Info-tech

‘Amazon refused Future offer to recompense in case of pact breach’

Forum Gandhi Mumbai | Updated on October 30, 2020 Published on October 28, 2020

Amazon had bought a 49% stake in Future Coupons last year   -  REUTERS

But the American firm rejected the proposal, reveal documents

The Future Group had offered to pay monetary compensation to Amazon if it was found in breach of the agreement signed in 2019 by getting into a deal with Reliance Retail. The proposal was, however, rejected by the American company, reveal documents filed with the Singapore International Arbitration Centre.

 

Dilution of stake

According to submissions made by Future, Amazon’s “real claim (if it has any basis, which is denied) sounds entirely in damages”. Under the 2019 agreement, when Amazon acquired a stake in Future Coupons, there were restrictions placed on promoters from diluting their control in Future Retail. It specifically stated that Amazon’s consent has to be taken if the promoters were to give up control. While Amazon has claimed breach of this agreement due to the deal between Future and Reliance Retail, Future Group has argued that its promoters had given up control over the retail business in April itself when the shares were encumbered by the lenders. By April 9, 2020, the promoter shareholding, which was unencumbered, constituted only approximately 0.5 per cent of the shares in Future Retail. “To the extent that the complaint is that the Amazon has lost the economic value of its initial investment in Future Coupon, Amazon continues to have that investment and shares. Any claim for diminution of value of those shares is eminently and, by definition, only a claim for damages (if any),” said a source close to the Future Group.

However, Amazon has rejected compensation stating that the special, protective and material rights with respect to the retail assets of Future represent a valuable and strategic asset and the loss of its interests in these assets due to the deal with Reliance cannot be compensated in monetary terms.

Meanwhile, sources close to Reliance said that it will step in only after Amazon files a plea in an Indian court to enforce the interim stay order given by the SIAC.

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Published on October 28, 2020
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