Supreme Court allows Future Retail to approach the Delhi High Court The apex court had earlier restrained the National Company Law Tribunal from taking a final call on the Future-Reliance deal The Supreme Court has granted liberty to Future Retail Ltd (FRL) to approach the Delhi High Court seeking permission for the continuation of the proceedings in the National Company Law Tribunal...
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Supreme Court allows Future Retail to approach the Delhi High Court
The apex court had earlier restrained the National Company Law Tribunal from taking a final call on the Future-Reliance deal
The Supreme Court has granted liberty to Future Retail Ltd (FRL) to approach the Delhi High Court seeking permission for the continuation of the proceedings in the National Company Law Tribunal (NCLT) regarding the sanction for the scheme for merger with Reliance Retail.
The bench of Chief Justice NV Ramana, Justice AS Bopanna and Justice Hima Kohli requested the single-bench of the Delhi High Court to pass appropriate orders as and when such an application was moved by FRL.
The bench also observed that the high court should decide without being influenced by any observations made in the Supreme Court order.
The apex court noted that the proceedings before the NCLT were at stage 8 (meeting of shareholders) and that there were altogether 15 stages for the final approval of the scheme.
It further said that senior advocate Harish Salve had submitted that FRL was incurring expenditure for each day's delay and that there was a threat of insolvency proceedings against it. Further, the livelihood of more than 20,000 employees was at stake.
The bench had reserved the orders in the Future Retail's plea on the issue of whether NCLT proceedings on the Future-Reliance deal could be permitted to continue and if FRL could be allowed to go ahead with the steps of the scheme.
The Future Group had submitted before the Supreme Court that if the Future-Reliance deal got through, the jobs of the employees would be saved, no shops would close, the banks would be paid out, and FRLs debt would be paid off completely.
Appearing for FRL, Salve had submitted that the company should be allowed to go ahead with the steps of the scheme, as several meetings would have to be held. He added that the court might hold in the interim that no final order would be made to sanction the merger scheme and no transfer of assets would happen, so e-commerce giant Amazon would be protected.
Appearing for the Future Coupons Private Limited (FCPL) senior advocate Mukul Rohatgi referred to the order of the Competition Commission of India (CCI), revoking the approval granted to Amazon. It held that Amazon's conduct was fraudulent and had imposed a fine of Rs.200 crores on it. He argued that CCI had withdrawn the "blessings" given to the agreement between FCPL and Amazon, which contained the arbitration clause.
On behalf of Amazon, senior advocate Gopal Subramanium submitted that the injunction order passed by the Emergency Arbitrator (EA) in October 2020 had not been varied or reversed in appeal. Hence, it meant it was still in force. He further said that the merger scheme could not be permitted to proceed in violation of the Emergency Award.
Regarding FRL's objection to the arbitral tribunal's jurisdiction, Subramanium submitted that the same was a jurisdictional objection and had been dismissed under the Arbitration Act by the tribunal in October 2021.
He added that the order could be challenged in the final award only, and not before the Delhi High Court in an appeal filed under the Act as proposed by Salve.
Subramanium maintained that the NCLT proceedings were dependent on the number of prior actions as many approvals had to be obtained. All those approvals were obtained by FRL in contravention to the tribunal's injunction order.
Senior advocate Aspi Chinoy appearing for Amazon submitted that, in effect, FRL wanted the court to permit NCLT proceedings, which was in derogation of the injunction order that was subsisting and not challenged by them.
In 2020, the EA through its order had restrained FRL from going forward with its deal with Reliance and injuncted FRL from taking steps in furtherance of the Scheme of Arrangement with Reliance. The arbitral tribunal reinforced the EA's order in October 2021 and dismissed FRL's plea to vacate the order of the EA.
In February 2021 a bench headed by Justice RF Nariman of the Supreme Court had barred the NCLT from sanctioning the scheme of merger of Reliance-Future companies while allowing the continuation of the proceedings before the tribunal.
Recently, in a major relief to the Future Group companies, the Supreme Court had set aside the orders of the Delhi High Court, which initiated coercive steps against the companies and its promoters the Biyanis for alleged violation of the EA passed by the Singapore Arbitration Tribunal on the application filed by Amazon.
The Supreme Court had set aside the February and March 2021 orders passed by the Delhi High Court ordering coercive steps against the Future Group and the October 2021 order, which refused to stay the Singapore Tribunal's refusal to vacate the EA that restrained the Future-Reliance deal.