Delhi High Court refuses to injunct Amazon from writing to regulators

New Delhi: The Delhi High Court on Monday allowed Amazon to oppose before regulators a Rs 24,713 crore deal by Kishore Biyani-led Future Retail Ltd to sell assets to Reliance Retail but said that the US e-commerce giant's attempt to control Future Retail is violative of FEMA and FDI rules.

Asking statutory authorities/regulators to take a decision on Amazon's objections in accordance with the law, Justice Mukta Gupta however did not void Future Retail's board approval for the Rs 24,173 crore deal with richest Indian Mukesh Ambani's firm.

The interim order came after Future Retail approached the court last month against a temporary injunction Amazon got from a Singapore arbitration tribunal to halt the Reliance deal.

Justice Mukta Gupta said that while FRL has made out a prima facie case of interim injunction, the relief cannot be granted as the balance of convenience lies in favour of both Future Retail and Amazon, and whether any irreparable loss would be caused to either side, has to be determined during trial of the suit or by a competent forum.

The high court said another reason why it did not grant an interim injunction was that both FRL and Amazon have already made their representations and counter representations to the statutory authorities or regulators and "now it is for the statutory authorities/regulators to take a decision thereon".

It further said that FRL's August 29 board resolution approving the deal was not invalid or void as claimed by Amazon and the e-commerce giant's representations to that effect to statutory authorities and regulators was "based on incorrect assertions" which meant that its action was based on "unlawful means".

Therefore, FRL has made out a prima facie case of "tortious interference", the high court said and added that "the act of Amazon would fall foul of the freedom of FRL and Reliance to enter into the transaction thereby causing loss to both FRL and Reliance which would be a civil wrong actionable by both FRL and Reliance in case they suffer any loss".

The term 'tortious interference' means to intentionally damage someone's contractual or business relationships with a third party.

The other findings of the court in favour of FRL were -- its suit to permanently restrain Amazon from interfering with the deal was maintainable and a combined reading of the shareholding agreements (SHA) of FRL and Future Coupons Pvt Ltd (FCPL) and the share subscription agreement (SSA) between Amazon, FCPL and the Biyanis show that they not only protect Amazon's rights in respect of investments it made in FCPL, they also "transgress" to control over Future Retail which requires government approvals and in absence thereof, were contrary foreign direct investment (FDI) rules framed under the Foreign Exchange Management Act.