Supreme Court Allows Future Retail Ltd To Approach Delhi HC To Seek Resumption Of NCLT Proceedings For Reliance Merger Scheme Approval

The Supreme Court on Tuesday granted liberty to the Future Retail Ltd to approach the Delhi High Court seeking permission for the continuation of the proceedings in the National Company Law Tribunal regarding the sanction for the scheme for merger with Reliance.The bench of CJI NV Ramana, Justices AS Bopanna and Hima Kohli in the order requested the single bench of the Delhi High Court to pass appropriate orders as and when such an application has been moved by the FRL.The bench also observed that the Single Bench of the High Court should decide without being influenced by any observations made in the Supreme Court order.The Supreme Court noted that the proceedings before the NCLT are at stage 8 - meeting of shareholders- and that there are altogether 15 stages for the final approval of the scheme."We grant liberty to FRL to approach the High Court seeking continuation of proceedings before NCLT beyond Statge 8. We request the single judge to pass orders", the Chief Justice of India read out the operative portion of the order. A detailed copy of the judgment is awaited.The bench noted in its order that Future Retail Ltd has undertaken to complete the 15 steps for approval of the scheme and that the proceedings are at present at stage 8. The bench further noted that Senior Advocate Harish Salve has submitted that FRL is incurring expenditure for every day's delay and that there is a threat of insolvency proceedings against it. Further the livelihood of more than 20,000 employees are at stake.The bench led by CJI NV Ramana had reserved orders in Future Retail's plea on the issue of whether NCLT proceedings with regards to Future Reliance deal can be permitted to continue and if FRL can be allowed to go ahead with the steps of the scheme. Submission Of CounselsFuture Group had submitted before the Supreme Court that if Future Retail Ltd deal with Reliance goes through, 35000 jobs will be saved, no shops will be closed, Banks will be paid out as well, and FRL's debt will be paid to the last rupee.During the hearing, Mr Harish Salve for FRL submitted that FRL should be allowed to go ahead with the steps of the scheme as several meetings will have to be held. He added that the Court may hold in the interim that no final order will be made to sanction the merger scheme and no transfer of assets will happen, so Amazon would be protected.Senior Advocate Mukul Rohatgi appearing for Future Coupons Private Ltd while referring to CCI's order revoking the approval granted to Amazon holding that Amazon's conduct was fraudulent and imposing a fine of 200 crores had argued that the Competition Commission of India had withdrawn the "blessings" given to the agreement between FCPL and Amazon, which contained the arbitration clause.Senior Advocate Gopal Subramanium appearing for Amazon submitted that the injunction order passed by the Emergency Arbitrator on 25 October 2020 has not been varied or reversed in appeal and hence the same is in force as of today. He therefore submitted that the merger scheme cannot be permitted to proceed in violation of the Emergency Award.With regard to FRL's objection to Arbitral Tribunal's jurisdiction, Mr Subramanium submitted that the same was a jurisdictional objection and had been dismissed under section 16 of the Arbitration Act by the Tribunal on 20th October 2021.He argued that the said order can be challenged in the final award only, and not before the Delhi High Court in an appeal filed under Section 37 as proposed by Mr Salve.Mr Subramanium submitted that the NCLT proceedings were dependent on the number of prior actions as many approvals had to be obtained. He added that all those approvals were obtained by FRL in contravention to the Tribunal's injunction order.Senior Advocate Aspi Chinoy appearing for Amazon submitted that what FRL wants in effect is for the Court to permit NCLT proceedings which is in derogation of the injunction order which is subsisting, and it hasn't been challenged by them.BackgroundThe Emergency arbitrator through its order dated 25th October 2020 has restrained FRL from going forward with its deal with Reliance and injuncted FRL from taking steps in furtherance of the Scheme (Scheme of Arrangement with Reliance). The Arbitral Tribunal constituted to hear the Future-Amazon dispute reinforced the Emergency Arbitrator's order on October 21, 2021, and dismissed FRL's plea to vacate the order of the Emergency Arbitrator.On February 22, 2021 a bench headed by Justice RF Nariman of Supreme Court had barred the NCLT from sanctioning scheme of merger of Reliance-Future companies, while allowing the continuation of the proceedings before the Tribunal.In a major relief to Future group companies, the Supreme Court on 1st February, 2022 set aside the orders of the Delhi High Court which initiated coercive steps against the companies and its promoters Biyanis for alleged violation of the Emergency Award passed by the Singapore Tribunal on the application filed by...

Supreme Court Allows Future Retail Ltd To Approach Delhi HC To Seek Resumption Of NCLT Proceedings For Reliance Merger Scheme Approval

Shruti Kakkar

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