Delhi High Court has maintained the stance taken by Singapore International Arbitration Centre wherein Future Retail Ltd. (FRL) is to hold back from proceeding with Rs 24,713 crore deal with Reliance Retail .
The decision to sell FRL to Reliance was resisted by Amazon.
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What FRL Must Do
Justice JR Midha has stated that FRL intentionally violated Singapore Arbitrator’s order. They will now have to donate Rs 20 lakh to Prime Minister’s Relief Fund which provides Covid vaccines to senior citizens Below Poverty Line (BPL).
They must also attach properties of future founder Kishore Biyani and others related to Future Group
They have been summoned to the court on Apr 28. They will be asked to justify why they should not be jailed for 3 months for their violation.
Background
A deal was struck in August 2020 wherein FRL would sell its retail, wholesale, logistics and warehousing units to Reliance.
Amazon moved court on Oct 25 ,2020 to take action against FRL. Amazon wished to restrain it from completing the Rs 24,713 crore asset sale transaction with Mukesh Dhirubhai Ambani’s Group.
This move was allegedly in violation of a contract between FRL and Amazon.
The Right of First Refusal clause that was violated was that FRL will not be permitted to sell assets to 30 entities including Reliance Industries without Amazon’s approval.
In a Hurry To Complete Deal
FRL had pleaded with SIAC before to remove itself from the consortium of 30 groups that Amazon prohibits from selling to without prior approval.
The Future-Reliance deal has been waiting for approval from the Supreme Court and the National Company Law Tribunal (NCLT).
FRL was cash strapped with mountains of debt hence they were trying to speed up the process to close the deal and avoid complete collapse.
Future Group currently owes $3 billion worth of dues to creditors.
The Amazon-Reliance Tussle
In a three way battle, the fight between Amazon and Reliance has been long running.
Both are competing over their share of the pie that is the Indian retail market which is predicted to exceed $1.3 trillion by 2025.
Amazon is unwilling to give an edge to Reliance Retail that it will enjoy after acquiring Future Retail.
In an official statement Justice Midha ruled that Future Group is very much involved in the arbitration proceedings and that SIAC’s emergency order is rightly invoked and enforceable in India.
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