Amazon has written a letter to Future Retail’s promotors stating that the shareholder meeting for the approval of the deal with Reliance Industries is illegal. 

In a letter to the Kishore Biyani-led company on April 12, Amazon said that the meeting for the approval of the asset sale was not only illegal but also a breach of the 2019 investment agreement between Future Coupons and the eCommerce giant.

As per the agreement, Amazon had restricted Future Group’s companies to deal with restricted parties including Reliance Industries. 

Future Retail and multiple other companies of the Future Group agreed to sell its assets to Reliance Inudstries for ₹24,713 crore in August 2020. However, Amazon opposed it and dragged Future Group’s companies to arbitration. In its letter to Future Group’s promotors, Amazon said that if Future Group held a shareholder meeting, it would also violate a Singapore arbitral tribunal’s injunction on the sale of Future Retail’s assets to Reliance.

This comes even as the National Company Law Tribunal (NCLT) in February had allowed the debt-strapped company to go ahead and convene those meetings to consider the scheme of arrangements to sell its assets to Reliance Industries. The meeting is set to be held on April 20 and 21.

Warns consequences

“Any person or entity assisting FRL, FCPL or the Promoters in violating these valid and binding injunctions will be liable for consequences, severally and jointly, under law at their own cost and peril,” Amazon said in its 16-page letter which was reviewed by BusinessLine. 

It further added that any attempt to act contrary would be treated as a willful, illegal and fraudulent attempt to avoid the injunction by those who are expressly named and by those who assist them, even if they are not expressly named in such an injunction.

Impugned transaction

Amazon, which had invested ₹1,400 crore in August 2019 for a 49 per cent stake in FCPL said: “categorically stated” that it did not consent, or approve any transaction involving a ‘restricted person’. “In complete disregard of these binding covenants, and undertakings, FRL, on August 29–2020, issued a disclosure stating that it had entered into binding agreements relating to the impugned transaction.”

The deal with Reliance has been stuck for over 18 months now. In the meanwhile, Reliance had started repossessing at least 900 stores of Future Retail’s retail chain Big Bazaar. 

“We are distressed to note that the promoters, FCPL and FRL are still intent on moving forward with the scheme with the (Mukesh Dhirubhai Ambani) MDA Group, which constitutes a continuing non-compliance of the order of the duly constituted arbitral tribunal which is enforceable as any court order,” it added.