Given that Future Retail failed to stop Amazon from presenting itself to the various government bodies and regulators, the e-commerce giant will be allowed to make its case, mainly on the basis of the arbitration award. Shares of Future Group take a huge stall after the Delhi High Court upheld the Singapore International Arbitration Centre’s order. The order restrained Future Retail from moving ahead with the deal to sell its business to Reliance Retail. The shares of Kishore Biyani’s Future Retail Ltd. plunged 9.99% at 11.25 AM on Friday.
WHAT WAS THE IMPEACHMENT WHICH SPAWNED THE DEAL TO BREAK?
The Delhi Court on Thursday asserted that Future Retail Limited and its promoters violated the order. The order restrained FRL from going ahead with its assets sale deal with Reliance Retail. Moreover, the concerning talking point of the whole debate was the intention put forward to the court deliberately and willingly by the Future Group. While the deal didn’t provide reassurances of abiding with the law, the Delhi High Court declared the proposal of FRL’s sale consideration null and void.
The judgment panel questioned the Future Group, ‘why should they not get detained in prison?’ Justice J.R Midha directed the FRL members to be present with show-case proofs on why they should not get penal action amid the violation of the emergency’s arbitrator order. Kishore Biyani’s led Future Group were not concise enough in their dealings and hence faced the repercussions of not taking the deal forward with Reliance Retail.
In a statement, Justice J.R. Midha directed FRL and its promoters to record any action taken by the company in contention with the Reliance deal after October 25, 2020. The court also slapped up a fine of Rs. 20 Lakh on Future Group in an Interministral meeting. The imposed cost was due to the administration of the Covid-19 vaccine to adults of the Below Poverty Line(BPL) Group. The fine should get deposited to the Prime Minister’s Relief Fund. The prohibition of laws is understandable, and a company doing it should be liable to a punishable offense.
HOW DID THE ARBITRATION PAN OUT TO BE AN AWARD FOR AMAZON?
The U.S-based e-commerce giant Amazon sought enforcement of the Emergency Arbitration Award from the Delhi High Court. Amazon contented that it had invested Rs 1,431 crore in FCPL with the clear conscience that FRL will operate its activities as a sole vehicle. Amazon asserted that FRL took various steps to violate the agreement of the Restricted Person.
The response of Amazon came after it figured out the involvement of the MDA group. In a significant victory against the Future Group, Amazon claimed compensation from the company regarding the violation of EA at Singapore International Arbitration Centre(SIAC) on October 25, 2020. The tussle continuing between Amazon and the Future Retail Limited is the correspondence of many violations that goes unnoticed. A firm reason could be due to biasedness towards influential companies in India.
Recently, Amazon acquired a 49% stake in the FCPL. And thus, the involvement of The restricted person becomes a penal offense in the Indian Judicial System. While it’s pretty coherent, the Future Group manipulated its activities according to its interests as it foresaw the company’s debt rising upwards.
The Arbitration by Future Retail Ltd. turned out to be an award for Amazon. FCPL holds almost 9.8% share in the FRL. FCPL has objected to the EA award on various grounds saying that the EA is not an Arbitrator or Arbitrator Tribunal. Contrastingly, such activities come under the jurisdiction of fallacy and should not let go indisputably.
HOW DID THE SHOCKING NEWS UNRAVEL FOR FUTURE GROUP?
The debt-ridden company has already been under the hush of liquidity for a long time. Future Retail’s woes worsened during the coronavirus pandemic, and the company hasn’t observed an inclination in the stock markets since then. The implications of the devastating pandemic have made the companies suffer the consequences of the ailing Indian Economy.
Shares of Future Retail Group hit a staggering in the opening of the Bombay Stock Exchange on Friday. Weighed down by the developments over the case, the share prices opened lower at Rs 55.85 against the previous close price of Rs 62.05. On Friday, when the court bombarded the case against Kishore Biyani, it led to massive outrage across the social media platforms.
