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Thursday, June 13, 2024

Future Retail scheme not impeded, Amazon contravened FDI, FEMA rules

A Delhi High Court verdict clearly shows that the Future Retail Limited (FRL) board resolution of selling out to Reliance has been found to be fine and it is therefore aligned to the company law and other relevant provisions.

The takeaway from the verdict is that it seems there are no impediments in the mind of the court regarding the scheme proposed and approved by the FRL board.

While Amazon can continue to engaged with regulators on the Rs 25,000 crore Future-Reliance deal, the 132-page court verdict said the Amazon-Future deal is prima facie in contravention of the FDI and FEMA rules in the absence of a government approval.

“Since this court has held that prima facie the representation of Amazon based on the plea that the resolution dated August 29, 2020 of FRL is void and that on conflation of the FCPL SHA and FRL SHA, the ‘control’ that is sought to be asserted by Amazon on FRL is not permitted under the FEMA, FDI rules, without governmental approvals,” the Delhi High Court said.

Traders body CAIT said that the court passed an order holding Amazon liable for violating the Foreign Exchange Management Act (FEMA) and provisions of the FDI policy of the government.

Praveen Khandelwal, Secretary General of the Confederation of All India Traders (CAIT), said, “This judgement vindicates the stand taken by CAIT since a long time that Amazon is openly violating the FDI policy of the government and reinforces Amazon’s blatant conduct and an urgent need for the Enforcement Directorate and other statutory authorities to take corrective measures so as to prevent Amazon from abusing the laws of the land for its benefit.”

He further said that the manipulative, coercive, arbitrary and dictatorial policies of Amazon to control and dominate the retail trade of India through e-commerce should come to an end now.

“It has been rightly held that Amazon acquired control of Future Retail by virtue of its arbitrary dominance in Future Coupon Limited and in the absence of any government approval, it is contrary to FEMA and FDI rules. The CAIT in the recent past had submitted a detailed complaint along with evidence to the Commerce Minister, Finance Minister, Enforcement Directorate, SEBI and RBI for taking action against Amazon for its violative deal with Future Group,” CAIT said.

The findings by the high court that Amazon has violated provisions of the FEMA rules vindicate CAIT’s consistent efforts to highlight the habitual violations of those rules by major e-commerce players like Amazon, CAIT said.

(The story has been published via a syndicated feed.)

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