The permitivity constant of a medium cannot be less than one

when you have two charges they attract each other due to coulombic forces.

No when these same charges are placed in a medium, the dipoles are formed in the medium with the electrons moving towards the positive charge and the nuclei towards the negative.  These dipoles in turn produce their own field in a direction opposite to the original charges so the net force between the charges is decreased . so Fv/Fm > 1

Now such dipoles wold be least when matter would be absent ie in vaccuum

This is similar to refractive index of a medium