The Enforcement Directorate (ED) has summoned Amazon India chief Amit Agarwal for next week over alleged irregularities in a deal with Future Group, NDTV reports. In 2019, the online merchandise giant had bought a 49 per cent stake, worth Rs 1,400 crore, in Future Retail.
In the current case, ED is focusing on whether the deal violated India's law on foreign exchange, the Foreign Exchange Management Act (FEMA), which mandates the formalities and procedures for all such transactions in the country. The FEMA case against Amazon was filed in January this year.
The ED's move comes after the Delhi High Court made specific observations on the case between Amazon and Mukesh Ambani's Reliance Industries Ltd. After going through three agreements in the case, the high court said that they have "prima facie transgressed from a protective right to a controlling right in favour of Amazon." The high court observed that Amazon, through the three agreements, took control of Future Retail without the government's permission, violating the FEMA and foreign investment rules.
Three agreements were made as part of the the Future Retail shareholders' deal with Future Coupons, Future Coupons' shareholders' agreement with Amazon, and Future Coupons' share subscription agreement with Amazon. Reliance Industries has plans to take over Future Retail but which was relentlessly thwarted by Amazon. Both in India and abroad, Amazon and Reliance are in court battles. Last year, Amazon had used the deal with Future Retail to argue breach of contracts when the latter announced its plans to sell its retail assets to rival Reliance Industries. Amazon argued that Future Retail's plans to sell its stores to Reliance Industries violates the 2019 partnership contract.