Amazon is in the process of filing a petition against Future Retail under section 17 of the Arbitration Act, seeking interim relief in the matter of the latter downsizing its business and allowing its leases to be transferred to Reliance Retail.
Over the past two years, Future Retail has been facing an acute cash crunch. This has led the company’s promoters to pledge more shares, and the company to default on payments to lenders and landlords.
Due to non-payment of dues, landlords of properties where Big Bazaar stores operate had started terminating its agreements with Future Retail.
Since Reliance had agreed to do a deal with Future Retail, In order to protect the value of the company, Reliance stepped in to take over the lease and then further sub-lease all these premises back to FRL so that its business could continue. Reliance had also provided working capital support as well as inventory support to Future Group’s companies.
Despite this, Future Retail continued to make losses; it also continued to default lease rentals towards Reliance as well. A fortnight ago, Reliance started the process of repossession of the said stores. According to sources, it is in the process of repossessing over 400 stores.
This move has irked Amazon to seek remedies and sources said the company is in the midst of seeking interim relief from the Delhi High Court. Amazon will file the petition by next week, sources added.
“Retail is all about location and store space; if the prime location of the business is unavailable, it’s pointless to run the business then. Amazon wants a level playing field in the court, hence it is filing this petition,” said sources.
An Amazon spokesperson did not respond to BusinessLine’s query.
Future Retail and Amazon have been loggerheads for the past 18 months after the Kishore Biyani-owned retail chain got into a scheme of an agreement to sell its assets to Reliance Industries for ₹24,713 crore. The e-commerce giant, Amazon, had said that while doing a deal with Future Coupons in 2019, for ₹1,400 crore, it had prohibited Future Retail to enter into a deal with restricted parties including Reliance.
Amazon had dragged Future Retail to the Singapore International Arbitration Centre (SIAC) where it had an interim order in its favor. The matters are now being heard in multiple courts in India.
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