Future Retail on Sunday said the emergency order given to Amazon by the Singapore International Arbitration Centre (SIAC) putting its Rs 24,713-crore deal with Reliance Industries Limited on hold was not “enforceable and binding”, and any move to enforce it would be “resisted” by the company.
Last week, US retail giant Amazon had written a letter to market regulator Securities and Exchange Board of India (Sebi) and the stock exchanges urging them to take into consideration the Singapore arbitrator’s interim judgment.
In the interim arbitration award, a single-judge bench of V.K. Rajah barred Future Retail Limited (FRL) from taking any step to dispose of or encumber its assets or issue any securities to secure any funding from a restricted party. Both the Future group and Reliance have hinted they will go ahead with the deal.
In a filing to the stock exchanges on Sunday, FRL said that the interim award of the arbitrator was “void and coram non-judice”, meaning the proceedings were not conducted by a judge.
The company said the order was passed by invoking an arbitration clause in a contract to which it was not a party. “FRL is advised that an Emergency Arbitrator (EA) has no legal status under Part I of the Indian Arbitration and Conciliation Act, 1996 and therefore, the proceedings before an Emergency Arbitrator are void and coram non-judice,” the company said, adding the order passed by an authority without jurisdiction is a nullity under Indian law.
The Biyani company said it participated in the proceedings before the arbitrator expressly without prejudice to its jurisdictional objection and under protest.
“The EA order is not enforceable under the provisions of the Arbitration and Conciliation Act, 1996 and is not binding on FRL. Any attempt on the part of Amazon to enforce the EA order shall be resisted by FRL to the fullest extent available under Indian law. FRL is also in the process of taking appropriate legal action to protect its rights,” the Future group company said.
It further asked the BSE and the NSE not to take cognizance of Amazon’s letter or the EA order. According to FRL, it has complied with all the requirements of obtaining the requisite approval from its step-down firm Future Coupons Pvt Ltd (FCPL) as was required in the shareholders agreement executed by FRL with its promoters.
The letter said Future Retail was undergoing serious financial difficulties, particularly in light of the unprecedented impact of the pandemic, and the proposed scheme was the only way, it can come out of the situation.
The scheme is in the best interest of all stakeholders that includes shareholders, financial institutions, vendors and suppliers, and its employees and delay in the implementation will cause irreparable losses, the letter said. Amazon’s letter to Sebi, Future Retail said, painted a picture that the public shareholders of the company were being misled.
“It is a bit rich for such an argument to be made from someone who is not even a shareholder in FRL. Evidently, Amazon’s letter is motivated by other considerations,” the letter said.
“It is submitted that Sebi regulations are very clear in terms of the information that needs to be disclosed when a listed company approves a scheme of arrangement, and FRL has complied with all Sebi requirements.
“At best, Amazon’s claims are a contractual dispute between Amazon and the promoters of FRL, and Amazon has already initiated arbitration for the same,” FRL said.
It further observed that Sebi and the stock exchanges should consider the scheme independently on its merits.
“A contractual dispute between the promoters of FRL and Amazon cannot restrict or interfere with the authority of Sebi and the stock exchanges to approve the scheme involving the listed entity. To be clear, the EA order cannot and does not in any manner restrict Sebi or the stock exchanges from considering and approving the scheme,” Future Retail said.
Amazon had last year acquired a 49 per cent stake in Future Coupons Private Ltd, the promoter entity which owns a 7.3 per cent in FRL.