Supreme Court stops NCLT from approving Future-Reliance deal
The Supreme Court on Monday stopped the National Company Law Tribunal (NCLT) from approving the ₹24,713 crore deal between Kishore Biyani-led Future Retail Limited (FRL) and Mukesh Dhirubhai Ambani’s Reliance Retail.
Admitting the appeal by e-commerce giant Amazon, the top court issued the interim order, making it clear that the NCLT shall not sanction the scheme to pave way for the deal between the FRL and the Reliance even if the meetings of the creditors and shareholders of the Future groups takes place.
A bench of justices Rohinton F Nariman and BR Gavai also issued notices to the Future group companies and the Biyanis and fixed the matter for the next hearing after five weeks.
The bench made it clear that the division bench of the Delhi high court shall not proceed with the case since the Supreme Court had admitted the matter for examination.
United States-based Amazon, through senior advocates Gopal Subramanium and Ranjit Kumar, had sought restoration of the status quo on the FRL-Reliance deal till the time various legal issues relating to the matter were finally decided.
In its appeal, Amazon, among a host of legal issues, had questioned the maintainability of FRL’s petition before the Delhi high court’s division bench against the interim order of the single judge who had restrained the Future Group from proceeding further with entities of the Reliance Group.
The US retail giant has also banked on the October 25, 2020 Emergency Arbitrator (EA) order passed by the Singapore International Arbitration Centre (SIAC) that had restrained FRL from going ahead with the deal with Reliance Retail.
“No provision for appeal is provided against an order passed under Section 17(2) of the Arbitration and Conciliation Act. The respondents (FRL) have not challenged the EA order itself, but have preferred to challenge the single judge order enforcing the EA order,” said the Amazon’s petition in SC.
It added that the single judge’s status quo order was passed for the limited purpose of preserving the rights of the parties till pronouncement of final orders and the division bench of the Delhi high court ought not to have issued its order “hastily”.
Pointing out the consequences of lifting the status quo, Amazon’s petition said, “The greater the progress made towards the completion of the impugned transaction, the harder it will be to unravel it. Over time, the interests of additional third parties may also become entwined with the transaction and be subsequently compromised.”
On February 8, a division (two judge) bench of the Delhi high court had stayed a single judge’s direction of February 2 that had put a temporary freeze on the deal between Future Retail and Reliance.
The order by the division bench had come on FRL’s appeal which had claimed that due to the status quo position, the proceedings before the NCLT for approving the amalgamation scheme were held up. This could be an “absolute disaster” for the company with its outlets across India being shut and nearly 25,000 employees losing their livelihood, FRL had contended.
The order in appeal before SC had noted, “Statutory authorities should not be restrained from proceeding in accordance with law on Future-Reliance deal,” while lifting the single judge’s status quo direction.