Amazon to initiate criminal proceeding against Future group
The world’s largest online market place, Amazon, now plans to initiate criminal court proceedings against Future Retail for selling portions of its assets to Reliance group when the matter was still awaiting final court orders. Over the last few days, Future group had transferred close to 500 stores to Reliance Retail which have also been rebranded as Reliance Retail stores. This was as per the agreements with the landlords.
It may be recollected that for more than 15 months, the deal between Future group and Reliance Retail had been held up due to objections from Amazon. Both, Amazon and Future Group have been in a legal stand-off that has virtually stalled the Future group’s $3.4 billion sale of assets to Reliance Retail Ventures Ltd. Amazon had halted the sale citing violation of contract as the agreement between Amazon and Future Retail.
A quick background to this case!. In 2019, Amazon had acquired a 49% stake in Future Coupons and that had given them an indirect stake in Reliance Retail too. As per the terms of the understanding, Future Retail was not supposed to sell any part of their business to any competitor and Reliance Retail would obviously classify as a competitor. Hence it had got an injunction from the Singapore International Arbitration Centre (SIAC) to this effect.
Now the latest criminal proceedings have come after a Reuters report mentioned that Reliance had started to take over around 500 of stores of Future Retail and rebranding them as its own outlets. Reliance had transferred leases of some of Future's flagship supermarkets to its name, but permitted Future to continue to operate them. With Future group defaulting on lease payments, now Reliance has now begun to take possession of the stores.
Amazon is most likely to base its legal case against Future Retail on the premise that they concealed information during legal proceedings and allegedly transferred leases of its stores to rival Reliance. This happened although the Singapore arbitrator had halted any transfer or disposal of assets in the ongoing dispute. However, Amazon is clear that this would be their last attempt to stall the deal between Amazon and Reliance Retail.
The plan to start criminal proceedings against Future group will mark a major escalation of the tenor of the legal battle between Amazon and Future Retail as well as Reliance Retail. However, legal experts are divided. One view is that Amazon has a strong case but the trail may be hard to prove. Another view is that with Reliance taking over assets under the debt recovery route, the doors for Amazon may have finally closed.
Even as the battle continues, there is an interesting shift that is happening. The Supreme Court has offered both the parties viz. Amazon and Future Retail one last chance to sit across the table and hammer out an out-of-court settlement. The way Supreme Court looks at the case is that legal battles can go on interminably on issues like agreements and legal jurisdictions. Hence an out-of-court settlement would be a good choice.
It now looks like even Future Group and Amazon are keen on an out of court settlement as it would allow them a reason to get back to business as usual. The next few days in this case could be quite interesting.
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