Amazon-Future Group's 'Compromise' Talks Fail

The conversation is over, Amazon.com NV Investment Holdings LLC informed the Supreme Court of India on Tuesday while shutting doors on the possibility of a compromise with the Future Group.

In October 2020, an emergency arbitrator‘s order had directed a status quo on the transaction between the Future Group and Reliance Retail Ventures Ltd. Since then, the legal dispute between Amazon and Future Group has travelled to multiple legal forums in the last two years, with no end in sight.

In the last hearing in the top court, Amazon had proposed a dialogue between the parties to find a resolution and Future Group agreed to participate in the effort.

"We made efforts but nothing is possible by way of a resolution," Senior Advocate Gopal Subramanium told the bench presided by the Chief Justice of India.

"Some offer was made on behalf of Biyanis. If they [Amazon] say it is over then it must be over," Senior Advocate Harish Salve replied for Future Retail Ltd.

The parties' failure to reach a compromise was communicated to the court on a day when both Amazon and Future Retail's lenders have issued public notices in leading newspapers.

Any effort to transfer Future Retail's assets to Reliance Industries Ltd. would be liable for civil and criminal consequences, Amazon's notice said. And on behalf of the lenders, Bank of India has stated that Future Group's assets are still charged to the lenders and that any person dealing with them can be subject to enforcement action.

Amazon Raises The Issue Of Takeover Of Stores

After informing the apex court that the talks had failed, Amazon requested it to allow the resumption of the arbitration between the Future Group and Amazon. The arbitration proceedings were stayed by a division bench of the Delhi High Court earlier this year.

Further, Subramanium also raised the issue of take over of Future Retail’s stores by Reliance.

On March 9, Future Retail and Future Lifestyle Fashions Ltd. informed the exchanges that they had received termination notices from Reliance Retail on sub-leased properties due to pending dues. This included 34 Central stores and 78 Brand Factory outlets.

Future Retail's disclosure stated termination notices from Reliance Group in relation to another 835 sub-leased properties—342 large format stores, including Big Bazaar, Fashion@Big Bazaar, and 493 small format stores such as Easy Day and Heritage stores.

This is in addition to the 200 Big Bazaar stores that Reliance Retail took control of after the Future Group defaulted on payment for renewing the lease, a company spokesperson had said.

Subramanium told the bench that Amazon wanted to have a dialogue in good faith but the takeover of the stores was in the process.

Subramanium pointed out to the court that the Future Group had committed that no transfer of assets will take place as it seeks approval to the deal with Reliance Retail.

However, Future Retail said it was incorrect to argue that the stores had been transferred.

Senior Advocate Salve told the bench that the takeover of the stores was not voluntary and the promoters Biyanis objected to the action.

However, Salve said, Future Retail has no money to pay for the rent lease and therefore Reliance moved in to takeover the stores.

"I have been saying that this litigation will drive us to bankruptcy and it has", Salve said, adding that Amazon was aware of the takeover even while it proposed a conversation to settle the dispute.

Amazon requested the Supreme Court to pass interim orders directing nothing moves forward until the arbitration tribunal resumes the hearing.

The bench presided by Chief Justice of India Justice NV Ramana asked the company to file a formal request for the interim orders and agreed to post the case for hearing on Wednesday.