On the basis of the interim order by a Singapore Arbitrator on October 25th, 2020, Delhi High Court sought Amazon’s response on a plea by Future Retail Ltd, alleging that Amazon.com Inc is interfering between its deal with Reliance.
Amazon’s insider trade allegations against the Future-Reliance deal, that started before an arbitrator in Singapore got intense as the Future group moved to Delhi High Court for seeking no interference its sale of assets to Reliance Industries Ltd.
The e-commerce giant accuses Future group for violating a contract with the sale to its opponent and wants to put on hold of the deal between Amazon and Future Group whose assets Reliance has recently agreed to buy for $3.4 billion.
According to Amazon, the deal violates the non-compete and right-of-first-refusal clause that it signed with Future Group. Amazon and Future Group have been holding each other on several accounts considering the legitimacy of the Future-RIL deal.
As a verdict, Justice Mukta Gupta asked Amazon, Reliance and Future Group representatives, to file their written statements on the concerned suit. It was also added that the issue of maintainability of the suit, raised by Amazon would be kept open.
As the latest development in the verdict process, Future says that Future Retail and Future Coupons Pvt. Ltd are two separate organizations and thus there shouldn’t be any inference in any deal between Future Retail and Reliance by Amazon. This comes in as Amazon agreed on the deal with Future Coupons and whereas the deal with Reliance Industries entails the sale of assets by Future Retail.
Amazon urged the Indian Market Regulator, Securities and Trade Board of India (SEBI) to prove Reliance’s August month’s insider trading possibilities of buying logistics, retail and other properties, taking in consideration of the interim decision. Amazon also wanted disclosure of the price-sensitive data from the arbitration injunction to Reliance from the Future Group. The disclosures were made according to the applicable requirements says the accused.
Further, Delhi High Court to secure approval for Future Retail to continue with the Reliance Industries deal. However, both the companies have agreed to continue their arbitration battle at SIAC despite future claimed SIAC does not have the power to adjudicate on the concerned matter and the interim ruling does not have efficacy in law, before SEBI and Delhi High Court.
With regards to the concerns raised by Amazon, Future Retail has put-forth three primary key arguments:
- Since Amazon is not a shareholder of Future Retail, the giant does not hold any investor protection rights.
- Future Retail is entitled to ask the court to direct Amazon to not interfere with the approval process of the scheme of arrangement proposed by it.
- The agreement between Amazon and Future Coupons cannot dilute the fiduciary duty of Future Retail’s directors who have to take every measure – in this case, a scheme of arrangement – to save the sinking company.
Future Retail Ltd advocate Harish Salve stated: “When did you [Amazon] become the Bhishma Pitamaha of Future Retail that it needs your prior written consent for a scheme?” “The interference by Amazon in the Future-Reliance deal would result in thousands of job losses and FRL becoming bankrupt”, added Salve.
However the Indian market Regulator SEBI has refused to interfere – “Amazon can settle the commercial aspects in designated courts rather than have SEBI enforce the contract,” a source said on condition of anonymity. “It does not come under securities law.”
“In today’s day and age, to say that I will kill a 25,000 crore company. God knows if Amazon still thinks that it’s living during the time of the East India Company,” says Salve.