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Obtain stay order from Supreme Court or comply with our order, Delhi HC tells Future Group

The latest hearing in this legal battle saw the court give Future Group a few weeks to obtain the stay order even as Amazon is reportedly preparing a bailout plan for Future Retail. 

The Delhi High Court on August 17 told Future Group that, unless it gets a stay order from the Supreme Court by September 17, the court will implement its single-judge order issued on March 18 restraining the sale of Future Retail to Reliance and attaching its properties, The Hindu reported.

Both Reliance and Amazon are trying to expand their online and offline retail offerings. Reliance is trying to acquire Future Retail to do this, while Amazon is trying to prevent this deal from happening. The Future Group vs Amazon legal battle has been going on since October 2020.

Future Group vs Amazon: Brief timeline of events

November 2019 –Amazon acquired a 49 percent stake in Future Coupons, a promoter company that owns about 7.3 percent stake in Future Retail.

August 2020 –  Reliance announced that it will acquire most of Future Group’s retail, wholesale, and logistics business in a deal worth Rs 24,713 crore. Amazon objected to the Reliance deal in October 2020 saying that its agreement with Future Coupons had a non-compete-like pact and right of first refusal against deals with competitors like Reliance Retail.

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October 25, 2020  Amazon obtained an emergency arbitrator’s award against the Future Retail–Reliance deal from a Singapore arbitration tribunal.

March 18, 2021 – A single judge Justice JR Midha from Delhi High Court upheld the Singapore emergency arbitrator’s order against Future Group, putting on hold the Future–Reliance deal and attaching the properties of Future Group and its promoters Kishore and Rakesh Biyani. The court also imposed a cost of ₹20 lakh on Future Retail and its promoters and directed it to be deposited in the PM Cares Fund.

March 22, 2021 –  A division bench of the Delhi High Court stayed the March 18 order allowing the Future-Reliance deal to proceed. Amazon appealed to the Supreme Court against this stay.

August 6, 2021 – The Supreme Court ruled in favour of Amazon by accepting its appeal against the Delhi HC order dated March 22, which let the deal between Reliance and Future Retail proceed. The court also held that the emergency arbitrator’s award obtained by Amazon in Singapore can be legally enforced in India.

August 12, 2021 – Future Group filed a Special Leave Petition in the Supreme Court against the March 18 order, which is yet to come up for hearing. An SLP can be filed against orders which are otherwise non-appealable.

A complete timeline of events can be found at the end of the article

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What happened in Delhi HC?

The court on Tuesday was hearing Amazon’s plea for enforcement of the March 18 single-judge order. Senior advocate Gopal Subramanium, appearing for Amazon, argued that the order was effective following the Supreme Court decision dated August 6. Future Group submitted that it has filed a Special Leave Petition in the Supreme Court against the March 18 order.

After hearing the two sides’ arguments, Justice Suresh Kumar Kait said that in the absence of a stay from the Supreme Court, he has no option but to enforce the March 18 order, The Hindu reported. “Either get a stay within 2-3 weeks on the March 18 order or comply with it. This court has no third option,” the judge said, according to the report.

Future Group has also moved an application before the Singapore International Arbitration Centre (SIAC) to revoke the emergency arbitrator’s award. SIAC is expected to give its verdict later this month.

Amazon making a bailout plan for Future Retail?

According to Mint, Amazon is reportedly preparing a bailout plan for cash-strapped Future Retail if the Reliance–Future deal does not go through.

“Right now, Future needs to take care of its dues and get enough working capital. Amazon is ready to salvage Future Group by bringing in enough capital if Future continues to work as Amazon’s partner as per the contract between Future Coupons and Amazon that was signed in August 2019,” a person aware of the internal discussions at Amazon told Mint.

“Amazon eventually plans to bring in more investors, including private equity funds, to participate in equity infusion in the Kishore Biyani-led group, which faces the bleak prospect of bankruptcy if the SIAC ruling goes against it,” another person told Mint.

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Future Group vs Amazon: Complete timeline

August 2019 – Filings revealed that Amazon is looking to acquire a 49% equity stake in Future Coupons — the promoter entity of Future Retail. Future Coupons owns a 7.3 percent stake in Future Retail, which operates 900 stores in India, including 293 Big Bazaar stores. If the deal goes through, Amazon will 3.58% stake in Future Retail.

November 2019 – The Competition Commission of India (CCI) approvedAmazon’s proposed acquisition of 49% equity stakes in Future Coupons.

August 2020 – Reliance Industries (RIL) announces it will buy most of Future Group’s retail, wholesale, and logistics business in a deal worth Rs 24,713 crore.

October 7, 2020 – Amazon accuses Future Group of breach of contract and slapped it with a legal notice over the Future Group-Reliance deal. Amazon reportedly had a non-compete-like pact and right of first refusal against deals with competitors like Reliance Retail.

October 25, 2020 – Amazon obtained an injunction order against the Future-Reliance deal from a Singapore arbitration court, but Reliance Group and Future Retail publicly stated that they will proceed with their deal “without any delay.”

November 2, 2020 – Future Group urged stock exchanges to ignore Amazon’s objections to the Reliance deal saying that the emergency stay on the transaction obtained by Amazon from the Singapore International Arbitration Center had no legal force in India.

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November 7, 2020 – Future Group moves Delhi Court against Amazon interfering in the acquisition by Reliance.

November 11, 2020 – Amazon accuses Future Group of insider trading, saying that Reliance Retail was improperly informed of the Singapore arbitrator’s order.

November 20, 2020 – Despite Amazon’s protest, the Competition Commission of India approved Reliance Retail’s ₹24,713 crore acquisition of Future Group’s retail, wholesale, logistics, and warehousing businesses.

December 21, 2020 – The Delhi High Court said that while it wouldn’t stop the Future-Reliance deal from happening, the court wouldn’t interfere with regulators making their own assessment of the legality of the deal.

January 20, 2021 – The Securities and Exchange Board of India (SEBI) gave its go-ahead for the Future-Reliance deal.

March 18, 2021 – A single judge from Delhi High Court upheld the emergency arbitration order obtained in Singapore against Future Group, putting on hold the Future-Reliance deal. The judge upheld that the purchase violated an agreement that was signed between Amazon and Future Coupons, an investor company in Future Retail Limited. The court observed that the Future Group had agreed to give Amazon a veto on transactions like the Reliance Retail acquisition, but failed to hold good to that commitment. The high court also ruled that Future Retail must deposit Rs 20 lakh into the PM-CARES fund, and that company executives must respond on why they shouldn’t be jailed.

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March 22, 2021 – A division bench of the Delhi High Court stayed the March 18 order. Amazon appeals to the Supreme Court against this stay order.

July 9, 2021 – The Supreme Court moved the hearing to July 20, after the final hearing before the Singapore Arbitration Tribunal, which began on July 12.

July 21, 2021 – The Supreme Court began hearing arguments from Future Retail and Amazon.

July 23, 2021 – CCI in a letter dated June 4 accused Amazon of concealing facts and making false submissions in 2019 when it sought approval for an investment in Future Coupons.

July 29, 2021 – The Supreme Court reserved its judgement on the issue.

August 6, 2021 – The Supreme Court ruled in favour of Amazon by accepting its appeal against the Delhi HC order dated March 22, which let the deal between Reliance and Future Retail proceed. The court held that the emergency arbitrator’s award obtained by Amazon in Singapore can be legally enforced in India.

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August 12, 2021 – Future Group filed a Special Leave Petition in the Supreme Court against the March 18 order, which is yet to come up for hearing.

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