The SIAC on October 25 passed an interim order in favour of Amazon barring FRL from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party.
Accusing Amazon of trying to “destroy competition” by objecting to the Future Group-Reliance Retail deal, Future Retail (FRL) on Thursday told the Delhi High Court that the e-commerce firm was misrepresenting its legal rights and behaving like “East India Company”.
Senior counsel Harish Salve, appearing for Future Retail, told Justice Mukhta Gupta that Amazon is misrepresenting to the world through an agreement that FRL “can’t restructure its company, save jobs, and its creditors worth Rs 1,800 crore can’t be protected. This is wrong.”
As per the Companies Act 2013, entities with less than 10% shareholding cannot object to the scheme of the arrangement, he said, adding that a “passive holding of less than 10% does not entitle one to object to such schemes”.
He further said that “Amazon has no rights over FRL and cannot control its board. Amazon doesn’t have a direct stake in FRL and holds 49% in Future Coupons which in turn holds 9.8% in FRL. A foreign investor can’t acquire a controlling stake in the Indian multi-brand retail as per law. Over 10% investment by Amazon would have violated FEMA. When Amazon doesn’t have a controlling stake, how can it restrain FCPL?” Salve argued, adding that “FRL is a public listed company, Amazon can’t stop its transactions. Amazon is acting like the East India Company of 21st Century and is falsely claiming that it has taken charge over us”.
FRL wants to restrain Amazon.com NV Investment Holdings LLC from approaching regulatory bodies like the Competition Commission of India (CCI) and Sebi against stalling its transaction with Reliance Industries’ retail arm, Reliance Retail.
The Future Group and Amazon have been locked in a battle after the US-based company took FRL into an emergency arbitration over alleged breach of contract. The SIAC on October 25 passed an interim order in favour of Amazon barring FRL from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party. Subsequently, Amazon wrote to Sebi, stock exchanges and CCI, urging them to take into consideration the Singapore arbitrator’s interim decision as it is a binding order.