The Delhi High Court on Monday ruled that the sale of Future Retail Ltd’s retail and wholesale business to Reliance Retail was in line with Indian laws while holding that Amazon was free to write to regulators. Justice Mukta Gupta wrote in her order that FRL managed to make a prima facie case on a couple of grounds.
“The present application is disposed off, declining the grant of interim injunction as prayed for by FRL, however, the Statutory Authorities/Regulators are directed to decide on the applications/objections under the law,” she wrote in the order. CCI has approved the transaction.
Amazon, which is a stakeholder in FRL’s gifting arm FCPL, had filed an Emergency Arbitration in the Singapore International Arbitration Centre after the deal was announced.
The Emergency Arbitrator (EA) passed an interim order restricting Future Retail from taking further steps in the deal with Reliance Industries’ retail arm.
Amazon alleged that RIL is a restricted party as per its agreement with Future Group. Basis which, it approached the Indian statutory authorities to stall the deal. Justice Gupta wrote that the interim order passed by the EA order was valid.
In response to BusinessLine’s query, an Amazon spokesperson said: “We welcome the verdict of the High Court of Delhi rejecting the interim injunction sought by Future Retail and their claim that the Emergency Arbitrator process is invalid under Indian law.”
Over and above this, Justice Gupta noted that the agreement between FCPL and Amazon is against FEMA/FDI norms.
The court, “is prima facie of the opinion that the conflation of the three agreements i.e. FRL SHA, FCPL SHA and FCPL SSA 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.”