The multinational retail giant Amazon moves to Supreme Court to stop Future Retail Limited's (FRL) assets sale to Reliance Industries. Three days ago, the Delhi High Court in an interim order, revoked its single bench's decision staying FRL's $3.4 billion deal. On February 2, the single bench had asked FRL to maintain status quo.
Amazon alleged that FRL violated their contract by agreeing to sell its retail assets to Reliance last year. In its petition to the Supreme Court, Reliance noted that the high court should have waited for a detailed order from the single bench before revoking the stay order. It also added that there could be no return if the Competition Commission of India and the Securities and Exchange Board of India run the procedures after the high court allowed them.
In the interim order, the division bench had said that FRL was not a party to the share subscription agreement (SSA) between Amazon and Future Coupons Pvt Ltd (FCPL), another Future unit. Also, Amazon was not a party in FRL-Reliance deal. According to the division bench's judgment, since these agreements are independent of each other, the 'group of companies' cannot be invoked.
The 'group of companies' doctrine states that when a deal is signed by one entity out of a group of companies, all the others in the group are included without them signing the deal.
The dispute began when FRL decided to sell its retail assets to Reliance, including debt. Amazon argued that it is a violation of a separate deal made with FCPL which would forbid Future Group from selling assets to a list of companies including Reliance.