The Kishore Biyani-owned Future Group had in August agreed to sell its retail and wholesale assets to Reliance Retail Ventures in an all-cash deal worth Rs 24,713 crore. The Singapore International Arbitration Centre had in an interim ruling last month directed Future Group to put the proposal to sell the retail business to Reliance on hold until it gives a final judgement on a plea filed by Amazon. “The respondents are injuncted from issuing securities of Future Retail or obtaining and securing any financing, directly or indirectly, from any restricted person,” it said. Some legal experts said such blanket restriction can be rendered as void by court.
“While entering into a share purchase agreement, parties are free to agree to a reasonable restriction on transfer of shares to competitors, etc. However, the restriction cannot be a blanket restriction to include all persons engaged in a similar business,” said Ashish K Singh, managing partner at law firm Capstone Legal. “Such a blanket restriction is in restraint of trade and can be rendered as void by court’s intervention.”
The Singapore arbitration court ruled that while Amazon was aware of Future Retail’s discussions with Reliance, it had no details on the contours, nature and specifics of the potential deal. It also said the disputed transaction is with a competitor that Amazon had expressly singled out as a restricted person and the parties unequivocally agreed to this investment parameter. In response to ET’s request for comment, an Amazon spokesperson said, “As a responsible investor and a long term player in India, Amazon complies with foreign direct investment laws and seeks regulatory approvals including from the Competition Commission of India.”