A month after the Delhi High Court passed adverse remarks against US e-commerce giant Amazon, the Enforcement Directorate (ED) has launched a probe against the company to investigate whether it violated the Foreign Exchange Management Act (FEMA) in its deal with Future Retail (FRL).
Last month, while passing its judgement on Amazon’s plea challenging the acquisition of Kishore Biyani-led Future Retail by Mukesh Ambani’s Reliance Group, the Delhi High Court had observed that Amazon appeared to have indirectly obtained control over Big Bazaar owned Future Retail without the approval of the government.
This, the high court observed was done with the help of three agreements by Amazon. The high court further remarked that the said agreements appeared to be violation of FEMA.
It might be mentioned here that FEMA deals with forex contravention and is primarily treated as civil in nature.
The Delhi High Court had ruled Amazon's attempt to control Future Retail through a conflation of agreements it has with an unlisted unit of the Indian company appeared to be violative of the FEMA FDI rules. The high court, however, had upheld Amazon’s right to make representations to statutory authorities against the Future Group-Reliance Retail deal.