salve argued that Amazons change in stance is motivated with vested interest - it purportedly seeks to protect its investment - but, the entire proceedings are aimed at pushing FRL into bankruptcy
Harish Salve
On the FPI/FDI policy meaning for Amazon, Salve argued that firstly, Amazon chose not to do its investment through the FPI/FDI route. FPI investment is relevant only for passive investors. FDI in FRL would have meant prior government permission since FRL is engaged in MBRT. FPI is allowed only up to 10 per cent - assumed that Amazon's claim to minority rights (less than 5 per cent) in FRL were to be reckoned, it cannot in any manner seek to control the decision making process (including exercising of voting rights) of the majority stakeholders, all through contractual restraints.
Secondly, admittedly Amazon is not a shareholder in FRL, but it now seeks to claim more rights than that of a promoter/shareholder etc. Amazon's investment through FCPL was its own conscious decision. Salve argued that Amazon's change in stance is motivated with vested interest - it purportedly seeks to protect its investment - but, the entire proceedings are aimed at pushing FRL into bankruptcy. On the no control clause in FCPL SHA read with Amazon's representations before the CCI, Salve said contrary to Amazon's claim now, Clause 15.17 of FCPL SHA categorically claims that Amazon's investment is not in FRL, it does not seek to assume any control over FRL etc. Either, this is true or this is a subterfuge to hoodwink the regulators, he added.
This is further supported by Amazon's own representations before CCI -- they have categorically asserted that their investment is in FCPL, which is engaged in the business of loyalty cards, etc. As regards the independent status of the FRL SHA and FCPL SHA, even on scope of restricted persons, FRL had reserved its rights to review and decide on the list, as mutually agreed with FCPL on an annual basis, therefore, FRL was within its rights to do the transaction with Reliance, so long as FCPL had consented to it.
And, if FCPL's consent is not okay with Amazon, its reliefs will arise only against FCPL, Salve said.
On the directors fiduciary duties, relying on two English case laws and RNRL/Rolta judgments in India, it was argued that, notwithstanding any of the diktats, directors' role/decisions are always mandated to be in the interest of the company.
And in any event, no contractual obligations agreed between promoters (KB) and any third party (Amazon) can bind FRL, when those conditions are not incorporated in its AoA. The court has now adjourned the matter to November 19.
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