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Willful and deliberate violation of agreement is liable to be dealt with severity.

Hence, Amazon wins the battle.

The Delhi High Court upheld the Emergency Award passed against Future-Reliance deal, observing that the Future Retail, Future Coupons, Kishore Biyani and others violated the Emergency Award.

The Court also imposed a cost of Rs 20 lakh on Future group, to be deposited with the Prime Minister's Relief Fund for providing COVID vaccination to the Below Poverty Line category - senior citizens of Delhi.

Justice JR Midha said that although the Future Retail, Kishore Biyani and others have taken Rs.1431 crore from Amazon, solely on the basis of the rights provided by FRL to FCPL that they would not transfer their retail assets without the prior consent of Amazon and never to a Restrict Person. However, since the agreement was breached and the intention proved to be dishonest, there should be no remorse other than heavy cost.

The court said that when the Future Retail, Kishore Biyani and other parties have deliberately and willfully violated the interim order passed dated October 25, 2020, their case falls under consequences enumerated in Order XXXIX Rule 2A of CPC. Accordingly, a show cause notice stood issued, asking the violators as to why they should not be detained in civil prison for a term not exceeding three months.

Directing the attachment of assets of Kishore Biyani, Future Retail, Future Coupons and other parties, the Court ordered the filing of an affidavit detailing their assets. It further held that the Emergency Arbitrator had rightly invoked the 'Group of Company' doctrine in relation to the Future Group companies. The Future Group is also barred from taking further action in furtherance of the deal with Reliance.

Kishore Biyani and others are directed to appear before the High Court on the next date of hearing in April 28, and the Future group was directed to place on record any action taken by it in connection with the Reliance deal after October 25, 2020.

The court however, cleared that treating all the agreements between Amazon-Future Coupons Ltd and Future Coupons-Future Retail as a "single integrated transaction" did not amount to control of Amazon exercising control over FRL and therefore, would not be in violation of any law.

The plain facts are that Respondents induced an investment from Amazon based on specific representations, that the investment is in accordance with law and that the control remains with the respondents despite the special, material and protective rights. However, the Respondents, contrary to the express terms of the Agreements and their representations, acted in egregious breach of their obligations without any justification by proposing to dispose of the Retail Assets to a Restricted Person, viz. Mukesh Dhirubhai Ambani Group.

In the absence of any defence to breach of contract, and the respondents having taken full benefit of Amazon's investments, sought to challenge the very agreements entered into by them, by alleging breach of FEMA.

The court however ruled that having benefited from substantial investment from Amazon under the Agreements, FRL and the other Respondents are in breach of their contractual obligations. In particular, FRL‟s argument that Amazon‟s investment in FCPL and the exercise of such rights under the FCPL-SHA to prevent the sale of FRL‟s Retail Assets to a Restricted Person violates the law, cannot be permitted.

Amazon was always ready, willing and able to assist with helping FRL in a manner consistent with law through its distress and in fact did engage to find a commercial solution to the problems FRL was experiencing. It did so by way of finding partners to partner with FRL who are non-Restricted Persons as well as look at infusing money through a structure similar to that of through FCPL. However, despite Amazon providing a contractually compliant arrangement to help FRL to get over the financial distress of FRL, the Biyanis, drove into a transaction with a Restricted Person, namely the MDA Group.

Justifying the costs imposed on Future, the court said that the Emergency Arbitrator is an Arbitrator for all intents and purposes; order of the Emergency Arbitrator is an order under Section 17(1) and enforceable as an order of this Court u/s 17(2) of the Arbitration and Conciliation Act.