The Supreme Court on Thursday stayed proceedings in the dispute between Future Group and e-commerce giant Amazon over a nearly ₹25,000-crore merger deal with Reliance Retail , taking into consideration the “balance of interests of both parties”.
A three-judge Bench led by Chief Justice of India (CJI) N.V. Ramana, while issuing notice, ordered the statutory authorities, including the National Company Law Tribunal, the Competition Commission of India and the Securities and Exchange Board of India, to not pass any orders in matters connected to the dispute for the next four weeks.
The order was passed after both the Future Group and Amazon consented.
“Parties have approached the Singapore International Arbitration Centre for vacating the Emergency Award passed by the Emergency Arbitrator and the arguments in the said matter have been concluded and the order is going to be pronounced shortly, we think it fit to balance the interest of both the parties by staying all further proceedings before the Delhi High Court for the time being. Ordered accordingly. We further direct to all the authorities i.e. NCLT, CCI and SEBI not to pass any final order for a period of four weeks from today. This order has been passed with the consent of both the parties," the Bench, also comprising Justices Surya Kant and A.S. Bopanna, recorded in the order.
During the hearing, when one of the lawyers raised apprehension about the period of four weeks, the CJI indirectly drew attention to the depleted manpower in tribunals. “Do you think any company law tribunal is in a position to take up any matter... I am sorry to say,” he stated.
The stay order and subsequent freeze on any action by statutory authorities for the next four weeks comes as a relief for the Future Group, which had moved the Supreme Court to stay a Delhi High Court Single Judge’s order in March to attach the assets of Future Coupons, Future Retail and Future Group promoter Kishore Biyani.
HC directive
The High Court had directed the Future group firms and promoters to file their affidavits giving details of their assets for violating an Emergency Arbitrator award.
On August 6, the Supreme Court ruled in favour of Amazon against the proposed ₹24,713-crore merger deal between Future Retail Limited and Reliance Retail.
A Bench of Justices Rohinton F. Nariman and B.R. Gavai upheld the validity and enforceability of a Singapore-based Emergency Arbitrator (EA) award, which restrained Future Retail Limited (FRL), India’s second largest offline retailer, from going ahead with the disputed transaction.
The EA, in an award in October last, injuncted FRL “from taking any steps to complete the disputed transaction with entities that are part of the MDA [Mukesh Dhirubhai Ambani] Group”
The apex court judgment, authored by Justice Nariman, had dismissed FRL’s argument that the “Emergency Arbitrator is not an arbitral tribunal” under the Arbitration and Conciliation Act of 1996.
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‘Prohibited entities’
The ruling saw the top court record that the MDA Group, which owns Reliance Retail, was among the “restricted persons” or “prohibited entities” with whom FRL, Future Coupons Private Limited, which owns 9.82% shareholding in FRL, and the Biyanis could not “deal” with. This was according to agreements based on which Amazon would invest money.
Despite these agreements, the Supreme Court noted that FRL entered into a transaction with the MDA Group. The deal envisaged “the amalgamation of FRL with the MDA Group, the consequential cessation of FRL as an entity, and the complete disposal of its retail assets in favour of the group”.
The 103-page judgment dismissed FRL’s argument that the “Emergency Arbitrator is not an arbitral tribunal” under the Arbitration and Conciliation Act of 1996.
Besides, Justice Nariman observed that a party (FRL) “cannot be heard to say, after it participates in an Emergency Award proceeding, that it will not be bound by an Emergency Arbitrator’s ruling”.
The apex court had said EA orders were “an important step in aid of decongesting the civil courts and affording expeditious interim relief to the parties”.
