Days after billionaire Mukesh Ambani-led group took some of the stores of Future Group, whose lease had expired due to the non-payment of rent, Amazon.com Inc on Tuesday accused the two of ‘fraud’ and said such ‘contumacious’ transfer will be liable to legal action.
Amazon has been contesting the Rs 24,713 crore sale of Future Group’s retail assets to Ambani’s Reliance group, first announced in August 2020, and the case is currently before the Supreme Court.
Reliance last month signed lease deeds with landlords who haven’t been paid rent for months for stores built on their properties by Future Group. Initially, it sub-leased the properties to Future Group for operation, but this month terminated those sub-leases and took over 947 such stores.
In advertisements in leading newspapers headlined ‘Public Notice’, Amazon said: “These actions have been done in a clandestine manner by playing a fraud on the Constitutional Courts in India, the Arbitral Tribunal and Indian statutory authorities/agencies”.
It accused Future Retail Ltd and its promoters of making a false submission before the Supreme Court that retail assets would continue to vest in FRL until the Reliance deal was approved by the insolvency court — the National Company Law Tribunal (NCLT).
“These false statements were made knowingly as FRL was on the verge of purportedly allowing handing over of the retail assets to the Mukesh Dhirubhai Ambani (MDA) Group.”
Amazon’s public outcry came even though on March 3, it offered to hold talks to resolve the dispute.
In stock exchange filings this month, Future has said it could not pay rent at many outlets given its distressed financial situation and that Reliance, which had taken over many of its leases, had issued it with termination notices.
“It has now come to light that FRL and its promoters have been trying to remove the substratum of the dispute by purportedly transferring and alienating FRL’s retail assets, comprising the retail stores in favour of the MDA group,” Amazon said in the public notice.
It went on to warn all concerned against such transfer.
“Amazon hereby puts all persons concerned to notice that any attempt by Future Group promoters to transfer, dispose or alienate any of its retail assets is in violation of the arbitral tribunal, which operates as order of the Indian court and any party assisting in such fraudulent and contumacious actions will be liable for civil and criminal consequences under the law,” it said.
Future — which has more than 1,700 outlets, including popular Big Bazaar stores — has been unable to make lease payments for a bulk of its outlets.
With landlords insisting on payments or shutting down of stores, Reliance transferred the leases of some stores to its name and sublet them to Future to operate the stores. It also offered all the 30,000 employees of Future Retail jobs.
In addition, a majority of inventory at these stores was being supplied by Reliance Jiomart as a cash-strapped FRL could not clear dues to existing suppliers.
Earlier this month, the Kishore Biyani-led debt-laded Future Group firms said they have been served notices to terminate the lease of 835 Future Retail stores and 112 Future Lifestyle stores.
Amazon has argued that Future violated the terms of a 2019 deal the companies signed when the US e-commerce giant invested USD 200 million in a Future Group unit. Amazon’s position has been backed by a Singapore arbitrator.
Future had in January challenged its lenders in the Supreme Court to avoid facing insolvency proceedings over missing bank payments, citing its dispute with Amazon.
In August 2020, the loss-making retail giant proposed to sell its retail, wholesale and logistics arms that included businesses, including Fashion at Big Bazaar, Koryo, Foodhall and Easyday, to Reliance for Rs 24,713 crore.
Amazon in the notice said the award of the arbitration tribunal, who it had approached to block the Reliance-Future deal, had restrained the Biyani-led firm and its promoters from directly or indirectly taking any steps to transfer/dispose /alienate /encumber retail assets in any manner without the prior written consent of Amazon.
“The above-mentioned orders passed in the arbitration continue to subsist and are operative as on date,” it added.
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