Last week, the Mumbai bench of the NCLT directed both
and Reliance Retail to submit their petition as a composite scheme rather than two separate scheme matters as transferee company and transferor company.
Amazon has approached the Singapore International Arbitration Centre (SIAC). Amazon said it has a valid position at this stage to intervene in the petition seeking directions from the tribunal for convening meetings of the shareholders and creditors of the companies that form part of the composite scheme.
“The tribunal should adjourn further proceedings in the instant petition, until the issuance of the final award in SIAC Arbitration, restrain Future Retail from taking any steps in furtherance of or in aid of the scheme and refrain from directing any meetings of the shareholders and creditors,” Amazon said in its plea.
Amazon has also filed a petition in the Supreme Court to restore a Delhi High Court interim order putting the deal on hold after a division bench of the HC quashed the stay order last week. The high court has said it will pass the judgement February 26.
Legal experts said Amazon’s arguments in the latest petition do not appear tenable.
“There is no order by any court stopping the NCLT from taking a decision on the Future-Reliance deal. Moreover, SEBI and CCI have already approved the deal while considering various Indian applicable laws,” said Ashish K Singh, managing partner of law firm Capstone Legal. “For a foreign arbitral award to be enforced in India, an application has to be filed before the competent court under the Arbitration and Conciliation Act. The court will then declare if Arbitral Award is enforceable after hearing both parties.”
Amazon indirectly owns a 5% stake in Future Retail, which runs all the departmental stores of the group–Big Bazaar, HyperCity, Easyday and Nilgiri’s. Amazon’s stake is held through the 49% ownership, bought last year for Rs 1,500 crore, in Future Coupons.
In August last year, Reliance Retail agreed to acquire the retail assets of Future Group in a deal that will see the merger of five listed entities, including Future Retail, into Future Enterprises (FEL) that currently houses the group’s retail back-end infrastructure. The retail business will then be transferred to Reliance in a slump sale for nearly Rs 25,000 crore, thus obviating any need for a stake sale. Amazon, like other shareholders of these listed companies, will get shares in FEL, which will manage consumer goods and insurance businesses.
In its petition, which ET has reviewed, Amazon argued that Kishore Biyani, founder of Future Group, and his residual company Future Enterprises have a non-compete agreement with Reliance, prohibiting them to enter into any form of retail for 15 years.
“Therefore, the scheme, in essence, deprives FRL and its shareholders, including FCPL, of its main business,” said Amazon. “If the disputed transaction proceeds, the special and protective rights with respect to the retail assets that the applicant has, under the agreements entered into with the arbitration, will be irretrievably lost. The widespread network of retail stores across India, which was built by FRL over a period of several years is a uniquely strategic asset for the applicant for protection of which it has paid valuable and significant consideration.”