FRL should not be allowed to go into bankruptcy proceedings as that would impact its rights further, the online retail giant said in a letter that was seen by Mint.
In the letter, Amazon repeated its demand for a forensic investigation into FRL’s alleged misconduct.
“It is the duty of banks in India, more specifically, public sector banks, to ensure compliance of fiduciary duty towards the public. However, lender banks of FRL have acted in a completely irresponsible and collusive manner, despite having knowledge of FRL’s illegal actions. Thus, the present letter is being issued requesting that a forensic investigation to be carried out with respect to these collusive actions of FRL and all its lender banks," Amazon said.
Amazon alleged that FRL was attempting to initiate a corporate insolvency resolution process through Bank of India to utilize the provisions of Section 14 of the Insolvency and Bankruptcy Code to seek an illegal injunction in the ongoing arbitration and litigation involving Future Retail.
Thus, the insolvency petition was purposefully filed by FRL jointly with the lenders and such actions are not to be allowed, Amazon contended. Statutory authorities must hold lender institutions accountable for their ‘malicious conduct’ and take appropriate measures, it said.
The letter said that despite its pre-existing rights, if the lender banks’ illegal and malicious insolvency procedures against FRL are allowed, there will be no accountability for FRL’s retail assets.
This was in reference to Reliance Group’s takeover of Future Retail’s assets. Reliance Projects & Property Management took possession of approximately 800 Future Group stores in February, saying Future had failed to make rental payments of ₹4,800 crore for more than a year.
Amazon also alleged that the collaboration between FRL and its lenders to sell the former’s small store formats through a framework agreement was part of a larger scheme to transfer or dispose of FRL’s retail assets to the Reliance Group. Under the agreement, FRL had proposed to sell the small format stores to raise approximately ₹3,000 crore to pay off debt.
The agreement was not a result of financial distress and banks participated in these actions despite having knowledge of such actions by FRL, Amazon alleged.
Amazon’s petition in Delhi High Court seeks enforcement of a Singapore-based arbitral tribunal order that stayed the sale of Future Group’s retail assets to Reliance Retail.
“The purported initiation of proceedings for insolvency resolution by the Bank of India is the latest attempt to whitewash the fraud that has been committed not only on Amazon but also the statutory regulators, lakhs of retail investors and other stakeholders. Such conduct, including on the part of the lender banks, establishes that the banks have given FRL a reprieve by taking it into insolvency without seeking accountability from the Promoters, board members and management of FRL, and conducting proper investigation," Amazon said.