NCLT bars Future Retail from seeking shareholder nod for ₹24,713 cr deal with RIL
Premium- Following a hearing on Monday, the NCLT changed its earlier stance by stopping Future Retail from holding the key shareholders’ meeting
MUMBAI : In another setback, Kishore Biyani promoted Future Group, which is embroiled in a bitter legal battle against US-based e-commerce giant Amazon.com NV Investment Holdings, has been restrained by NCLT from calling any shareholders' meet to seek approval for its proposed Rs. 24,713 crore retail asset sale deal to Mukesh Ambani-promoted RIL.
Following a hearing on Monday, the NCLT changed its earlier stance by stopping Future Retail from holding the key shareholders’ meeting.
Future Retail, along with six other companies, had last week notified the Securities and Exchange Board of India that it will conduct e-voting between 6 November and 9 November and subsequently declare the results of the voting process on 10 November.
On the other hand, Amazon has stated in a letter to Sebi and exchanges that post the Supreme Court verdict, the SIAC rulings had given an order and the High Court of Delhi too has refused to grant interim relief.
In the hearing on Monday, “the NCLT has said till a detailed verdict, Future Group cannot hold meetings temporarily also," said a person familiar with the matter.
Future Group now seems to be struggling to close its Rs. 24,713 crore proposed deal with RIL.
On Monday, Future Retail has filed a special leave petition before the Supreme Court against Delhi High Court's 29 October interim order regarding the SIAC verdict.
FCPL and the promoters of FRL too have filed an appeal before the Supreme Court of India through an SLP, a spokesperson from FRL said.
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On 29 the Delhi High Court had rejected Future Retail’s plea seeking a stay on the 21 October interim order passed by the SIAC. The high court asked Amazon to respond on the matter and has scheduled the next hearing for 4 January.
A week before this interim order, the SIAC had rejected Future Group’s appeal to vacate the interim stay on the company’s deal with RIL passed in October last year. SIAC had also held that Future Retail is a party to the matter between Amazon and Future Group, rejecting its (Future Retail's) request to be excluded from the arbitration proceedings.
With the Amazon- Future Group faceoff increasing, the independent directors of Future Retail have written to the Competition Commission of India (CCI) to cancel the approval that was given to Amazon in August 2019 to buy 49% stake for ₹1,431 crore in Future Coupon Pvt Ltd.
In the letter on Sunday, the independent directors of FRL have alleged that Amazon, in order to avoid hassles of getting regulatory clearances, has concealed certain information regarding its intention to gain control in Future Retail through investment on FCPL.
Had Amazon expressed its intent to have control in FRL, it would have faced a hurdle to the extant Foreign Direct Investment (FDI) norms which doesn't allow a foreign firm to own a majority stake in an Indian multibrand retail firm.
On the other hand, on 30 October, Amazon has written to Sebi and exchanges, urging the latter to direct Future Group to disclose complete information regarding the orders passed by the courts and prevent Future Retail from calling shareholders meeting to get an approval on the deal with RIL.
Earlier, Amazon had sought a stay on the operation of the NCLT order and to grant a stay on the operation of the notice of meetings dated 11 October 2021 issued by FRL, restraining the convening of any meeting pertaining to FRL, the stock exchange filing said.
Amazon had also filed an interim application in the Supreme Court seeking to halt the meeting of shareholders and creditors of Future Retail Ltd (FRL) to approve the deal with RIL's retail unit, which NCLT had approved.
On 29 August last year, debt-laden Future Group announced the sale of its retail and wholesale assets to RIL's two retail subsidiaries for Rs.24,713 crore.
This had compelled Amazon to approach the SIAC on grounds that its investment agreement with Future Coupons Pvt. Ltd, restricts FRL from selling its assets to RIL. In October last year, an SIAC emergency order blocked the sale, which triggered a legal battle between Amazon and Future Group regarding the enforceability of the SIAC order.
SIAC's final order is yet to be pronounced.
In August, the Supreme Court upheld the Singapore emergency arbitrator’s order blocking Mukesh Ambani-led RIL’s acquisition of Future Group’s assets.
A Supreme Court bench of Justices Rohinton Fali Nariman and B.R. Gavai ruled that the 25 October 2020 order by SIAC is enforceable under Section 17(2) of India’s Arbitration Act.
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