Did not dispose of FRL stores to Reliance: Future to SC
The Future Group denied on Friday that it alienated or disposed of its store premises to the Reliance Group, weeks after the latter took possession of some 200 Big Bazaar outlets as it held the leases for the retail real estate on which these Future Group stores were operating.
The Kishore Biyani-led group also accused US e-commerce giant Amazon Inc of attempting to destroy the company, the latest twist in a saga that has pit Reliance and Amazon in a bruising corporate war for control of one of India’s most prominent retail chains. In 2019, Amazon invested ₹1,431 crore in a separate Future Group unit that it says prevents the latter from selling its retail business without its permission. But within months of the deal, Future entered into a transaction with Reliance Group for a proposed $3.4 billion sale of retail assets.
The US entity moved an application last month urging the top court to restrain FRL from transferring any more assets to any third party, alluding to the de-facto transfer of premises in late February of the 200 stores for which the leases were taken over by a Reliance group company over unpaid dues. In a response filed two days ago, FRL said, “There has been no alienation or disposal of FRL’s retail store premises to Reliance.” It said due to Covid-19, the retail sector took a hit and the firm was not in a position to pay lease rentals to landlords who instead approached Reliance. “Each of these leases was terminated in the first instance by the original landlord and in the second instance, by Reliance Projects and Property Management Services Limited (RPPMSL) on account of FRL’s failure to pay lease rentals (to the tune of ₹1,100 crore).” Blaming Amazon for leading the company to this end, the Future Group’s reply said: “The proximate cause of the current situation is the deluge of destructive and vexatious legal proceedings that Amazon has brought against FRL.”
A bench headed by Chief Justice of India NV Ramana asked FRL: “What remains in your company” as it considered the order to be passed on Amazon’s application. “If our scheme with Reliance lapses, our entire business will collapse like a pack of cards. And if Amazon succeeds (in arbitration), they will stand in the queue of unsecured creditors. They wanted to destroy us and they have destroyed us,” senior advocate Harish Salve appearing for FRL said.
The bench, also comprising justices Krishna Murari and Hima Kohli, reminded Salve, “Don’t say that…they have invested over ₹1400 crore.” Salve replied: “There are 374 stores that continue with us unless the landlords of these store premises throw us out.” Senior advocate Mukul Rohatgi who appeared for Future Coupons Private Limited – the company in which Amazon has invested -- argued that nothing was done by them in violation of any court order. “If leases cannot be honoured and rent cannot be paid, landlords have right to take back possession. Amazon is asking to restrain the landlords. Let them deposit ₹5,000 crore before Court. That should cover our rent obligations.”
For Amazon, senior advocate Gopal Subramaniam said, “They are not hanging by a thread. There is not the slightest compelling evidence to remotely suggest that the any of the landlords sought back the lease properties. This is a smokescreen. The entire transaction was and is nothing but a guise and a stratagem wrongfully adopted by FRL, with the connivance and collusion of the MDA Group, to transfer the Retail Assets.”
The apex court kept the matter for further consideration on Monday.