Amazon had argued that Future breached contracts by selling its retail assets to Reliance.
The Future Group today challenged a Delhi High Court order that has blocked its $3.4 billion deal with Reliance on the objections of business partner Amazon. The High Court paused Future Group's sale of retail assets to rival Reliance Industries, in a boost to Amazon. Caught in a battle involving businesses led by two of the world's richest men, Jeff Bezos and Mukesh Ambani, Future group has said if it cannot sell its assets, then it faces insolvency.
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In a court filing against Amazon, which wants to block the sale, Future Group said if it cannot sell assets, $4 billion in bank loans and debentures will be at risk. "It is inevitable that FRL (Future Retail) will go into liquidation," said the company.
Other than an estimated Rs 300 billion hit to bank loans and debentures, the deal's failure would also impact livelihoods of 50,000 employees and 6,000 small and medium-sized vendors, said the Kishore Biyani led company.
Amazon had argued that Future breached contracts by selling its retail assets to Reliance. The court sided with Amazon, saying an order in Singapore from an arbitrator that put the Future-Reliance deal on hold was valid.
Future had challenged the Singapore tribunal's decision, saying it was not binding. But the High Court said the arbitration order was enforceable and asked all authorities to maintain status quo on the transaction, effectively putting the deal on hold.
Amazon, in its petition, alleged that Future had displayed deliberate and willful disobedience of the overseas arbitration court's order. The US company owns a minority stake in one of Future Group's firms and has accused the latter of violating a contract when it agreed to the deal with Reliance.
The legal victory for Amazon comes after its letters to Indian regulators in an attempt to stop approvals for the deal were unsuccessful. The antitrust regulator gave its approval in November.
In a letter to employees, Kishore Biyani wrote that given the financial crisis in the retail sector on account of pandemic, his company was left with no other option but to enter in a constructive deal with Reliance Group.
"This deal with Reliance meets our objective of providing stability and security for our people, vendors, landlords and lenders. I chose this option despite the fact that this means there is no gain for the promoters, in fact we are losing business that was painstakingly created with you all over the last three decades," Mr Biyani wrote.
He described Amazon's moves as playing the dog in the manger. "Amazon's relentless attack is on Future Retail, the Board of Directors, lenders, promoters, and is unsparing of even on my father, uncle and children. The stated and evident policy of vexatious litigation and harassment makes one wonder about the similarity in ruthless ambition to scorch the earth akin to the Greek Alexander - after all, they are inspired to name their product as Alexa," he said.
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