'Future Retail Will Sink With 30,000 Employees If Reliance Deal Doesn't Get Through' : Future Group Lawyers To Supreme Court In Case Against Amazon

In the Amazon-Future case, the Future Group on Tuesday submitted before the Supreme Court that being in a financially precarious situation, Future Retail Ltd will "sink with 30,000 employees losing their jobs" if the Rs 26,000 crores deal with the Reliance doesn't go through.

Both FRL and Future Coupons Pvt Ltd argued that FRL should be allowed to go forward with the interlocutory proceedings of the scheme with Reliance to ensure that they would be able to finalise the deal once the dispute with Amazon is concluded.

Senior Advocate Harish Salve appearing for Future Retail submitted: "We first sank because of lockdown when people wouldn't go to shops. We are in this financially precarious situation. Fortunately, banks are willing to wait and say that if the transaction goes through the Reliance deal, we will pay off the banks. The Reliance deal is close to 26,000 crores, and Amazon's stake is 14000 crores. Around 30,000 Jobs will be saved. If you put this all together, let us get to that final stage. Amazon's interests aren't hurt."

Salve highlighted that under the Reliance deal, the employees are protected.

 "The 9th September order protects both sides which says no final orders are to be passed. The interlocutory proceedings be completed by then",  Salve submitted referring to Supreme Court's earlier order dated 9th September 2021 which directed that no final orders are to be passed by any authority on the FRL-Reliance scheme.

Senior Advocate Mukul Rohatgi appearing for Future Coupons submitted that at this stage, the balance of equities favours Future Group and Amazon's interests are not harmed at present. "The individual promoters of Future Group, the Biyanis - their head is in the noose. Their entire assets are hypothecated, if we don't get the reliance deal with FRL, everybody will be sunk, we have more than 25000 employees", Rohatgi submitted.

Amazon Wants To Paralyse Everything: FRL

Mr Salve argued that Amazon wants to paralyse everything, as they are not interested in FRL and they are targeting the Reliance group which is their real competitor.

"If we go into bankruptcy, the 30000 people employed lose their jobs, these shops are closed. It's good for Amazon." Salve said

A Bench comprising Chief Justice of India NV Ramana, Justice AS Bopanna and Justice Hima Kohli reserved its orders in the following two pleas:

• Special Leave Petitions of  Future Coupons and Future Retail against Delhi High Court's Single Bench March 2021 order directing attachment of assets of Future group companies and its promoters for breach of Emergency Award (order passed by a single bench of Justice Midha)
  
• Special Leave Petitions of both FRL and FCPL challenging Delhi HC's 29th Oct order which refused to stay the Singapore Arbitration Tribunal's refusal to vacate the Emergency Award restraining it to continue with Reliance deal.

During the hearing, the bench indicated that without going into larger aspects, it might ask the Delhi High Court to decide the Future Group's appeal against the Singapore Tribunal's order. The bench also said that Justice Midha's order could be set aside as subsequent developments have taken place with the Singapore Tribunal affirming the Emergency Award.

 Which order will operate? Emergency Arbitrator's Order or Constitutional Court's order?: FRL

Mr Salve submitted that the Emergency Arbitrator injuncting FRL from going forward with the scheme with Reliance had come after the Delhi High Court had stated there is no arbitration agreement. Therefore, it has to be decided which of these orders will operate. He pointed out that a Single Judge of the Delhi High Court, by an order issued on December 21, 2020, in FRL's suit had held prima facie that FRL does not have an arbitration agreement with Amazon. 

No contractual rights against FRL can be asserted by Amazon Until CCI's Approval: FRL

Referring to the recent order of the Competition Commission of India which revoked the sanction for Amazon's deal with Future, FRL argued that Amazon cannot seek to enforce its contractual rights against Future Group until it gets the CCI's sanction.

 Justice Midha's Order Fails to Satisfy the requirements of the Principles of Natural Justice: FRL

 According to FRL, the manner in which the Single Judge proceeded to pass the Enforcement Orders fails to satisfy the requirements of the Principles of Natural Justice. 

According to FRL, the prejudice occasioned to FRL is writ large in the Impugned Judgment, in which the Single Judge, after denying FRL an opportunity to file pleadings in the matter, rejected its contention that the Award of the Emergency Arbitrator is a nullity.

