Reliance Industries Chairman Mukesh Ambani. Photo: AFP

In a setback to Amazon, an Indian tribunal has allowed the oil-to-telecom conglomerate Reliance Group to seek shareholders’ nod to acquire Future Group’s businesses.

The National Company Law Tribunal on Monday allowed Reliance Retail Ventures Ltd and Reliance Retail & Fashion Lifestyles Ltd to hold extraordinary general meetings of their shareholders and creditors for the acquisition of Future Group’s businesses. The tribunal said the objections raised by the American e-commerce giant were premature and can be dealt with at a later stage.

Reliance Retail had earlier approached the tribunal for permission to seek creditors’ nod for reorganizing companies in lieu of the proposed Future-Retail deal. On September 28, the tribunal had allowed Future Group units to hold the meetings of their respective shareholders and creditors.

However, the tribunal’s permission to hold the meeting is only a preparatory step. Its final clearance to the deal will be subject to the Supreme Court’s order where both Future Group and Amazon are litigating.

Future Retail had in August last year entered into a 250-billion rupee (US$3.4 billion) deal with Reliance to sell its supermarket chain Big Bazaar; premium food supply unit Foodhall; and fashion and clothes supermart Brand Factory’s retail and wholesale units.

Amazon had then approached the Singapore International Arbitration Center alleging that this deal has breached the agreement it had entered into with Future Group in 2019. The US firm had acquired a 49% stake in Future Coupons and by virtue of it obtained a small stake in Future Retail. This gave Amazon the first right of refusal during a stake sale. There is also a non-compete clause that prevents Future Group from approaching Amazon’s competitors.

The Singapore court had on October 25 ordered a stay and told Future Group not to proceed with the sale and to await the outcome of the arbitration process. The Indian Supreme Court has also asked both parties to wait for the final order from the Singapore court.

Future Group’s promoter Kishore Biyani had moved to sell his assets to Reliance Group after operations suffered during the two-month-long national lockdown last year during the first wave of Covid-19. Its stores remained closed in April and May last year, leading to huge losses and a cash crunch.