Remember the time when we went to Big Bazaar with our friends or family and it felt like an adventure. Everything was so much ahead of its time in Big Bazaar. Modern products, great staff, toys section, discounted prices- what else we wanted. there are no two ways around the fact that we all loved going to Big Bazaar, right? It was our source of entertainment. However, we all know how dynamic the world is, with everything that keeps on changing. Similar is the case with Big Bazaar. Let’s talk about it in detail about the prospects as well as what is currently going on.
Flashback to August last year, Future Retail, which owns Big Bazaar announced the sale of its supermarket chain Big Bazaar’s retail and wholesale business, along with its premium food supply unit Foodhall and the very popular clothing mart Brand Factory’s retail and wholesale units to very popular Reliance Retail which is a unit of Mukesh Ambani’s owned Reliance Industries. Sounds like a huge deal right?
Future Retail vs Amazon:
However, before the deal could be executed, the much popular Amazon objected to it claiming that it had a breach of contracts with Future Coupons which is the promoter firm of Future Retail. Amazon further alleged that it had an agreement with Future Coupons which provided it with a call option. According to the deal, Amazon could acquire all or part of Future Retail’s shareholdings. The agreement was made for ten long years.
This led to Amazon taking Future Retail into emergency arbitration before the Singapore International Arbitration Centre (SIAC). An emergency arbitrator stopped the latter from processing the deal. The matter has become so big that it has reached the doors of the supreme court.
The Supreme court upheld the orders of Singapore International Arbitration Centre’s emergency arbitration which paused the deal between Future Retails and Reliance Industries. The SIAC listened to arguments of both Amazon and Future Retail and ordered the latter not to take any steps in furtherance of the Board Resolution of 29 August.
The judgement was then passed to the supreme court in order to make the correct decision. The supreme court has finally given its orders. The supreme court said that it has framed two questions as well as tried to find answers to those questions. These two questions were framed by a two-judge bench of justices- Rohinton Fali Nirman and B R Gavai, both of them being equally popular and efficient.
The first question framed was to determine whether the emergency arbitration’s award was within the contemplation of the Arbitration Act or not. To sort out everything, we shall first learn what the Arbitration Act is.
Arbitration is a private process in which disputing parties agree to one or more individuals making the decision after providing them with all the pieces of evidence and after them hearing all the arguments. This process is similar to a trial in that parties make opening statements and provide evidence.
The process of arbitration is less formal and quicker. What is the meaning of arbitration award then which we were discussing? After all the pieces of evidence and hearing, the arbitrator provides an award which is basically of two types – bare bone award where the arbitrator directly announces the decision or the reasoned award in which the arbitrator gives reasons.
Believing that such award can be a rightful part of the arbitration act, the supreme court said that the orders taken were an important step in helping the decongesting of civil courts. Moreover, it was said to provide quick interim relief to parties in the arbitration. Hence, according to the court, it was a necessity.
The second and equally important question which was framed by the supreme court was whether the appeal did by Future Retail before a Division Bench of Delhi High Court was maintainable or not. The two-judge bench came to the conclusion that the order of a single bench of the high court could not be appealed before the Division Head. Why? Due to section 37(2) of the arbitration act, it was not possible to appeal the order of a single bench of high court before a Divisional Head. Let’s see Amazon’s perspective on this.
Regarding the second question, Amazon contended that the Arbitration Act is a whole code in itself. It further said that if the appeal does not fall within the four corners of section 37, it is not at all appealable.
On the other hand, Future Retail said that the appeal was not filed under the Arbitration Act in the first place. They claimed that the appeal was filed under Order XLIII of the code of civil procedure. After hearing the arguments of both sides, the bench said that it should be kept in mind that no corresponding argument was made to section 37(2) in order to include the scope of amended section 17.
We have discussed quite a lot about the court orders on this issue. Let’s now jump to the whereabouts of the current situation. What is happening to the deal?
As of now, the deal between Future Retail and Reliance Retail has been paused. It has been completely frozen due to the allegations of Amazon. The deal is currently pending behind the supreme court for adjudication. However, Future Retail is still doing the groundwork for the sale of its three big units namely Bug Bazaar, Foodhall and Brand Factory by going to various regulators in order to seek their clearance. The Supreme court is doing quite the opposite on the other hand. It rules that the emergency arbitrator’s ruling hold goods in India would put a complete hold on all the deals in the nation.
Both Reliance Retail and Future Retail are really concerned about their deal and are trying their best to make this deal happen at the earliest. For the same, both the parties have already approached the permanent bench of the Singapore International Arbitration Centre and are expected to look for an early resolution.
Can the deal be cancelled is a very good question? If the Singapore International Arbitration Centre finds out that the deal between Future Retail and Reliance Retail is actually under violation of the agreement that Future Coupons had with Amazon, it would directly lead to the end of the deal between Future Retail and Reliance Retail, according to some legal experts.
According to some other reports, if there is an actual violation of the agreement, the judgement would serve as a reminder to the parties to carefully follow the terms and conditions of the arbitration. The parties have been agreed to arbitration which is governed by SIAC along with abiding the Indian law.
The parties have therefore agreed to an emergency arbitration till the constitution of the arbitral tribunal.
Whatever happens in the future, one thing is sure that justice will prevail. If the allegation of Amazon is proved to be true, the deal could suffer a huge beating. The allegation has led to a delay in the deal, which could have been very beneficial for Reliance Retail, but the earlier pact between Amazon and Future Coupons is acting as a barrier. The decision of the SIAC will be therefore the deciding factor of this deal which clearly means the fate of both Future Retail and Reliance Retail lies within the decision of SIAC.