New Year fireworks: Future Group writes to Amazon, says firm has ‘illegally exercised its rights’ 

Kishore Biyani

In yet another twist to the tussle between the Future Group and Amazon over the deal with Reliance Industries, the Kishore Biyani-led firm has hit back at the e-commerce major’s allegations of “wilful and material” breach of the shareholders agreement by Future Coupons and Future Retail Ltd (FRL).

In a letter dated December 31, 2020, Biyani and the promoter group Future Coupons Private Ltd (FCPL) and Future Corporate Resources Pvt Ltd have denied any wrongdoing and said Amazon was not a party to the Future Retail shareholders agreement. Moneycontrol has seen a copy of the letter.

Amazon illegally exercised its rights by addressing a series of letters in October and November to the market regulator, stock exchanges, Future Retail Ltd and its independent directors and the audit committee, the letter says. Amazon could not act as the “ constituted attorney” of Future Coupons Private Ltd and issue the letters. A constituted attorney is typically a power of attorney holder acting on behalf of another person.

The letter says that Amazon’s case that there is a “single integrated transaction” arising out of the Future Retail shareholders agreement and the Future Coupon shareholders agreement violates the Foreign Exchange Management Act (FEMA), 1999 and that both transactions are independent.

Also read: Amazon wants Future Group to languish: CEO Kishore Biyani

The letter also argues that the Amazon stance violates Section 15.17 of the Future Coupons shareholders agreement, which states: “For the avoidance of doubt, Parties hereby expressly record their understanding that the Promoters and the Investor have no agreement or understanding whatsoever in relation to the acquisition of shares or voting rights in, or exercising control over, FRL and that the Company, the Promoters and the Investor otherwise do not intend to act in concert with each other in any way whatsoever.”

Saying that Amazon failed to fund the struggling firm earlier despite many opportunities, the letter adds, “ Therefore, it is apparent that on the one hand you did not bother to preserve your ‘protective, special, and material rights’ under the FCPL SHA, by protecting your right and ability to become the single largest shareholder of FRL, whilst on the other hand, you seek to contend that the FRL SHA and FCPL SHA constitute a “single integrated transaction” to protect your “protective, special, and material rights” under the FCPL SHA. Your conduct smacks of mala fides, with a view to obstruct the merger with the Reliance and cause wrongful gain to yourself.”

Also read: Delhi HC says FRL-Reliance deal in accordance with laws, but can't stop Amazon from writing to regulators

In August 2019, Amazon invested Rs 1,431 crore in an arm of the Future Group, executing a controversial transaction that put it at odds with the Biyani-led firm and Reliance Retail, which went on to acquire the assets of the troubled retailer in August 2020 for about Rs 25,000 crore.

Amazon, through an emergency arbitrator in Singapore, obtained a temporary stay on the transaction. Future Retail has requested the Delhi High Court to ask Amazon to stop interfering in the approval process for the asset sale scheme

On December 21, 2020, in a setback to Amazon, the Delhi High Court ruled that the Future-Reliance Retail deal was in accordance with Indian laws. However, it did not restrain Amazon from writing to regulatory authorities not to give a nod to the Future Group’s deal with Reliance Retail. The court said the statutory authorities were free to take their own decision.