The Kishore Biyani-led Future Group, which has been locked in a conflict with Amazon over selling most of its retail business to Reliance Retail for ₹24,713 crore, urged stock exchanges on Sunday to ignore the e-commerce giant’s objections to the deal. In a letter to the National Stock Exchange and the Bombay Stock Exchange, the retail conglomerate argued that an emergency stay on the transaction obtained by Amazon by the Singapore International Arbitration Center had no legal force in India.

“[Future Retail Limited] is advised that an Emergency Arbitrator 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 Future Group said in the letter, signed by the group’s Company Secretary and legal chief Virendra Samani. Coram non-judice means that the ruling took place in an inappropriate legal venue.

Amazon had warned in a legal notice to the Future Group in October that the latter may be violating contractual obligations by pursuing a sale of its various retail businesses, including Big Bazaar, to Reliance Retail. In 2019, Amazon had purchased a 49% stake in a Future Group subsidiary, Future Coupons, for ₹1,500–2,000 crore. In that deal, Amazon said, it had negotiated a so-called right of first refusal, which would let it veto deals like the one Future struck with Reliance.

But Future Retail claims that Amazon has no standing in claiming that right. “The [Emergency Arbitrator] Order was passed in arbitration proceedings initiated by Amazon by invoking an arbitration clause in a contract to which FRL is not a party. Instead the only parties to the arbitration agreement are Amazon and various promoters of FRL. FRL is not a party to the arbitration agreement and, as such, could not have been joined as a party to the arbitration proceedings before SIAC,” the Future Group argued, adding that it appeared before the arbitrators simply to argue that they had no jurisdiction in the matter, and that they did so under protest.

The Future Group picked apart the way Amazon had executed the 2019 deal to argue that the US firm subverted the law in a way that disqualified its right of first refusal:

The EA Order accepts Amazon’s contention that two separate shareholder agreement(s), one between Amazon and FRL’s promoters (to which FRL is not a party) and another between FRL and its promoter (to which Amazon is not a party) constitute one single integrated transaction and that by such a composite transaction Amazon has an interest in and rights against FRL.

This contention raised by Amazon is entirely misconceived. In fact, if the two separate agreements were treated as a single integrated transaction by which Amazon obtained an interest in and rights against FRL, then in 2019, when the agreements were executed there would have been a change in control of FRL in favour of Amazon, requiring it to make an open offer to FRL’s public shareholders in terms of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. No such open offer was made, thereby suggesting that there was no intent of Amazon to consider the two Agreements as a single integrated transaction at that point of time. Though this issue was raised by FRL before the Emergency Arbitrator, the EA Order appears to overlook this illegality by stating that Amazon has not attempted to assert control over FRL without appreciating that once the two agreements are conflated in law the protective, special and material rights granted thereunder would constitute a conferral of “control” in favour of Amazon. Given that the EA Order is premised on violation of SEBI Regulations it cannot and ought not to be accorded any sanctity by SEBI, NSE and BSE.

The letter further argued that the Companies Act had “supremacy” over any contractual obligations that might exist, and said that FRL was exploring legal options to defend its rights. It argued that the group was in dire financial straits due to the pandemic, and that the stake sale to Amazon would be the only way to remedy the situation. “In its letter, Amazon has painted a picture that public shareholders of FRL are 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. The company had told the Singapore court that it would have to go into liquidation if the Reliance deal fell through.

Also read: Reliance Retail, Future Retail say deal will proceed ‘without any delay’ despite Amazon obtaining injunction order