Amazon vs Future: Here’s the lowdown on India’s biggest legal case

right now

At stake is the Rs 27,000 crore deal between Future and Reliance, which has been on the

back-burner since 2020. Future group is trying to ensure the deal goes through, while

Amazon is trying to secure its interests in the Future group. Future Group and Amazon are

entangled in a legal battle over a decision by the former to sell its Big Bazaar retail business

to Reliance Retail, a subsidiary of RIL. Amazon claims that the transaction violates an

agreement that it has with the Future group’s Future Coupons Pvt. Ltd. (FCPL). The legal

battle between the two sides has been running for more than a year and an early resolution

seems nowhere in sight. So, why should a transaction between Future and Reliance bother

Amazon? It so happens that in August 2019, Amazon acquired a 49 percent stake in Future

Coupons Pvt Ltd for a sum of Rs 1,431 crore. FCPL is one of the promoters of the publicly

listed Future Retail Ltd (FRL), and, as per the arrangement with Amazon, the monies pumped

in by the US e-commerce giant in FCPL were to be transmitted to FRL, which owns the Big

Bazaar chain. The two parties also entered into a shareholders’ agreement that provided

Amazon with certain rights and protections. It was agreed that Amazon would have a call

option to acquire FCPL’s stake in FRL in the event of a change in Indian laws on Foreign Direct

Investment in multi-brand retail. Additionally, the terms of the agreement also stated that
Future group would not alienate any of its assets, nor would it engage in business with a list

of entities. This list included RIL as well. Delhi High Court  -On the SIAC emergency

arbitration: The Delhi High Court first came into the picture after the emergency award was

passed by the arbitration tribunal. Future group had moved the high court for the limited

purpose of getting Amazon to stop writing to Indian regulators. It was Amazon’s subsequent

plea seeking enforcement of the emergency award that assumed more significance.In

February 2021, a single judge ruled that the emergency award was valid and enforceable

and held that FRL, Future group CEO Kishore Biyani and other key persons in the group

companies were guilty of wilfully disobeying the emergency award. Future group was asked

to get a reversal of all the regulatory approvals it had received. A division bench of the high

court stayed this order, but it was reinstated in August 2021 after the Supreme Court’s

precedent-laying ruling on the validity of emergency arbitration. With the single judge’s

order reinstated, Future group filed an appeal before the Supreme Court and sought

permission to take precipitative steps in furtherance of the stalled deal with Reliance.

On the SIAC’s partial award: The Delhi High Court once again became the centre of action
when Future group moved the high court for a stay on the partial award of the tribunal
under SIAC rules. This request for a stay was denied by a single-judge bench and Future
group then appealed before the Supreme Court. On termination of the arbitration
proceedings: After the SIAC-governed arbitration tribunal expressed its inability to hear
Future group’s application seeking a termination of proceedings on priority, the Delhi High
Court was approached once again. While a single-judge rejected Future group’s petition and
refused to give directions to the tribunal, a division-bench stayed the arbitration
proceedings after Future group appealed. The division bench cited the CCI’s suspension of
approval for the 2019 FCPL-Amazon deal (more on that later) as the reason for the balance
of convenience in favour of Future group and the need for the arbitration proceedings to be
stayed. Amazon has appealed against this stay order before the Supreme Court.

NCLAT asks CoC to consider 63 moons' plea

in DHFL Resolution Plan
In a major boost to 63 moons technologies, which had filed a petition in the
National Company Law Appellate Tribunal (NCLAT) against Piramal ascribing Re 1
value to Rs 40,000 crore worth of recoverable assets in the DHFL case, the NCLAT on
Thursday ordered the petition to be considered by the Committee of Creditors
(CoC).

In a statement, 63 moons technologies said with this order, the CoC has to

reconsider the provision of section 66 of IBC, which mandates that the benefit
should go to all the creditors of DHFL.

However, in its resolution plan, the CoC had overlooked this provision to the benefit
of the Piramal Group.

The 63 moons, which holds non-convertible debentures (NCDs) worth over Rs 200
crore issued by DHFL, had challenged the NCLAT's judgment on the grounds that
the current resolution plan was "disappointing" for NCD holders.

In September last year, the Supreme Court had directed the NCLAT to complete the
hearing of the appeal filed by 63 Moons Technologies against the Piramal Group's
resolution plan for mortgage financier Dewan Housing Finance Corporation Ltd
(DHFL) within two months.

The 63 moons, the only company that challenged the decision of the CoC in NCLAT,
stated that if the CoC considers this without alteration of provision of section 66 of
IBC, all creditors of DHFL will be benefited.

It may be pointed out that in its resolution plan, Piramal had ascribed Re 1 value
against Rs 40,000 crore assets that have been fraudulently diverted by erstwhile
promoters of DHFL.

With 63 moons' efforts, lakhs of creditors will stand to benefit from this Rs 40,000
crore by way of recovery.
"The 63 moons has full faith in the Indian judiciary system and believes that truth
shall prevail," the company stated.

Appeals tribunal tosses out promoter plea

against liquidation of Siva Industries
The bankruptcy appeals tribunal has tossed out promoter C Sivasankaran’s
plea against the National Company Law Tribunal (NCLT) order on
liquidation of Siva Industries.
“The promoter of the corporate debtor, who is ineligible to submit a
resolution plan because of Section 29A of Insolvency and Bankruptcy
Code (IBC), is trying to provide a settlement proposal, which is similar to
a resolution plan under Section 12A of IBC. In other words, the promoter
is trying to restructure the loans granted by the financial creditor on the
pretext of a settlement proposal to be given under Section 12A of IBC,”
the NCLT had noted in August while ordering liquidation.
In its order in August, the NCLT had also dismissed the lenders’ proposal
to withdraw the company from bankruptcy proceedings, and the
application filed by resolution professional.
Siva Industries and Holding owes lenders about Rs 5,000 crore.
In the latest move, the bankruptcy appeals tribunal note: “It is pointed out
that Section 33 of the IBC enjoins ‘Liquidation of the Corporate Debtor’ if
the ‘Adjudicating Authority’ comes to the conclusion that the resolution
plan does not satisfy the ingredients of Section 30(2) of the Code.” 
While dismissing the appeal, the the bankruptcy appeals tribunal noted that
the conclusion arrived at by the insolvency court to direct the company's
liquidation was right and needed no interference.

It noted that the insolvency court's order was reasonable and fair keeping
in view the statutory provision laid down under Section 33(1)(a) of the
IBC. This provision says that the adjudicating authority - the NCLT - can
direct a corporate debtor's liquidation in the event it does not receive a
resolution plan within the stipulated timeframe.

The promoter in the case has a legal remedy available to appeal against the
appeals tribunal's ruling before the Supreme Court.