The Delhi High Court on Monday declined to retrain U.S. based e-commerce major Amazon from making representations to various Indian statutory authorities such as the SEBI, CCI and others objecting to an assets sale deal between Kishore Biyani-led Future Retail Ltd (FRL) and Reliance Retail.
The court said that though a prima facie case was made out by FRL for grant of interim injunction, “the balance of convenience lies both in favour of FRL and Amazon”.
FRL, in its plea, accused Amazon of interfering with its assets sale deal with Reliance by writing to various regulatory authorities about an order passed by the Singapore International Arbitration Centre (SIAC) on October 25, 2020, restraining FRL from taking any steps to transfer its retail assets.
Amazon has 49% stake in Future Coupons Pvt. Ltd. (FCPL), which has 9.82% stake in FRL.
Justice Mukta Gupta, in the 132-page judgment, opined that a combination of FRL SHA, FCPL SHA and FCPL SSA (Share Subscription Agreement) besides “creating protective rights in favour of Amazon for its investments also transgress to ‘control’ over FRL requiring government approvals and in the absence thereof are contrary to FEMA FDI Rules.”
Another reason for declining FRL’s plea, the court said, was that both FRL and Amazon have already made their representations and counter representations to the statutory authorities/regulators and now it was for the statutory authorities/regulators to take a decision.
FRL said in its plea that it was a listed company with more than three lakh shareholders and over 25,000 employees, operating retail chains in more than 400 cities in every State of the country through digital platforms and also through about 1534 physical stores across India.
‘Hit hard by pandemic’
The plea stated that the COVID-19 pandemic had had a devastating impact on the Indian retail sector, including FRL, which was in serious economic peril. FRL’s financial condition was rapidly deteriorating with notices being received from banks, financial institutions, creditors, landlords and vendors etc.
It said that Reliance was acquiring the retail and wholesale business as also the logistic and warehousing business from the Future Group as going concerns on a slump sale basis for lumpsum aggregate consideration of ₹ 24,713 crore.
The petition claimed the transaction would address concerns of FRL’s creditors, as Reliance would acquire not only FRL’s retail assets but also its liabilities amounting to approximately ₹12,801 crore.
If the transaction failed, FRL would go into liquidation, causing damage to the public shareholders, livelihood of the employees etc., its plea said.
