A messy deal is getting messier.
Yesterday, the Delhi High Court hit the pause button on Future Retail Ltd’s $3.4 billion (Rs 24, 713 crore) sale of its retail assets to Reliance Industries Ltd, acting on a petition by Amazon.com Inc, which has alleged that the deal was in violation of its own contract with Future.
Today, the Future Group, which is already under the threat of insolvency, knocked on the doors of the Delhi High Court with a plea against the order directing status quo on its deal with Reliance.
Though the Future Group prayed for a hearing today itself saying that its situation is desperate, the court has marked the case for hearing tomorrow.
The Kishore Biyani Group wants the court to stay its yesterday order which is seen as a shot in the arm for the Amazon group.
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Setback for Future: Singapore tribunal order enforceable in India
The High Court has not only directed Future Retail to maintain status quo on the assets, but also said it was of the prima facie view that a Singapore tribunal order, which asked the company owned by Kishore Biyani not to proceed with the deal, was enforceable in India.
It may be recalled that last October, the Singapore International Arbitration Centre passed an interim order in favour of Amazon, barring Future Retail from going ahead with the sale to Reliance.
Yesterday, after the High Court order, Amazon said: “We have utmost respect for the Indian legal system and appreciate the interim order of the Hon’ble Delhi High Court to uphold the enforceability of the Emergency Arbitrator’s order and maintain status quo.”
What is at stake?
The three parties — Amazon, Reliance and Future — are putting a spirited fight with reason. For at stake is several thousands of crores of rupees and the bragging rights in the highly lucrative in Indian retail and e-retail market.
Last August, the Kishore Biyani-led Future Group worked out a Rs 24,713 crore agreement with Mukesh Ambani-helmed Reliance Retail. Future Group, which is in financial distress, sold its retail, wholesale, logistics and warehouse businesses to Reliance Retail Ventures (RRVL).
The deal has been having problems right from day one as Amazon had bought 49% stake in one of Future’s unlisted firms in 2019 in a complex deal. Amazon’s contention is that as part of this deal Future could not have sold itself to Reliance, Amazon’s rival in the market place.
Future is saying that Amazon had failed to provide any help to the debt-laden firm that suffered a massive setback during the Coronavirus lockdown. Amazon contends that there were ongoing discussions on multiple options with partners and with the promoters of Future.
Last year, India’s antitrust watchdog cleared the deal between Ambani and Biyani firms.
But Amazon has also taken the matter to an arbitrator in Singapore and got it to block the deal between Reliance and Future.
Later, the Delhi High Court also rejected Future’s plea for an injunction to restrain Amazon from writing to regulators and other authorities over the deal. But the court also gave a go-ahead to the regulators to decide over the deal.
Recently, the Securities and Exchange Board of India (SEBI), the stock market regulator in India, granted approval to the Future Group and Reliance Retail deal, much against the pleas of Amazon India.
As you can see, the case has been a roller-coaster ride with Future Group and Amazon alternatingly going up and down with every development.