Customers outside a Big Bazaar outlet in Gurgaon Haryana, India, on January 13, 2019. Photo: AFP/Nasir Kachroo/NurPhoto

Troubled offline retailer Future Retail Ltd’s plan to sell a major chunk of its assets to Reliance Group has again hit a roadblock with an Indian court upholding an earlier order by Singapore’s Emergency Arbitrator restraining the sale.

The Delhi High Court on Thursday directed the Kishore Biyani-led company not to take further action on the 247-billion rupee (US$3.4 billion) deal, which was objected to by US e-commerce giant Amazon.

The court also held that the group had willfully violated the Singapore Arbitrator’s order issued last October. Amazon contended that a decision by the Singapore arbitrator was enforceable under Indian laws.

The high court directed the presence of Biyani and others before it on April 28 as also the attachment of their properties. It asked them to show cause why they not be detained for three months under civil law for violating the emergency arbitrator’s order. It directed the Future Group and its directors to deposit two million rupees in costs in the Prime Minister’s Relief Fund.

In reaction, Future group said the Delhi High Court ruling has no bearing on the status quo of the case, which is now pending before the Supreme Court. “Today’s Delhi HC order has no bearing on status quo of case since it is already in Supreme Court, where next hearing is expected to be in April. The National Company Law Tribunal is allowed to continue its proceedings but same shall not culminate in any final order of the sanction of the scheme,” the statement said.

Amazon had approached the Singapore International Arbitration Centre last year alleging that Future group had breached their earlier agreement. In 2019, the US giant acquired a 49% stake in Future Coupons and by virtue of that obtained a small stake in Future Retail.

This deal gave Amazon the first right of refusal during a stake sale. There is also a non-competition clause that prevents Future Group from approaching Amazon’s competitors. Amazon alleged Future has violated the contract last August by agreeing to sell its retail assets to Reliance Industries.

The proposed sale to Reliance Group included Future Group’s supermarket chain Big Bazaar, premium food supply unit Foodhall and fashion and clothes supermart Brand Factory’s retail and wholesale units.

Future Group alleged it had approached Reliance after Amazon failed to help in fighting a cash crunch. The retailer had to keep its 1,700 outlets shut for months after the Indian government announced a countrywide lockdown on March 25 to fight the Covid-19 pandemic.

Kishore Biyani earlier claimed the company approached Amazon eight times seeking help, but the e-commerce giant did not oblige. Amazon denied the claim and said it had held discussions with partners and promoters of Future Group to find a solution.

The e-commerce giant is keen to block the deal as it will give Reliance an unparalleled edge over its rivals. Reliance is already the country’s biggest brick-and-mortar retailer and has made ambitious plans for its e-commerce venture JioMart.

Its retail arm Reliance Retail is looking to offload a 15% stake and has already attracted investments from global private equity majors such as Silver Lake and KKR.