Proceedings before NCLT allowed, but there will be no final order: FRL

Future Retail Ltd on Monday said the National Company Law Tribunal (NCLT) can issue directions to convene meetings of shareholders and creditors of applicant companies, including it, to consider the Rs 24,713-crore deal with Reliance Retail following an order by the Supreme Court.

Earlier in the day, the apex court had allowed the NCLT, Mumbai to continue with the proceedings but asked not to pass a final order on the amalgamation of Future Retail Ltd (FRL) with Reliance Retail, as it agreed to hear Amazon’s plea against the Delhi High Court verdict that stayed a single judge directive to maintain status quo on the deal.

The US-based e-commerce giant had moved the top court against the order of the high court division bench which paved the way for the Reliance-FRL deal.

A bench comprising Justices R F Nariman and B R Gavai issued notices to FRL, Chairperson Kishore Biyani and others and sought their replies to the Amazon plea.

The reply is to be filed in three weeks and a rejoinder to it two weeks thereafter, the bench said, adding that the appeal will be listed for hearing after five weeks.

The Supreme Court has “further specifically ruled that the proceedings before NCLT will be allowed to go on but will not culminate in any final order of sanction of the scheme.

Accordingly, the NCLT can now issue directions to convene the meetings of shareholders and creditors of the applicant companies including FRL to consider the scheme,” Future Retail Ltd said in a regulatory filing.

The Delhi High Court on February 8 had stayed its single judge direction to FRL and various statutory authorities to maintain status quo on the mega deal. The interim direction was passed on FRL’s appeal challenging the February 2 order of the single judge.

The high court division bench had also declined Amazon’s request to keep its order in abeyance for a week so that it can explore appropriate remedies.

The division bench, however, said it was staying the single judge order as firstly, FRL was not a party to the share subscription agreement (SSA) between Amazon and Future Coupons Pvt Ltd (FCPL) and the US e-commerce giant was not a party to the deal between FRL and Reliance Retail.

The bench further said it was of the prima facie view that the share holding agreement (SHA) between FRL and FCPL, the SSA between FCPL and Amazon and the deal between FRL and Reliance Retail “are different” and “therefore, the group of companies doctrine cannot be invoked”.

FRL, in its appeal, had claimed that if the February 2 order was not stayed it “would be an absolute disaster” for it as the proceedings before the NCLT for approving the amalgamation scheme have been put on hold.

It contended that the single judge’s status quo order will effectively derail the entire scheme which has been approved by statutory authorities in accordance with law.

In August last year, Future had reached an agreement to sell its retail, wholesale, logistics and warehousing units to Reliance.

Subsequently, Amazon took FRL into an emergency arbitration before the Singapore International Arbitration Centre (SIAC) over an alleged breach of contract by the Future group.

Amazon had first filed a plea before the single judge for enforcement of the October 25, 2020 Emergency Arbitrator (EA) award by the SIAC restraining FRL from going ahead with its Rs 24,713 crore deal with Reliance Retail.

In its suit before the single judge of the Delhi High Court for enforcing the EA award, Amazon had sought to restrain FRL from taking any steps to complete the transaction with entities that are a part of the Mukesh Dhirubhai Ambani (MDA) Group.

Amazon also sought detention of the Biyanis, directors of FCPL and FRL and other related parties in civil prison and attaching of their properties for alleged “wilful disobedience” of the EA order.

After the SIAC’s EA order, Amazon wrote to the SEBI, stock exchanges and CCI, urging them to take into consideration the arbitrator’s interim decision as it is a binding order.

FRL thereafter moved the high court to restrain Amazon from writing to SEBI, CCI and other regulators about SIAC’s order, saying it amounts to interfering with the agreement with Reliance.

A single judge on December 21 last year had on FRL’s plea passed an interim order allowing Amazon to write to the statutory authorities, but also said that prima facie it appeared the US e-commerce giant’s attempt to control Future Retail was violative of FEMA and FDI rules.

Against the observations, Amazon moved an appeal before a division bench and during its pendency, Amazon filed the suit for the enforcement of the EA award.