NCLAT Asks Amazon to Pay Over Rs200 Crore Penalty within 45 Days
Moneylife Digital Team 13 June 2022
The National Company Law Appellate Tribunal (NCLAT), on Monday, upheld the December 2021 order of the Competition Commission of India (CCI) that suspended its earlier order approving Amazon's deal with Future Coupons, and had imposed a Rs202 crore fine on the e-commerce company for non-disclosure of relevant information. Amazon is asked to pay the fine within 45 days.
In December last year, CCI had imposed a penalty of Rs202 crore on Amazon and suspended its approval for the e-tailer's deal with Future Coupons. In the 17 December 2021 order, the Commission had said an approval granted to Amazon to acquire a 49% stake in Future Coupons would stand in abeyance, as the company suppressed information while seeking the clearance.
In its December ruling, CCI had said that Amazon ought to have notified the combination and Future Retail Ltd (FRL) shareholding agreement for acquisition of strategic rights over FRL through Future Coupons Private Ltd (FCPL) shareholders' agreement (SHA) as well as the commercial agreements between Amazon and Future group, to establish strategic alignment and partnership between Amazon group and FRL as well as have a 'foot-in-the-door' in the India retail sector.
Amazon failed to notify FRL SHA and the commercial arrangements, as part of the combination between the parties, and suppressed the actual purpose and particulars of the combination, as discussed above, in contravention of the obligation contained in sub-section (2) of Section 6 of the Companies Act read with Regulation 5 and sub-regulations (4) and (5) of Regulation 9 of the Combination Regulations, CCI had said.
CCI's order further added that, given that the combination is between players who are known in the online marketplace and offline retailing, and they have contemplated strategic alignment between their businesses, the Commission considers it necessary to examine the combination afresh, based on a notice to be given with true, correct and complete information, as required therein.
Citing CCI's order, Future Retail had argued that the 2019 deal, which Amazon had used to assert its rights over Future, has been suspended. Citing this deal, Amazon has blocked Future's attempt to sell retail assets to a rival, alleging breach of certain contracts. 
Future Retail had approached the Delhi High Court contending that the 2019 deal could not get the CCI's approval; therefore, it has no legal existence in the country, and the continuation of the entire arbitration proceedings is a perpetuation of illegality. However, in January 2022, the HC dismissed the plea filed by Future Retail.
In 2020, Amazon invoked arbitration after Future Retail announced its asset sale deal with Reliance Industries Ltd.'s wholly-owned subsidiary, Reliance Retail.
However, in April this year, after many twists and turns, including prolonged legal battles up to the Supreme Court (SC) and international arbitration proceedings, Reliance Industries Ltd (RIL) has called off the deal with FRL after FRL's secured creditors voted against the scheme.
The scheme of arrangement was for the transfer of retail and wholesale business and the logistics and warehousing business of Future group to Reliance Retail Ventures Ltd (RRVL), a subsidiary of the company, and Reliance Retail and Fashion Lifestyle Ltd (RRFLL), a wholly-owned subsidiary of RRVL, for Rs24,371 crore.
The deal was opposed by Amazon and intense legal battles have been waged ever since the deal was announced. (Read: Reliance-Future Retail's Rs24,371 Crore Deal Is Off. What Next?
In April this year, a bench headed by chief justice NV Ramana noted that Amazon and FRL will move the arbitration tribunal to resume arbitration proceedings. Disposing the plea, the bench said parties will approach the tribunal to resume arbitration proceedings and the tribunal will consider the termination application by FRL as under Section 32(2)(C), and pass orders.
The apex court was considering an application by Amazon seeking a direction to restrain FRL from alienating its assets. Amazon had alleged that FRL surrendered its stores to Reliance. Senior advocate KV Viswanathan, representing FRL, submitted before the court that the tribunal should decide on his client's application seeking termination of arbitration proceedings on priority.
Amazon, in an application, had raised the issue of Future Retail's shops and assets being taken over by Reliance, besides resumption of arbitration over FRL's merger deal with Reliance Retail. In March 2022, Amazon alleged that 80% of FRL shops have been surrendered to Reliance while Future Retail said no assets were transferred.
Future Retail had been sub-leasing store space from Reliance group. In a regulatory filing on 9 March 2022, FRL had stated that 342 of its large stores and 493 of smaller outlets—constituting 55% to 65% of retail revenue—received termination notices of sub-leases from Reliance entities. 
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