Amazon accuses RIL of future collusion

According to court documents accessed by Mint, Future Retail made back-to-back arrangements with constituents of the MDA (Mukesh Dhirubhai Ambani) group to exit these leased premises subject to payment of rent to the MDA group.

“The circumstances under which the alleged surrender of leases led to the transfer to Reliance Group, and the fact that Reliance pretended to grant a license to Future Retail to continue to operate as a licensee from the same premises, while the latter Surrendered. Such licences have led to Reliance ‘acquiring and operating’ alleged 950 retail premises, a move wrongly adopted by Future Retail in connivance with and connivance of the MDA Group to transfer the retail assets. The guise is another trick.” Petition reviewed by Mint.

Amazon has filed a petition in the Supreme Court seeking a stay on the transfer of retail assets. While the apex court did not grant interim relief, it allowed the companies to proceed with arbitration. The court will hear the matter again on March 23.

With stores at Future Retail’s most prized assets—attractive locations—being acquired by Reliance Group firms, the Kishor Biyani-led company may have little left in terms of substantial value to its creditors and shareholders.

The acquisition of Reliance’s stores comes after Amazon blocked Future Group’s plan to sell its retail and wholesale assets to Reliance. 24,713 crore deal for over a year. Amazon, which invested 1,431 crore in Future Coupons Pvt Ltd. Ltd., in December 2019, challenged the sale to Reliance on the ground that clauses in the investment agreement bar Future Group from selling its assets to specific rivals, including Reliance.

Email queries sent to spokespersons for Amazon, Reliance Industries and Future Retail did not go unanswered.

However, in a stock exchange filing on Wednesday, Future Retail said Reliance Group had unilaterally terminated the leases and forcibly took control of hundreds of Future Retail stores. And since its board, throughout the period, Future Group and Reliance Group have been collaborating to ensure full continuity of businesses,” Future said in an exchange filing.

The board of Future Retail has expressed “strong opposition” to the conduct of Reliance Group and asked the company to reconsider all other steps taken in recent days.

Amazon also detailed in court documents why it considers Future Retail’s conduct to be one of so-called ‘collusion’.

The US company said it has documents about the operation of the “Big Bazaar” outlet at Forum Celebration Mall, Udaipur, Rajasthan, which exposed alleged fraud by both Future and Reliance Industries.

According to the documents, Future Retail has entered into a long-term lease deed with Flickr Projects Pvt Ltd. Ltd. for leasing out the premises at Forum Celebration Mall in September 2014. The lease was for 19 years and 11 months. On 11 March 2021, Future Retail entered into a deed to surrender the lease with Flickr Projects. The surrender will be effective on 28 February 2021.

“Relevantly, there was no statement in the surrender deed that the lease was being surrendered due to non-payment of lease rent,” Amazon said.

According to Amazon, similar surrender documents were issued for properties in several parts of India. Amazon also holds a legal copy of the surrender deed signed by Future Retail and MEL Properties Pvt. Ltd. for lease of premises at Coconut Avenue Road, Malleswaram, Bangalore.

“On March 12, the day after Future Retail filed an application to vacate the EA (emergency arbitral award) order before the arbitral tribunal, and a day after, Future Retail entered into an arrangement with Reliance Projects and Property Management Services Ltd. Entered into the conduct of retail business,” Amazon said in court documents.

This again was in direct contravention of the directions in the Emergency Order and was not disclosed before this Hon’ble Court or High Court or Arbitral Tribunal.