New Delhi: New Delhi: The Supreme Court Thursday reserved verdict on e-commerce giant Amazon's pleas against the merger of Future Retail Ltd (FRL) with Reliance Retail and would rule whether Singapore's Emergency Arbitrator (EA) award, restraining the Rs 24,731 crore deal, was valid under Indian law and can be enforced.
Amazon.com NV Investment Holdings LLC and FRL are embroiled in a bitter legal fight over the deal and the US-based firm has sought in the apex court that the EA award was valid and enforceable.
“So we close the case now. The judgement is reserved,” a bench of justices R F Nariman and B R Gavai said after senior advocates Harish Salve and Gopal Subramanium, appearing for FRL and Amazon respectively, concluded their submissions in the case.
The top court, which had earlier asked the National Company Law Tribunal (NCLT) not to pass the final order related to regulatory approvals for the FRL-RRL amalgamation, commenced hearing the final arguments on July 20.
“We will decide whether EA award falls under section 17 (1) (which deals with interim award by arbitral tribunal) of the Arbitration and Conciliation Act. And if yes, then whether it can be enforced under section 17 (2) (of the Act),” the bench said.
The provisions of the Act deal with the interim measures ordered by an arbitral tribunal and section 17 (1) says: “Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute.”
Section 17 (2) provides that the arbitral tribunal may require a party to provide appropriate security in connection with an interim measure ordered. Salve, appearing for FRL, referred to judgements on validity and the enforceability of arbitral awards and said that there was no notion of EA under the Indian law on arbitration and conciliation and, in any case, there was no arbitration agreement to this effect.
There was no provision for EA under the Indian Law and “it cannot be done by the process of construction”, Salve said referring to the single-judge order of the Delhi High Court which had held the award of the EA to be valid.
Amazon told the bench that the Biyanis of Future Group had negotiated with it to enter into certain agreements and is bound by the EA award restraining FRL from going ahead with the Reliance Retail merger.
Subramanium in his submissions reiterated that the EA's award in favour of Amazon was valid and enforceable under of the Arbitration and Conciliation Act of India.
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“For the purposes of this Act, the arbitral tribunal does not only imply a three-member tribunal, an EA would also be included. And merely because the word 'emergency' is not there (in the Act), does he cease to be an arbitrator under the Act,” he said, adding that the court here has to enforce the award as per the provisions of the law.
Salve advanced rejoinder submissions for a few minutes and said FRL has been saying that the EA had no jurisdiction to pass any award and the Delhi High Court cannot make it enforceable by constructing the Indian law.
“A slew of authorities (judgements) have been cited. Would it be convenient by tomorrow morning if we brought on record a short note responding to the authorities cited in the rejoinder,” he told the bench which allowed the request.
Kishore Biyani and 15 others including FRL and Future Coupon Pvt Ltd (FCPL) have been made parties by Amazon in a batch of pleas challenging the Delhi High Court order of the division bench which paved the way for the deal. Amazon had moved the top court against the Delhi High Court's division bench order which paved the way for the Reliance-FRL deal.
On February 8, the division bench had stayed the single-judge direction to FRL and various statutory authorities to maintain the status quo on the mega-deal. The interim direction was passed on FRL's appeal challenging the February 2 order of the single judge which had ruled in favour of the US firm saying that the EA's award was valid and enforceable.
Amazon had first filed a plea before the high court (single judge) for enforcement of the October 25, 2020, EA award by Singapore International Arbitration Centre (SIAC) restraining FRL from going ahead with the deal with Reliance Retail.
The high court division bench had however said that it was staying the single-judge order as FRL was not a party to the share subscription agreement (SSA) between Amazon and FCPL and the US firm was not a party to the FRL-Reliance deal.
FRL, in its appeal, had claimed that if the February 2 order has not stayed it “would be an absolute disaster” for it as the proceedings before the NCLT for approving the amalgamation scheme have been put on hold. It had contended that the single judge's status quo order will effectively derail the entire scheme which has been approved by statutory authorities in accordance with the law.
In August last year, the Future group had reached an agreement to sell its retail, wholesale, logistics, and warehousing units to Reliance. Subsequently, Amazon took FRL into EA before the SIAC over the alleged breach of contract by the Future group.
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(PTI)