What was more breathtaking, that the shares which were in high demand previously before the lockdown now faced a hampering setback. Around 1.25 lakhs shares of Future Retail Ltd. changed hands on the volume front. The stocks got overturned in the opening deals on the Bombay Stock Exchange(BSE). The woes worsened on the NSE as the Future Group Stocks hit an all-time low of Rs 9.98 per cent.
It seemed like providing the vaccine to the financially depleted senior citizens proved to be wrongdoing for the Future Group. Was the fine that led to reactions in the share markets justified? My conscience says that if the high court is directing such legal compensation from the company, there might be a government influence for such actions. The company now stands on the verge of liquidation of Kishore Biyani’s led Future Group.
What has been intensifying the debate for so long has been the company’s denial of the breached agreements stated by the high court. The issue came to significance when the U.S.-based e-commerce giant Amazon challenged the actions of the Future Group. The Delhi High court directed the Future Group to connect with the authorities to recall the approval granted regarding this deal.
HOW DID THE FUTURE GROUP RESPOND TO THE OUSTED ALLEGATIONS?
The tussle between Amazon and FRL unfolded an open-mouthed event as the FRL straight away opposed all the allegations. FRL responded to the constant criticism viciously by not considering the judgment to be a fair one. FRL objected to the plea of Amazon by opposing the Emergency’s Arbitration Award in the court. It argued that Reliance was acquiring the Retail and wholesale business and the logistics and warehousing business.
The company arising concern was a part of the rigorous slump that the businesses had been facing over the past few months. The Delhi High Court upheld the Singapore International Arbitration Centre’s order restraining Future Retail from going ahead with its ₹ 24,713 crore deal. The locked battle seems to be in favor of Amazon unless the case show-case a majestic U-turn.
Kishore Biyani’s storyline has taken a tragic mode even after gaining so much popularity before the lockdown. In an exchange filing on Saturday, Future Group asserted that it challenged the ruling by a single bench of the Delhi High Court. FRL believes that the high court has crossed all the limitations by passing out orders that were never a part of the prayer or any appeal registered by Amazon or any other party.
WHAT POSSIBLY COULD BE THE LAST NAIL IN THE COFFIN IN THIS CONTROVERSIAL DEAL?
The deal has now ridden over four months, and still, there seems to no end. The controversial battle keeps to locks the horn, and no party seems to back down from their stride to tranquilize the situation. The court on Thursday inserted a show-cause notice for Future Group, asking why they should detain in civil prison for three months. A spokesperson familiar with Future Group decisions said, “Arguments against such additional orders form the main part of the appeal by Future Group.’
Does this counter-statement change the dimension of the case? A division bench of the Supreme Court will hold a hearing on Monday to review the judgment. If the case after the final assessment gives no conclusive evidence or goes against Future Group, the respondents may approach the Supreme Court. Jeff Bezos‘s Amazon has been conducting activities in India over the past few years. But to encounter the raveling counter-attack, it would need a fair judgment in their favor.
The restraining order saw the detention of Future Group’s founder Kishore Biyani, along with the attachment of all his assets. Future Group affirmed that imposing a monetary penalty for allegedly breaching the agreements was another misinterpreted step taken by the Delhi High Court. “Ordering attachment of assets and urging detention of Biyani are additional areas that got inserted by the single-judge bench of Delhi HC without any such prayer by the appellant Amazon.”
While the compliancy lies in favor of Amazon momentarily, but don’t expect Future Group to stand off any lies in the deal break-up. Posing a penal liability on Future Group for availing the vaccine to the underprivileged senior citizens of the Below Poverty Line(BPL) portrays the government’s inadequacy in dealing with adverse situations.
The ongoing war reached the foothold when the Future Group asked the SIAC to remove FRL from the scope of its interim order that temporarily blocked the dealership with the MDA group. What will be happening at the next hearing is ambiguous for everyone associated with the deal. The asset management sale would be a propelling acquirement success for the Billionaire Mukesh Ambani. But it remains up in the air if the judgment will pass in favor of the Future Group or not? Stay tuned on April 28 to follow up with the case!