Flipkart-AIOVA case: After NCLAT order, e-sellers’ lobby files caveat against Walmart-owned company

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Updated: March 9, 2020 2:02:43 PM

National Company Law Appellate Tribunal (NCLAT) had last week ordered a probe against Flipkart for its alleged abuse of dominant market position and use of unfair practices.

Flipkart and Amazon India are currently running programmes in multiple states to help micro and small artisans, craftspersons, weavers sell online.

Anticipating Flipkart challenging National Company Law Appellate Tribunal’s (NCLAT) last week probe order against its alleged abuse of dominant market position and use of unfair practices in the Supreme Court, the All India Online Vendors Association (AIOVA) filed a caveat on Saturday. The lobby group for online sellers in India — AIOVA, confirmed to Financial Express Online, that the caveat has been filed in the apex court against the Walmart-owned e-commerce company.

“Whenever you win a case in the lower court, you file a caveat before the higher court so that if an appeal is moved with an interim order and notice is given to you, you are heard before any order is passed against you,” Chanakya Basa, the lawyer representing AIOVA, in this case, told Financial Express Online confirming the caveat filed. “Even if you presume a case will be filed against you, you file a caveat so that you are heard before any order is passed against you. It is a routine exercise in most of the cases,” he added. 

Flipkart declined to comment on the caveat filed.

Also read: Flipkart’s business ‘discipline’ impresses Walmart again despite expecting losses similar to last year

Even as Flipkart continue to face regulatory hurdles, its increase in revenue year-on-year and cut in losses as the business improves continues to impress its parent Walmart. While Walmart expects the company to report a similar amount of losses this year from last year, its business ‘discipline’ has earned praise. Walmart’s CFO Brett Biggs speaking at the UBS Global Consumer & Retail Conference held earlier this week said “If you think about the guidance we gave on Flipkart, that losses will be pretty similar to what we had last year, but we’re still growing at a good rate. And so that’s really discipline to be able to do that.”

Flipkart reported Rs 17,231 crore (consolidated) losses for FY19. It saw 51 per cent increase to Rs 30,164 crore in its consolidated revenue for FY18 from FY17 at Rs 19,854 crore even as losses increased 434 per cent from Rs 8,771 crore in FY17 to Rs 46,901 crore in FY18. However, for FY19, while the revenue increased by 44 per cent to Rs 43,615 crore, the losses dropped by 63 per cent to Rs 17,231 crore.

Flipkart and Amazon India — India’s two leading e-commerce players, which are currently running programmes in multiple states to onboard micro and small artisans, craftspersons, weavers and support them in selling their products in different geographies, have been accused by associations such as AIOVA and CAIT for unfair business practices and FDI violations. This includes controlling the inventory and influencing the prices of products sold on their marketplaces, deep discounting of products etc. The two e-commerce businesses, however, have claimed full compliance with the Indian laws.

Among the recent developments involving the two companies was the Karnataka High Court staying the CCI’s probe into Amazon and Flipkart last month after traders’ body Delhi Vyapar Mahasangh’s January complaint to the Competition Commission of India for alleged brand partnerships on exclusivity and other reasons. Amazon had said that CCI order was “only an inference without any factual backing.”

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