US e-commerce giant Amazon won a major legal victory in India on Friday as the country's top court blocked a $3.4-billion deal struck by domestic rival Reliance.

Amazon, Walmart-backed Flipkart and Reliance, owned by Asia's richest man Mukesh Ambani, are locked in a titanic battle to dominate online retail in the country of 1.3 billion people.

Reliance struck a deal last year to buy assets belonging to Future Retail, India's second-largest supermarket chain, owned by Future Group.

The acquisition of Future Group, which owns some of India's best-known supermarket brands, such as Big Bazaar, would have strengthened Reliance's presence in the hugely competitive e-commerce sector.

Amazon, which owned a stake in one of Future Group's firms that reportedly included an option to buy into the flagship company, claimed that the Reliance deal amounted to a breach of contract.

The US online titan last year approached the Singapore International Arbitration Centre which put the Reliance deal on hold after finding merit in Amazon's objections.

Amazon has pledged $6.5 billion in investment in India
Amazon has pledged $6.5 billion in investment in India AFP / MANJUNATH KIRAN

Amazon said the arbitrator's order was binding, while Future contested its legality. On Friday the Supreme Court ruled that the order was valid.

There was no immediate comment from Reliance or Amazon.

Amazon, owned by the world's richest man Jeff Bezos, has pledged $6.5 billion in investment in India, according to Bloomberg News.

Flipkart, which Walmart bought a majority stake in for $16 billion in 2018, recently garnered $3.6 billion in the country's largest fund raise at a valuation of nearly $38 billion, Bloomberg said.

Future Group founder Kishore Biyani was once known as India's retail king, but he has struggled in recent years as the coronavirus pandemic dealt a heavy blow to his empire.

Reliance's shares fell more than two percent in Mumbai.