SC stops NCLT from giving nod to Future deal for now
The order is a shot in the arm for Amazon, which seeks to stop the ₹24,713 cr deal
NEW DELHI: The Supreme Court on Monday restrained the National Company Law Tribunal (NCLT) from approving the ₹24,713 crore deal between Kishore Biyani’s Future Retail Ltd (FRL) and Reliance Industries Ltd (RIL) for the sale of the former’s retail assets, as the top court admitted a petition by Amazon.com Inc against the arrangement.
Granting an interim order in favour of e-commerce giant Amazon, the top court made it clear that the NCLT’S Mumbai bench shall not sanction the scheme to pave the way for the FRL-RIL deal even if Future Group holds any meeting of its creditors and shareholders to endorse the planned sale.
A bench of justices Rohinton F Nariman and BR Gavai also issued notices to the Future group and the Biyani family, fixing the matter for the next hearing after three weeks.
Future Retail’s scheme of arrangement has already received approval from the antitrust regulator Competition Commission of India and raised no objection from the Securities and Exchange Board of India (Sebi), following which it approached NCLT Mumbai on January 26. The SC order on Monday puts a spoke in the wheel.
A spokesperson for Amazon declined to comment. Future Retail, in a statement, said the SC had “specifically ruled that the proceedings before NCLT will be allowed to go on but will not culminate in any final order... Accordingly, the NCLT can now issue directions to convene the meetings of shareholders and creditors”.
NEW DELHI: The Supreme Court on Monday restrained the National Company Law Tribunal (NCLT) from approving the ₹24,713-crore deal between Kishore Biyani’s Future Retail Ltd (FRL) and Reliance Industries Ltd (RIL), after Amazon.com Inc. filed a plea before the apex court.
In an interim order in favour of e-commerce giant Amazon, the top court made it clear 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 SC bench comprising Justices Rohinton F. Nariman and B.R. Gavai, also issued notices to Future firms and the Biyanis. The matter will be heard after three weeks.
After FRL’S proposed merger with RIL was approved by the Competition Commission of India and the Securities and Exchange Board of India (Sebi) had issued a no-objection certificate, the company had approached the Mumbai bench of the NCLT on 26 January.
Monday’s SC order comes as a shot in the arm for Amazon, which seeks to stop the FRL-RIL deal, citing the Singapore International Arbitration Centre’s
(SIAC) interim award in October barring Future Retail from taking any step to sell its assets or issuing any securities from a restricted party to secure funding. Future Group is caught in a fight between Amazon and Mukesh Ambani’s RIL for domination of the Indian retail market, which is set to reach $1.3 trillion by 2025.
An Amazon spokesperson declined to comment, citing that the matter was sub-judice.
The SC bench also observed that the division bench of the Delhi high court shall not proceed with this case since it has already admitted Amazon’s appeal. The case is listed before the high court on Friday.
“According to us, this order (of the high court) seems to have
decided the main appeal let alone be just the maintainability at the interim stage itself. At the interim stage, you can’t vacate a stay order without giving adequate reasons... It is obvious they (high court) cannot hear it. You (Amazon’s lawyers) show them our order,” the SC said.
The SC bench was also critical of the high court’s 8 February order overturning a previous directive to halt the FRL-RIL deal. Senior advocates Gopal Subramanium and Ranjit Kumar, appearing for Amazon, sought restoration of status quo on the FRL-RIL deal till all the legal issues are addressed by the SC. They also pointed out that the scheme of arrangement for the FRL-RIL deal was now awaiting a nod from the NCLT and
shareholders, and therefore, an interim order of restraint was imperative. While the SC bench was inclined to stay all proceedings at the NCLT, senior advocate Harish Salve, representing FRL, argued that there was no possibility of the NCLT passing any final order of approval under the present circumstances. He said even if the meeting to consider the amalgamation was to be convened, it will not happen before six weeks and, hence, proceedings before the NCLT were not required to be stayed. The bench agreed and passed an interim order to the effect that the “NCLT proceedings will be allowed to go on, but will not culminate in a final order on sanction of scheme” till the matter is decided by the SC.