Justice Midha's Order In teeth of the directions issued by a co-ordinate bench Delhi High Court: FRL

FRL has submitted that the coordinate Bench of the High Court in its suit had issued an express direction to the concerned statutory authorities (SEBI and CCI) to consider Amazon's objections and pass appropriate orders on the applications filed by FRL for approval of the Reliance Transaction. These approvals having been thereafter granted by the concerned authorities, it was not open to the Single Judge to direct recall of these validly obtained permissions.

The FRL has also cited the Competition Commission of India's order dated 17.12.2021 which suspended Amazon's deal to acquire 49% stake in FCPL, on the ground that Amazon failed to disclose the true and complete details for the purpose of the Combination

Punitive Directions In Justice Midha's order Be Set Aside

FRL has argued that the punitive directions issued by the Single Judge have to be set aside since its actions in obtaining the approvals of CCI and SEBI were in terms of the directions issued in the Suit Judgment. Also, the Supreme Court had on February 22, 2021 passed an interim order permitting proceedings before the NCLT to proceed, but not culminate in a final order sanctioning the Scheme.

Submissions On Behalf Of Future Coupons: 

Senior Advocate Mukul Rohatgi appearing for FCPL submitted that both Future Coupons and Future Retail are on the receiving end of the brunt of Justice Midha's order. He added that the injunction by the arbitrator was against both the companies and the promoters, the Biyanis.

No Opportunity of Hearing, No time Granted to Future Group To File Reply: FCPL

Mr Rohatgi submitted that no time was granted by Justice Midha to respond. He added that a 200-page order was passed without any reply being filed and everyone was held guilty of contempt.

"On this itself the order must go. Holding us guilty, punitive actions and contempt are totally baseless. This isn't procedure established by law." Mr Rohatgi said.

"These punitive directions couldn't have been passed even in contempt jurisdiction without a proper opportunity of a reply", he added

FCPL took no action In violation of Arbitrator's Order: FCPL

Mr Rohatgi submitted that the Single Judge mixed up FCPL and FRL and it was examined like both the companies are the same. No action in violation of interim award of the arbitrator was taken by FCPL or the promoters Biyanis.

Agreement Between Amazon & FCPL Goes after Revocation of Amazon's approval: FCPL

Mr Rohatgi submitted that there is an agreement between Amazon and Future Coupons which is enforceable in India only on approval granted by CCI, which was granted but has been revoked last month holding that Amazon's conduct was fraudulent. Further, a 200 crores worth fine was imposed on Amazon.

He argued that if the approval goes, the agreement enforceability in India goes, if enforceability goes the arbitration agreement goes and the order goes.

Caused Great Prejudice, Effected Business Prospects: FCPL

Mr Rohatgi submitted that the Single Bench's order giving holding them guilty of contempt and issuing punitive directions has caused a great prejudice to the Future Group.

"What was the hurry of hearing the matter daily, with no opportunity of filing reply. It has caused great prejudice to us. We are business people, the way we are injuncted and held to be guilty has affected our business prospects." Mr Rohatgi said.

What was the Delhi High Court single bench March 2021 order?

A single-judge bench of Justice JR Midha on March 18, 2021 had directed for attachment of property of Future group companies and their promoters including Kishore Biyani and had also directed them to file additional affidavits indicating the details of their assets and property for violation of the emergency award. Also, the Single Bench had imposed a cost of Rs. 20 lakhs on FRL and its promoters for raising an untenable plea of nullity against the award and the cost was directed to be deposited in PM fund of Covid 19 to be used in vaccination of senior citizens belonging to the below poverty line group. The Court ordered the same to be deposited within 2 weeks and the same shall be put on record within 1 week thereafter.

The Court had held that the Emergency Arbitrator had rightly invoked the 'Group of Company' doctrine in relation to the Future Group companies and in view of this, the Court had also issued show-cause notice to as to why they shouldn't be detained in civil prison for violation of the order dated 25th October 2020.

A separate report on Amazon's submissions led by Senior Advocate Gopal Subramanian is to be published.

Case Titles: Future Retail Ltd v Amazon.com Investment Holdings & Ors, Future Coupons Pvt Ltd & Ors vs Amazon.com Investment Holdings & Ors by

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