NEW DELHI: In a big boost to US-based e-commerce giant Amazon, the Supreme Court has barred the National Company Law Tribunal (NCLT) from approving the Rs 24,713-crore deal between Kishore Biyani’s Future Retail Pvt ltd (FRL) and Reliance Industries Ltd (RIL).
Jeff Bezos founded Amazon Inc had moved the top court against the order of the high court division bench which had paved the way for the Reliance-FRL deal. In its interim order, the Supreme Court has stated that the NCLT’s Mumbai bench will not pave the way for the FRL-RIL deal even if Future Group holds a meeting of its creditors and shareholders to clear the proposed amalgamation. The court has also issued notices to Future firms and the Biyanis and scheduled the next hearing after five weeks.
Future Group is caught in a fight between Amazon and RIL for domination of the Indian retail market which is set to reach $1.3 trillion by 2025. On 29 August 2020, Future Group had announced that its retail and wholesale business would be sold to Reliance Retail, which is owned by oil-to-chemical conglomerate RIL.
However, a month later, Amazon dragged Future Group to arbitration at Singapore International Arbitration Centre (SIAC), accusing the Indian conglomerate of violating a 2019 partnership contract by entering into the deal with rival Reliance. On October 25 2020, a SIAC interim award was passed in favour of Amazon barring Future Retail from taking any step to dispose of its assets or issuing any securities to secure any funding from a restricted party.
The mega deal has already received clearance from Competition Commission of India and SEBI and the scheme of arrangement is now awaiting the nod from the NCLT and shareholders.
The latest order has come as a shot in the arm for Amazon and provides it with a legal advantage, especially at a time
when it is looking to strengthen its foothold in the country. However, it endangers Future Retail, which is struggling to pay debt and has warned of insolvency. The outcome of the deal could impact how the country’s retail sector shapes up in the post pandemic world.
