New Delhi: The Delhi High Court blocked Future Group's sale of a swathe of assets to rival Reliance Industries on Tuesday after Amazon raised objections to the $3.4 billion deal, in a battle of the retail titans that could reshape the shopping sector.
The decision is a setback for Future, the country's second-largest retailer with over 1,700 stores, which agreed to sell its retail businesses to market leader Reliance last year. It has said it could face liquidation if the deal falls through.
US online giant Amazon, which had its sights set on ultimately owning part of the retail assets itself, argued a 2019 deal it had with a unit of Future contained clauses prohibiting the Indian group from selling them to anyone on a "restricted persons" list including Reliance.
The corporate battle has embroiled sprawling businesses led by two of the world's richest men - Amazon's Jeff Bezos and Reliance's Mukesh Ambani.
It could help determine whether Amazon will be able to eat away at the dominance of Reliance, which sells through its network of more than 12,000 stores, at a time when the COVID-19 pandemic has seen shoppers race online.
After Future said it was not bound by an arbitrator's order that put the deal on hold, Amazon last month urged the Delhi High Court to enforce it.
Justice J R Midha said on Tuesday that an immediate order was necessary to protect the US company's rights, adding that the arbitrator had "rightly proceeded" against Future.
"This court is of the clear view that the (arbitration) order ... is enforceable," Midha added. "All the concerned authorities are directed to maintain status quo."
Amazon said it welcomed the order. Future and Reliance did not respond to requests for comment. A source with direct knowledge of the matter said Future would likely appeal against the High Court decision.
Future's planned deal to sell its retail, wholesale, logistics and certain other businesses to Reliance for $3.38 billion, including debt, had already been cleared by Indian stock exchanges and the antitrust watchdog, though it was awaiting approval from a law tribunal.
Justice Midha directed a federal government counsel to relay the court's decision to all authorities who were involved in reviewing the Future-Reliance deal. Future had acted "in violation" of the arbitrator's order, he added.
Both Future and Amazon hired some of the country's best legal brains to argue the matter, with the US company engaging law firms P&A Law Offices and AZB & Partners.
Future, in sometimes acrimonious court arguments, accused Amazon of blocking its deal in an attempt to thwart any competition from Reliance, which has plans to expand into e-commerce.
Amazon said at some point it wanted to become a single largest shareholder of Future Retail, which it says "has an irreplaceable and widespread network" of outlets across India.