In an intervention application, Amazon reportedly claimed that the petition filed by the BOI is an act of ‘malice and collusion’ with the company and its promoter Kishore Biyani
Amazon’s senior counsel Arun Kathpalia said that we will show that we have the locus to file this petition and we have reason to believe that the lender and the company are hands in glove
BOI opposed Amazon’s allegations and urged NCLT that any further delays could jeopardise the recovery of public money several Indian banks had lent to the struggling retailer (FRL)
Amazon’s investment arm, Amazon.com NV Investment Holdings has approached the Mumbai bench of the National Company Law Tribunal (NCLT), requesting to dismiss the insolvency resolution plea filed by the Bank of India (BOI) against Future Retail.
In an intervention application, Amazon reportedly claimed that the petition filed by BOI is an act of ‘malice and collusion’ with the company and its promoter Kishore Biyani. The ecommece giant also pleaded NCLT to direct an investigation into the ‘fraudulent and malicious’ intentions and impose a penalty on both – banks and FRL.
Amazon’s senior counsel Arun Kathpalia said, “We will show that we have the locus to file this petition and we have reason to believe that the lender and the company are hands in glove.”
Kathpalia added that they have filed an intervention application under Section 65 of IBC.
On this, BOI opposed Amazon’s allegations and urged NCLT to admit its application for initiating insolvency proceedings against FRL and argued that any further delays could jeopardise the recovery of public money several Indian banks had lent to the struggling retailer (FRL).
BOI’s senior advocate Ravi Kadam said that Amazon is neither a lender nor a borrower. Hence, it has no locus to file any such application at this stage.
Kadam stated, “Several officers of the company have resigned and we fear that the books of the company might not be available. Hence, it is necessary that the RP takes control of the company.”
Meanwhile, Future Retail’s counsel Shyam Kapadia requested NCLT to give one more week to file its response in the case. On this, the bench, led by Justice PN Deshmukh and Shyam Babu Gautam, allowed FRL to give a response by June 6 2022 and further adjourned the case for further hearing to the said date.
Amazon’s petition to NCLT comes after the ecommerce giant reached out to the RBI and lenders for the second time, urging that FRL should not be allowed to go for bankruptcy proceedings and further demanded a forensic investigation into FRL’s alleged misconduct.
In the letter, Amazon said that banks must ensure compliance with fiduciary duty towards the public. However, lender banks of FRL have acted in an irresponsible and collusive manner. Thus, the present letter is being issued requesting that a forensic probe be carried out for these collusive actions of FRL and all its lender banks.
Earlier, the ecommerce giant urged the RBI to conduct an audit of FRL for the past three years for allegedly committing fraud by letting Reliance Industries Ltd (RIL) take more than 800 of its stores.
Reliance Cancels Deal With FRL
In April this year, it was anticipated that the two-year-long battle would come to an end with Reliance cancelling the INR 24,713 Cr deal with FRL, which was a big blow for FRL. The announcement came from the Mukesh Ambani-led group after a majority of secured creditors of FRL voted against the deal.
A majority of secured creditors of FRL voted against the Reliance deal on April 22. “The shareholders and unsecured creditors of FRL have voted in favour of the scheme. But the secured creditors of FRL have voted against the scheme. In view thereof, the subject scheme of arrangement cannot be implemented,” RIL informed the stock exchanges in a regulatory filing.
Earlier this year, the Mumbai bench of the NCLT allowed FRL to convene meetings of its shareholders and creditors to approve the sale of its retail assets to Reliance.
How All It Started
The dispute between Amazon and Future Retail began in August 2020 when Kishore Biyani-led company signed an MoU with Reliance Retail for the sale of its consumer retail arm for INR 24,713 Cr due to bankruptcy.
Previously, in September 2019, Amazon held 49% stake in Future Coupons, a subsidiary of Future Group that owns 7.3% stake in Future Retail. With this deal, the ecommerce giant, Amazon infused Future Retail via twin entity investment, thus, acquiring 3.58% of the business.
With this move, Amazon craved a way to invest in the Indian retail ecosystem despite the CCI not allowing FDI engagement in the Indian retail sector.
Deets of the deal between Amazon and Future Retail later surfaced when the ecommerce giant mentioned a list of 30 entities with whom Future Coupons could not transact, including Reliance Retail. In this manner, Future Retail was forbidden to sell its business to Reliance Retail.