Amazon favors Future Retail by selling a stake to Premji Invest and not Reliance Industries Ltd (RIL), as a 2019 deal listed Mukesh Ambani among the 30 entities to which shares could not be sold as part of a clause of non-competition.
Although the deal was later signed with Future Coupons Pvt Ltd (FCPL), Amazon sees this only as a technicality because this company has a common promoter with Future Retail.
This is the crux of the position taken by Amazon at the hearing held by former Singapore Attorney General VK Rajah, the sole arbitrator investigating the dispute between the American retail giant and Future Group over the latter’s ₹ 25,000 crore deal with RIL. .
In a hearing that lasted five hours, Amazon based its argument on an alleged breach of contract. In 2019, due to FDI restrictions in the e-commerce sector, Amazon could not have invested in Future Retail; therefore, it invested Rs 1,430 crore in FCPL. “If the agreement between RIL and Future Retail is to go through, then Amazon’s investment is wasted as it will not get any return,” said a source.
On the other hand, Future Retail informed the arbitrator that the agreement between Future Retail and RIL was not in breach of any contract because Amazon’s agreement is with FCPL, which is a separate entity. Out of the five seats on Future Retail’s board, the promoters only hold two. Therefore, it was not a decision of the promoters alone, he said.
A ‘suitable’ partner
But a source close to Amazon said: “In May, before the RIL deal was announced, Amazon was informally helping Future Retail find a suitable partner. He had even recommended Premji Invest to Biyani’s company. However, Future Group decided to go ahead with the RIL deal, which is a breach of contract and anti-shareholder for multiple reasons. “
Singapore-based attorney Davinder Singh appeared on behalf of Future Cuopons, Kishore Biyani’s holding company. Gopal Subramanium, former attorney general of India, appeared for Amazon. The law firm P&A, Naik & Naik Associates and AZB Associates have also received advice.
The referee is expected to render his verdict on October 26, two people familiar with the matter said. Queries sent to the arbitrator’s office were not answered.
Meanwhile, Future Group is understood to have approached its lenders to restructure its debt under the new scheme announced by the RBI. A delay in closing the RIL deal would leave the Future Group in a serious financial crisis. Biyani would be the biggest loser in this battle between Jeff Bezos and Mukesh Ambani.
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