspended the clearance for the deal, stating that Amazon had failed to notify it about certain crucial details of its acquisition of a 49 per cent stake in Future, as required under Section 6(2) of the Competition Act, 2002 (Act). It had, therefore, also imposed of a penalty of ₹202 crore on Amazon.

The Tribunal, however, refused to consider the request before starting a final hearing, prompting the Future Group to move the Delhi High Court

The Court has now held that there is no evidence to suggest that the tribunal denied equal opportunity to Future Group or that it has not been accommodating towards their requests.

“No exceptional circumstances or perversity have been demonstrated/made out in the petitions or during the hearing to warrant the exercise of jurisdiction by this Court under Article 227 of the Constitution of India,” Justice Bansal wrote in his order.

The Court also did not find any merit in the submission by the Future Group that hearing of termination application should take precedence before the tribunal continues with hearing of the expert witnesses.

It said that it is the sole discretion of the tribunal to decide whether the applications should be heard before or after the hearing of experts.

“No prejudice would be caused to the petitioners if the hearing of the termination applications is conducted on 08th January, 2022. In any event, it is not for this Court to interfere with the scheduling of the arbitration proceedings as sought in the present case,” the Court has said.

Earlier, Senior Advocates Mukul Rohatgi and Harish Salve, appearing for the Future Group before the High Court, had argued that they were not asking for termination of arbitration proceedings, but only an order directing the tribunal to hear the application for termination before it proceeds with deciding the damages.

The Court was told that the tribunal has fixed January 6 and 7 as dates for determination of damages, and therefore, the termination application should be heard on January 5.

Rohatgi had argued that arbitration proceedings have reached a turning point after the Competition Commission of India (CCI) recently suspended its clearance given to Amazon and Future’s 2019 deal.

He submitted that the CCI order destroys the agreement between the two companies, and therefore, nothing under that agreement, including the arbitration proceedings, can go on.

“If the CCI approval goes, then agreement goes and therefore nothing can continue under the agreement. If nothing can continue under the agreement, then this arbitration is a pursuit of illegality,” he argued.

Salve, meanwhile, questioned the way the tribunal has proceeded in the matter, stating that almost everything that his clients have asked for was rejected.

“My client is on the verge of bankruptcy. Amazon has a budget of ₹8,500 crore to fight its legal battles. We don’t have that kind of budget,” he told the Court.

It was further argued that the only reason Amazon was interested in the case was to prevent the deal between Future Retail and Reliance Industries Limited.

Senior Advocates Gopal Subramanium and Amit Sibal, however, contended that an appeal will be filed by Amazon challenging the CCI order and that the arbitration clause does not perish with agreement, since there was permission existing for the deal on the date when the agreement happened.

They also argued that the tribunal had agreed to hear Future Group’s termination application on January 8.

“It is with some sheepishness that the present petitions have been preferred. The tribunal has responded in real time and accommodated the parties… Both these petitions are infructuous and immature at the same time. The grievance is that there is no date fixed even though the Tribunal has said that it will hear the termination application on January 8,” Sibal submitted.

The Amazon-Future Group deal has seen several legal battles as a result of which the sale of Future’s assets to Reliance has been stalled.

The deal, apart from being the subject of arbitration before the Singapore tribunal, has also come up before the Delhi High Court as well as the Supreme Court at various stages.

Last month, Amazon had moved the Delhi High Court challenging the probe initiated by the Enforcement Directorate (ED) into the deal. The company had termed the investigation a “fishing and roving” inquiry, adding that the ED had sought details of privileged legal advice and opinions from Amazon and other information not connected with the Future Group deal.

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