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

The Enforcement Directorate (ED) on Wednesday told the Delhi High Court that in view of the coronavirus pandemic, it will not for the time being insist on 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 SV 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 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 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.

"For next 2-3 days, he (ED counsel) says nothing will happen physically," said the judge who deferred further submissions 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.

It has 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 proceedings without any legal basis or jurisdiction and causing unnecessary harassment despite their full cooperation.

The directive was received by Petitioner No. 1 (Amazon Wholesale) from the ED "seeking information largely pertaining to the arbitration (between Amazon NV and Future Group), and matters which were already being investigated by the Bangalore Regional Office of the ED," the petition stated.

"(Most information sought) pertains to the transaction with the Future Group and pertains to Amazon NV and not petitioner nos. 1 and 2. It is pertinent to mention that the directive was addressed to and received by petitioner no. 1, who has nothing to do, directly or indirectly, with the Future Group or Amazon NV's investment in the Future Group," it added.

It has said that various summons and emails have been issued to the employees of Amazon Seller Services for a transaction which is completely unconnected with them and seeking from them the legal advice and privileged legal opinions that have been received from time to time by Indian subsidiaries of Amazon.

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.

It has further sought to direct the probe agency not to conduct fishing and roving enquiry on matters covered by legal privilege and ask for information falling outside the purview of FEMA.

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.