The American multinational asks SEBI to withdraw $3.4 billion Future-Reliance deal
The US e-commerce giant Amazon has written to Ajay Tyagi, the chairman of market regulator Securities & Exchange Board of India (SEBI) and other senior executives, to withdraw its conditional approval granted to Future Retail Limited (FRL). It relates to the $3.4-billion merger deal between the Kishore Biyani-led FRL and Reliance Industries Limited (RIL).
The communication has also been passed to the officials at stock exchanges, including the Bombay Stock Exchange (BSE) Limited and the National Stock Exchange (NSE) of India.
In 2019, Amazon had acquired a 49 per cent stake in Future Coupons (FC), the promoter entity of Future Retail, for about Rs.1,500 crore. It is now in a legal battle with FRL to stop its deal with RIL.
Amazon had earlier requested SEBI and the stock exchanges to act in aid of the binding injunctions operating against FRL, FC and the Biyanis, in terms of the EA Order and the Order on Vacate Application and recall the Observation Letters.
In the letter, Amazon said, "We wish to reiterate subsequent developments in respect of the EA Order, which reaffirms the position that the Observation Letters were obtained in violation of binding injunctions operating against FRL, FC and the Biyanis, and thus are null and void."
In 2020, an emergency arbitrator constituted under the Rules of the Singapore International Arbitration Centre, 2016, passed the EA Order containing the directions against FRL, FC and the Biyanis. The order included that the respondents refrain from taking any steps in furtherance or in aid of the Board Resolution made by the Board of Directors of FRL in relation to the Disputed Transaction.
It further said that without prejudice to the rights of any current promoter/lenders, the respondents were injuncted from directly or indirectly taking any steps to transfer/dispose of/alienate/encumber FRL's retail assets.
But Amazon said that despite the binding directions contained in the EA Order, FRL continued to pursue the approval for the impugned transaction by terming the EA Order a "nullity."
The multinational's letter alleged, "FRL issued various communications to SEBI and the stock exchanges in direct contravention of the EA Order and in a brazen attempt to subvert the rule of law. Pursuant to such contumacious conduct, FRL misled SEBI and the stock exchanges, and precipitated the Observation Letters."
Aggrieved by the violations of the EA Order, Amazon said it was constrained to initiate enforcement proceedings before the Delhi High Court (HC). Early this year, the court had passed the enforcement judgment.
But FRL, FC and the Biyanis challenged the judgment on the ground that the EA Order, being a "nullity", could not be enforced. Recently, the Supreme Court (SC) upheld the legality and enforceability of the EA Order.
Amazon further alleged that FRL had even approached the Arbitral Tribunal for vacating the EA Order. Two months ago, the SC had stayed the enforcement proceedings initiated by Amazon before the HC in anticipation of orders to be passed by the Tribunal on FRL's Vacate Application. But the SC did not stay the judgment or any of the directions contained in the EA Order.
Subsequent to that, the Tribunal passed the partial final award on jurisdiction dismissing FRL's jurisdictional objections. The dispositive directions contained in the award included that it had jurisdiction over FRL in the arbitration. This was in view of its determination that each party was bound by the FC's shareholders agreement (SHA) and arbitration, including FRL, notwithstanding its non-signatory status.
The letter further read that later the Tribunal had passed the Order on Vacate Application dismissing FRL's Vacate Application and re-affirming the directions contained in the EA Order. Thereafter, the HC had dismissed FRL's application seeking an ad-interim stay of the Order to Vacate Application.
"The directions contained in the EA Order have thus continued to bind and operate against FRL from October 2020, and have now been re-affirmed by the Tribunal," the letter said.
"FRL's pursuit of the approval for the impugned transaction before SEBI and the stock exchanges was in clear breach of the directions in the EA Order. The Observation Letters were thus illegally obtained and are a nullity in the eyes of law," it stated.