According to sources, Amazon India CEO Amit Agarwal will be summoned by the Enforcement Directorate next week over alleged irregularities in a deal with Future Group. In 2019, Amazon paid a total of Rs 1,400 crore for a 49 percent share in Future Retail.
The Enforcement Directorate is investigating whether the transaction broke India’s foreign exchange regulations, or the Foreign Exchange Management Act (FEMA), which lays out the formalities and processes for all such transactions in the country.
Amazon India was sued by the Federal Emergency Management Agency (FEMA) in January of this year.
The Enforcement Directorate issued the summons after the Delhi High Court made some observations regarding Amazon’s legal battle with Mukesh Ambani’s Reliance Industries Ltd.
The high court had said that the three agreements – the Future Retail shareholders agreement with Future Coupons, Future Coupons’ shareholders agreement with Amazon, and Future Coupons’ share subscription agreement with Amazon – had “prima facie transgressed from a protective right to a controlling right in favour of Amazon.”
Simply put, the high court found that Amazon seized ownership of Future Retail without the government’s authorization through these three agreements, which would be in violation of the FEMA and FDI guidelines.
The summons is being investigated, according to an Amazon spokeswoman. “The ED (Enforcement Directorate) has issued us summonses in connection with Future Group. We are analysing the summons and will answer within the time frame provided, as we have only recently received it “According to the spokeswoman.
Mr Ambani’s firm intends to acquire Future Retail, a move that Amazon has been attempting to thwart. Amazon and Mr. Ambani have been litigating in Indian and international courts.
When Future Retail announced plans to sell its retail businesses to rival Reliance Industries last year, Amazon utilised the transaction with Future Retail to assert breach of contract.
Future Retail’s proposal to sell its outlets to Reliance Industries, according to Amazon, violates the 2019 cooperation contract, while the indebted company claims it will fail if the deal falls through.
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