The independent directors of the Future Retail Ltd (FRL) have rejected Amazon’s allegations of facilitating a fraudulent stratagem for the transfer of 835 stores to Reliance Retail, terming them as “false” and said the e-commerce major is trying to create a narrative using the company “as a pawn” to carry its battle against billionaire Mukesh Ambani.
They have said due to the “cumulative effect” of Amazon’s wrongful conduct, the lenders of FRL had rejected the Rs 24,713 crore deal with Reliance Retail and the account the company has been declared NPA as it failed to monetise the assets by selling the small format stores to repay part of the overdue amounts to the banks.
Hitting out at Amazon for making “false statements” and submission of “false documents” before the fair trade regulator Competition Commission of India (CCI), which had in December 2021 put its order approving e-commerce major approval for investment in Future group firm in abeyance, the independent directors said preaching of governance to them is akin to “a demon preaching vedas”.
“… it is not for a company like yours to preach governance to us. This is akin ‘a demon preaching vedas’,” said the letter representing FRL independent directors.
The independent directors also alleged that Amazon was attempting to acquire key assets of FRL on the cheap for Rs 7,000 crore through Samara.
“When Reliance offered Rs 25,000 crore for the scheme, Amazon left no stone unturned to spike this deal, and finally succeeded in doing so for the reason that the financial institutions obviously refused to sanction the scheme in view of the uncertainty looming over it,” said the independent directors in a letter dated May 28.
Having destroyed FRL’s prospects, Amazon has now taken to making yet another set of false allegations, they alleged.
The independent directors alleged Amazon “illegally” dragged FRL into its dispute with Future Coupons Private Limited (FCPL) and obtained an injunction in October 2020 from SIAC restraining FRL from implementing the deal.
This made the landlords of FRL’s stores apprehensive of the prospect of recovering their pending dues, as the company was facing financial difficulties from as early as March 2020.
“The landlords are free to deal with their properties as they considered fit and they leased these store premises to Reliance. FRL could not have prevented the lease of store premises by these individual landlords to Reliance,” it said.
As the scheme of arrangement of sale and transfer of Future group retail assets was pending to be implemented, Reliance allowed FRL to continue operations from these premises by entering into licence arrangements subject to payment of licence fees.
However, after the deal was called off and company faced insolvency petition because of Amazon’s action, Reliance, in February and March 2022, issued termination letters and denied access to FRL to the store premises exercising its rights under contract.
“We once again reiterate that no retail store has been handed over by FRL to Reliance and there has been no stratagem whatsoever to handover any stores to Reliance,” they said.
Earlier, Amazon in a letter to the independent directors of FRL this month had accused them of facilitating a “fraudulent stratagem” of transfer of 835 stores to billionaire Mukesh Ambani’s Reliance group, saying the narrative of that transfer was on account of failure to pay huge outstanding rent was a “sham” as the retailer had a month prior to such move stated that outstanding rent was only Rs 250 crore.
The US retailer wrote on May 19 to independent directors of FRL that the firm had in a meeting with core lender banks on January 1, 2022 “categorically admitted that the unpaid rental dues was Rs 250 crore only. FRL further stated that it voluntarily retained the amount”.
“Surprisingly, FRL had managed to do so without discontinuing any of its operations or handing over its stores,” it wrote.
“Consequently, any narrative that there was a purported transfer on account of failure to pay huge outstanding rent for as many as 835 retail stores, that too as quickly as on February 26, 2022, is nothing but a sham and a false narrative to regulators, creditors, the shareholders and the Courts.”
Repling to it, FRL’s independent directors said Amazon is neither a shareholder nor a creditor of FRL and on the contrary, it has been responsible for the present state of affairs in FRL.
“Having wrecked all prospects of revival of FRL, it is remarkable that Amazon has written a letter like this,” they said, adding that this letter is a regurgitation of the baseless allegations being made by Amazon before various authorities including in pending proceedings before the Delhi High Court.
“It is unfortunate that Amazon is attempting to pursue the same frivolous and untenable allegations before different fora and is issuing defamatory and scurrilous public statements in this regard even while these matters are presently sub judice before the High Court of Delhi in proceedings initiated by Amazon itself. This is yet another demonstration of Amazon’s contempt for Indian law and its indifference to the rule of law in India,” they said.
Future and Amazon have been locked in a bitter legal tussle after the US e-commerce giant dragged Future Group to arbitration at the Singapore International Arbitration Centre (SIAC) in October 2020, arguing that FRL had violated their contract by entering into a deal for the sale of its assets to Reliance Retail on a slump sale basis for Rs 24,713 crore.
Disclaimer: “Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.”
Download your money calendar for 2022-23 here and keep your dates with your moneybox, investments, taxes