RIL-Future deal: NCLT can continue proceedings, but cannot pass final order, says SC

Future Group had entered into a ₹24,713-crore deal with Mukesh Ambani’s RIL to sell its retail, wholesale, logistics and warehousing units. File Photo.  

The Supreme Court on Monday allowed National Company Law Tribunal (NCLT) proceedings in connection with the proposed ₹24,713-crore deal between Future Group and Reliance Industries to go on, but directed the Tribunal to refrain from passing any “final order of sanction of the scheme”.

E-commerce major, Amazon, which opposes the multi-crore deal, had recently moved the NCLT against Future Group’ s plea to hold a meeting of its shareholders or creditors to approve the deal with Reliance.

On Monday, an apex court Bench led by Justice Rohinton Nariman also issued notice on a petition filed by Amazon, to stay the operation of a Delhi High Court order of February 8, which revoked an earlier direction to Future Group to maintain 'status quo' on the sale of its retail assets to Reliance Industries.

“We are not saying anything on merits now... We have read the files thoroughly and we know exactly what is happening,” Justice Nariman told the lawyers.

When senior advocate Ranjit Kumar asked whether the apex court’s intervention and notice in the case would mean the Division Bench of the Delhi High Court could not proceed further, Justice Nariman replied “obviously, show them the order”.

In its order, the Bench, while issuing notice to Future Retail and other parties arraigned by Amazon as respondents, said they would get two weeks to file their counter while Amazon was given a week to file its rejoinder thereafter. The case would next come up for hearing after three weeks.

“In the meantime, the NCLT proceedings will be allowed to go on but will not culminate in any final order of sanction of scheme,” the apex court directed.

In its order, the Bench, while issuing notice to Future Retail and other parties arraigned by Amazon as respondents, said they would get three weeks to file their responses while Amazon was given two weeks to file its rejoinder. The case would come up for hearing after that.

“Meanwhile, NCLT proceedings will be allowed to go on, but will not culminate in any final order of sanction of the scheme,” Justice Nariman dictated the order.

In its petition challenging the February 8 order of the High Court, Amazon, represented by senior advocate Gopal Subramanium, had said the order was “ex-facie arbitrary and illegal”. It was passed by a Division Bench of the High Court on an appeal filed by Future Retail Limited (FRL).

The February 8 order had countermanded a February 2 order by a Single Judge of the High Court. The latter order had directed FRL to maintain status quo on its deal with Reliance.

“It is evident that the Single Judge order to maintain status quo was directed for the limited purpose of protecting the substratum of the dispute till a detailed order was issued... However, the High Court, instead of waiting for a detailed order, has issued the interim order (February 8) staying the operation, implementation and execution of the Single Judge order without giving any reasons,” Amazon has contended in its petition before the apex court.

Amazon has urged the apex court to protect its interests by granting an ex-parte stay on the deal between FRL and Reliance. The US firm said the court should intervene to protect its rights as the “balance of convenience” was in its favour.

“Respondents (Future Group) have unequivocally stated that they will continue to take steps to complete the transaction. The greater the progress made towards the completion of the transaction, the harder it will be to unravel it. Over time, the interests of additional third parties may also become entwined and be subsequently compromised,” the petition said.

It said “irreparable harm” would be caused if the court did not stay the February 8 order.

The petition argued that an appeal, as the preferred by FRL against the Single Judge order, was barred under Section 17(2) of the Arbitration and Conciliation Act, 1996.

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Printable version | Apr 23, 2021 4:33:06 AM |

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