The Delhi High Court lifted an order restraining Future Group from selling its retail assets to Reliance Industries Ltd., in a setback to Amazon.com Inc.’s efforts to block the deal.
The court on Monday allowed the sale of Future Retail Ltd.’s assets, overturning a previous order blocking the $3.4 billion transaction. The ruling can be appealed in the Supreme Court.
With this order Amazon lost the legal advantage it scored last week in its effort to stop billionaire Mukesh Ambani’s Reliance conglomerate from acquiring the retail business that can help India’s richest man dominate the estimated $1 trillion market. For Future, the transaction is vital for its survival. Future will go bankrupt if the deal with Reliance falls, its lawyers have argued in court.
Representatives for Amazon India and Future didn’t immediately respond to a request for comments. A Reliance Industries spokesperson declined to comment on the latest order.
Amazon wants to enforce a Singapore emergency arbitration tribunal’s order that in October said Future group must not proceed with the deal. Amazon had cited a partnership agreement with a Future group firm for a customer loyalty promotion business. That pact restricted Future group’s asset sale to Ambani’s firm and allowed an arbitrator in Singapore to settle disputes.
Future Retail has argued that the pact with another group firm does not bind it and the Singapore’s emergency arbitration order is not enforceable in India. Both Reliance and Future Group have in the past reiterated their commitment to closing the deal.
Not A Party
The Delhi High Court bench, which will start a detailed hearing of the lawsuit on Feb. 26, said that the prima facie view was that the agreement between Amazon and another Future Group firm cannot be enforced as Future Retail was not a party to that pact. The court also declined Amazon counsel’s request to continue the halt for a week to give them time to appeal in the Supreme Court.
The American e-commerce giant had petitioned the Delhi High Court last month to detain Future Group’s founder, Kishore Biyani, and seize its assets for violating the arbitration court’s order.
The legal reprieve for Future Group comes after Amazon wrote letters to Indian regulators seeking to stop approvals for the deal. Despite these objections, the local antitrust regulator gave its approval in November. The stock exchanges said in January that they had no adverse observations.