2 April 2022 4:21 AM GMT
Seeking orders to restrain Future Retail Limited from alienating its assets, e-commerce giant Amazon submitted before the Supreme Court that the FRL was acting in collusion with Reliance so to let the latter take over the former's stores in violation of the injunction orders.Future Group, on the other hand, submitted that it was facing great financial difficulties which resulted in termination...
Seeking orders to restrain Future Retail Limited from alienating its assets, e-commerce giant Amazon submitted before the Supreme Court that the FRL was acting in collusion with Reliance so to let the latter take over the former's stores in violation of the injunction orders.
Future Group, on the other hand, submitted that it was facing great financial difficulties which resulted in termination of the leases of their stores, and that the landlords later handed over the properties to Reliance group.
During the hearing, the Court asked if it can pass any restraint orders without hearing the landlords. The Court will continue the hearing on Monday.
A bench comprising the Chief Justice of India NV Ramana, Justice Krishna Murari and Justice Hima Kohli was hearing Amazon's appeal against the Delhi High Court order which stayed the proceedings in the Singapore Arbitration Tribunal. In the appeal, it has moved an application seeking to restrain the alienation of FRL assets. According to Amazon, assets must continue to remain with FRL and operate with FRL until matter is resolved by arbitral tribunal.
Senior Counsel Gopal Subramanium, appearing for Amazon, submitted that the resumption of arbitration is in the common interest of both the parties and added that there can be no sudden handover of assets to alter the status quo. He said that over 800 shops of FRL have been vacated and taken over by Reliance group.
Responding to FRL's submission that it was having no money to pay rent of their stores, Mr Subramanium submitted that in their own annual accounts signed in July 2021, they said that they have enough money to play all rentals and there is no document to show they couldn't pay the rentals.
Senior Advocate Aspi Chinoy appearing for Amazon submitted that counter filed by FRL establishes that transfer to shops to Mukesh Dhirubhai Ambani group was collusive and a consensual act.
He added that while their case is they couldn't pay the rent and had to surrender to landlords, 800 of these leases were then handed over to MDA group and as lessees they allowed same FRL to be the licensee
"Is this remotely possible without connivance? I haven't heard of such cooperative lessees in India", Mr Chinoy remarked.
Senior Advocate Harish Salve, appearing for FRL, informed the court that FRL still has 374 stores with it and the rest of the stores are with Reliance.
"Reliance entered into agreements with landlords. We owe them 3000 crores of rentals. Once this goes into section 7 of IBC, all this will come to an end. No one wants to do business with FRL as section 7 may come in anyday. For 1400 crores Amazon destroyed a 2400 crore company." Mr Salve said
"You said you have 374 stores. You say you haven't paid for any of them. Are you in occupation in default?" the bench asked
"Hanging by thread. My bank accounts are frozen. I can't pay rent. Everyone's hoping that if the scheme gets through Reliance will come in and everyone will get the money. That is where we are, its the hard reality that's where Amazon has got us", Mr Salve said.
Senior Advocate Mukul Rohatgi appearing for Future Coupons Private Ltd submitted that if leases cannot be honoured and rent cannot be paid the landlords are entitled to get the shops back. Opposing Amazon's prayer in its application, Mr Rohatgi submitted that there can't be an interlocutory order in an appeal where this issue doesn't arise.
"In February 2022, we couldn't find a solution to NPA, bank accounts were frozen. Nobody today is willing to give us anything today. 374 stores somehow we are running today, we're managing. Most employees have left. Amazon wanted to destroy us and they have", Mr Salve said.
Senior Advocate Rakesh Dwivedi appearing for the consortium of banks submitted that no interim order should be granted which goes against banks' interest and their interest shouldn't be prejudiced.
In the Future- Amazon dispute, the lawyers on behalf of the American e-commerce giant Amazon had on an earlier occasion proposed to have an informal dialogue with the Future Group to settle the dispute amicably.
Senior Advocate Gopal Subramanium for Amazon had later informed the Court that the dispute could not be resolved through discussion.
Amazon has also issued a public notice alleging that Future Group is on the verge of purportedly allowing handing over of the retail assets to Reliance in violation of orders of the Arbitral Tribunal and submissions made by it before the Supreme Court
According to Amazon, FRL and its promoters made false submissions before the Supreme Court stating that the retail assets would continue to vest in FRL until the scheme of arrangement with Reliance was finally approved by the NCLT.
'These false statements were made knowingly as FRL was on the verge of purportedly allowing handing over of the retail assets to the MDA Group.' the public notice issued by Amazon states
The notice has warned parties who assist or cooperate with FRL in transferring, disposing, or alienating its assets, of civil and criminal consequences under law.
The public notice has stated that any attempt by Future Retail Ltd and its promoters transfer/dispose/alienate any of its retail assets is in violation of binding orders of the Arbitral Tribunal, and party assisting or cooperating in such actions will be liable for civil and criminal consequences under law.
The bench comprising CJI NV Ramana, Justice AS Bopanna and Hima Kohli was hearing a special leave petition filed by Amazon against Delhi High Court's order staying further arbitration proceedings before the Singapore Tribunal against Future Group.
The impunged order of the division bench also stayed the Single Judge order which had dismissed Future Group's plea challenging the two orders passed by the Singapore Arbitration Tribunal which deferred the hearing in Future's plea seeking termination of the arbitration proceedings instituted by Amazon.
The High Court had also issued notice on the two appeals filed by Future Retail Ltd. and Future Coupons Pvt. Ltd. impugning the said Single Judge order and made it returnable on February 1, 2022.
Before the High Court, Future Group in its plea had placed reliance on an order passed by the Competition Commission of India on December 17, 2021, which had kept the approval granted for Amazon's deal with Future Group in abeyance.
Before the Supreme Court, Amazon has argued that the impugned interim order injuncting an ongoing international commercial arbitration seated in New Delhi under SIAC Rules presided over by a distinguished Arbitral Tribunal and involving parties and experts from across the world is strikingly contrary to the provisions, intent and purpose of the Arbitration and Conciliation Act which emphasises party autonomy and minimum judicial interference.
Single Judge's Observations
The Court was of the view that just because the hearing of the termination application was scheduled for a date after the hearing of the expert witnesses, it did not mean that the Arbitral Tribunal was not willing to consider the said applications on merits or was discounting the merits of the said applications.
The Court further noted that prima facie, there was nothing to suggest that the Arbitral Tribunal denied equal opportunity to the parties or that the Arbitral Tribunal was not accommodating towards requests made by the Future Group.
Case Title: Amazon.com NV InvestmentHoldings LLC vs Future Coupons Private Limited & Ors, Amazon.com NV Investment Holdings LLC vs Future Retail Ltd & Or
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