NEW DELHI: The fate of the Rs 24,713 crore deal between Future Retail and Reliance Industries hangs in the balance after the Delhi High Court on Monday allowed Amazon to continue opposing the transaction mainly on the basis of the arbitration award against the proposed asset sale, but left it to local regulators to take the final call on the deal.
While the antitrust watchdog Competition Commission of India already cleared the transaction in November, fresh battle lines are now expected to be drawn before market regulator Securities and Exchanges Board of India (Sebi) and the Ministry of Corporate Affairs where the American e-commerce giant is currently challenging the deal.
Amazon is locked in a legal tussle with the Kishore Biyani-led Future Group, which in August sold its sprawling retail asset to Mukesh Ambani's conglomerate. The Future Group was seeking an ad-interim injunction to restrain the e-commerce giant from writing to statutory regulators, or raise concerns over — and halt — the deal between the two Indian giants.
The court, however, ruled that Amazon cannot be barred from writing to regulators or any other statutory authorities due to "potentially irreparable damage". The regulators will now either clear the deal in accordance with the law after its preliminary review or open an investigation if it has serious concerns.
The acquisition of Future's assets would give Mukesh Ambani, Asia's richest man, an unparalleled edge over peers -- an advantage Amazon is not willing to cede. For the insolvent Future Group, which is sitting on a debt pile of over Rs 12,000 crore, the asset sale without further delay is a crucial rescue act to restore normalcy.
Meanwhile, the court also observed that the lawsuit filed by Future Retail, a unit of Future Group, was maintainable and its attempt to seek approval of the transaction with Reliance Industries was also valid.
Amazon has been arguing that it has bought a 49 per cent stake in Future Coupons, one of Future's unlisted firms, last year. As part of the deal, Future cannot sell its assets to certain parties, including Mukesh Ambani's Group of companies.
Last month, Amazon also won an interim award against the Reliance-Future transaction after a Singapore-based single judge arbitration panel put the transaction on hold. However, the American e-tailer has suffered a setback with the High Court ruling that its investment into Future Group required government approval and by not securing it violated India's foreign exchange and investment laws.
".. the 'control' that is sought to be asserted by Amazon on Future Retail Limited is not permitted under the FEMA, FDI Rules, without the governmental approvals, this Court finds that FRL has made out a prima facie case in its favour for grant of interim injunction..," the court said in its order.
Senior lawyer Harish Salve, representing Future Retail, had earlier likened Amazon to the East India Company for misrepresenting its legal rights and stated the e-tailer is trying to "sink the ship" by not letting Reliance acquire Future's assets. If the assets are not liquidated now, Salve said, thousands may lose jobs overnight and the Future may go bankrupt.