Amazon favours Future Retail selling a stake to Premji Invest and not to Reliance Industries Ltd (RIL), as a 2019 agreement had listed the Mukesh Ambani company among the 30 entities to which shares could not be sold as part of a non-compete clause.
Although the agreement was then 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 stand taken by Amazon at the hearing held by former Attorney-General of Singapore VK Rajah, the sole arbitrator looking into the dispute between the American retail giant and the Future Group over the latter’s ₹25,000-crore deal with RIL.
At a hearing that lasted five hours, Amazon hinged its argument on alleged contract breach. In 2019, due to the FDI restrictions in the e-commerce sector, Amazon could not have invested in Future Retail; hence, it invested ₹1,430 crore in FCPL. “If the deal between RIL and Future Retail is to happen, then Amazon’s investment goes waste as it will not get any returns,” said a source.
On the other hand, Future Retail informed the arbitrator the deal between Future Retail and RIL did not breach any contract because Amazon’s agreement is with FCPL, which is a separate entity. Of the five board seats of Future Retail, the promoters have only two. Hence, it was a not a decision by the promoters alone, it said.
A ‘suitable’ partner
But a source close to Amazon said: “In May, before the deal with RIL was announced, Amazon was informally helping Future Retail find a suitable partner. It had even recommended Premji Invest to Biyani’s company. However, the Future Group decided to go ahead with the RIL deal, which is a breach of contract and anti-shareholder on multiple grounds.”
Singapore-based lawyer Davinder Singh appeared on behalf of Future Cuopons, the holding company of Kishore Biyani. Gopal Subramanium, former Solicitor-General of India, appeared for Amazon. P&A Law Firm, Naik & Naik Associates and AZB Associates have also been roped in for advice.
The arbitrator is expected to give his verdict as early as October 26, said two people in the know. Queries sent to the arbitrator’s office did not elicit any response.
Meanwhile, the 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 deal with RIL would leave the Future Group in severe financial crisis. Biyani would be the biggest loser in this battle between Jeff Bezos and Mukesh Ambani.