Amazon’s attempts to stop the Enforcement Directorate’s probe were not entertained by Delhi HC

Amazon vs Future Group wars pull in the ED. WIll more agencies follow?

January 5, 2022

Will not insist on physical appearance in probe against Amazon: ED

Delhi High Court on Wednesday did not entertain Amazon’s petition to stop the Enforcement Directorate’s probe. The US e-sales giant Amazon and its Indian subsidiaries fall to the radar of ED for Foreign Exchange violations during its deals with Future Group. ED told the High Court that in view of the Coronavirus pandemic, it will not for the time being insist on the physical appearance of people in connection with its probe against an Amazon subsidiary under the Foreign Exchange Management Act (FEMA). The oral assurance was given by Additional Solicitor General S V Raju, appearing for the central agency, on petitions by Amazon Wholesale (India) Pvt Ltd and Amazon Seller Services Pvt Ltd challenging the jurisdiction of the ED and its officers to investigate the first company and seek information pertaining to Amazon’s ongoing arbitration with the Future Group.

Justice Rekha Palli listed the case for further hearing on January 12 and asked the senior lawyer for the agency to “advise officers that if they want any information, they will do so through video conferencing“. “Because of COVID-19, we will hold our hand (on the insistence on physical appearance),” said Raju.

Lawyer Amit Mahajan, also appearing for the ED, added that the agency would not ask any person connected with the petitioners to come to Delhi. The Court said that at this stage, it “would not comment” on the aspect of information being sought by the agency in the investigation or ask the agency to “hold its hand” in matters of the probe.

Senior advocate Sidharth Luthra, appearing for Amazon Wholesale, contended that the ED’s investigation was beyond the scope of its power under FEMA and that it could not seek details with respect to the legal opinions sought by the company. He clarified that his client had nothing to do with the deal between Amazon and Future Group, and urged the Court to direct the agency to hold its hand till the next date of hearing.

In November, Amazon had said it was in receipt of summons by the ED in connection with its deal with the Future Group. In the plea, the two companies, which are indirect subsidiaries of the US-based e-commerce giant, have said they are Indian resident entities and are challenging the ED investigation as it pertains to transactions that have no foreign exchange element.

The petition by Amazon said that the ED issued a directive on February 19, 2021 and is conducting a fishing and roving investigation against Amazon Wholesale and subjecting the petitioners to proceed without any legal basis or jurisdiction and causing unnecessary harassment despite their full cooperation. The petition has sought direction to the ED to forthwith withdraw or cancel the February 2021 directive and all summons or proceedings commenced by the agency.

Amazon and Future Group have been embroiled in a series of litigation after the Kishore Biyani-led group in August last year agreed to sell its assets to billionaire Mukesh Ambani‘s Reliance Retail on a slump sale basis for Rs.24,500 crore. Amazon is objecting to the sell-off plans, accusing Future Group of breaching its 2019 investment pact. Future Coupons was founded in 2008 and is engaged in the business of marketing and distribution of gift cards, loyalty cards, and other reward programmes to corporate customers.

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