New Delhi, February 16, 2022: While considering Future Retail’s submission that the delay in the proceedings before the NCLT will have serious ramifications and will virtually render the agreement between FRL-Reliance Group redundant, thus keeping the livelihood of 22,000 employees of FRL at stake, the Supreme Court has granted liberty to FRL to approach the High Court by filing an application seeking continuation of the NCLT proceedings beyond the 8th Stage (Meeting of Shareholders and creditors).
A Larger Bench of Chief Justice N.V. Ramana, Justice A.S. Bopanna and Justice Hima Kohli also took into account FRL’s submission that the continuation of the NCLT proceedings will not adversely affect Amazon in any manner.
Going by the background of the case, aggrieved by the sale transaction between Future Retail Limited (FRL)-Reliance Group, Amazon initiated an arbitration proceeding before the Singapore International Arbitration Center (SIAC), in terms of Future Coupons Pvt. Ltd. (FCPL)-Amazon agreements. Amazon filed an application for emergency relief with the registrar of the SIAC court of arbitration seeking interim prohibitory injunction to prevent FRL and FCPL from taking further steps in the said transaction with the Reliance group. Parallelly, FRL filed a suit before the Delhi High Court against amazon for tortious interference in the scheme for the sale of assets.
The Emergency Arbitrator thereafter, injuncted FRL from taking any steps to materialize the deal including injunction against proceedings before various Regulatory authorities. However, the Delhi High Court came to a conclusion that Regulatory authorities had to pass appropriate orders considering the representation of both FRL and Amazon, before granting approvals. In the meanwhile, CCI and SEBI approved the Scheme following the filing of the FRL suit. Further, FRL filed sanction of the composite Scheme of Arrangement under the provisions of Section 230 to 232 of the Companies Act, 2013 before National Company Law Tribunal (NCLT) for its consideration, which is pending.
Amazon thereafter filed a Petition for enforcement of Emergency Arbitrator award before the Delhi High Court, which passed orders inter alia, enforcing the emergency award. When the matter was carried by Amazon to this Court in SLP, this Court allowed the NCLT proceedings to continue without culminating in a final order of Sanction of Scheme. However, this Court did not adjudicate the merits. Thereafter, the applications filed by FRL and FCPL for vacating the award of the Emergency Arbitrator was dismissed by the Arbitral Tribunal, which was challenged by FCPL and FRL before the Delhi High Court, who rejected immediate relief to FRL.
Aggrieved by the aforesaid orders, FCPL and FRL approached this Court, which directed the Single Judge to reconsider the issues and pass appropriate orders on its own merits, uninfluenced by any observation. When the matter was taken again by this Court, the Senior Counsel Harish Salve appearing for the petitioners submitted that the NCLT proceedings for grant of final approval of the proposed Scheme ought to continue as the culmination in the final order would take six to eight months for completing all the steps as required under the Companies Act, 2013. Mr. Salve further argued that it is only when the final Scheme is sanctioned by the NCLT that the retail assets of FRL would get alienated, and so long as the final order of sanctioning is not passed by the NCLT, Amazon is not prejudiced in any manner.
The senior counsel Mukul Rohatgi, appearing on behalf of FCPL submitted that the Competition Commission of India has revoked initial Amazon-FCPL share purchase, which effectively nullifies the arbitration. He submitted that these facts have bearing on the continuation of the proceedings which needs to form a part of consideration.
On the contrary, senior counsel Gopal Subramanium, appearing for Amazon submitted that up till now FRL has conducted NCLT proceedings in contravention of the order of the Emergency Arbitrator as well as the Enforcement order passed by the Single Judge of Delhi High Court.
After considering the submissions of the counsels, the Larger Bench observed that if an order is passed by the Arbitral Tribunal in favour of FRL, then it will be difficult to initiate fresh proceedings before NCLT at that stage. It was also, the submission of Mr. Salve that FRL is incurring expenditure everyday and there is an imminent threat of insolvency
Accordingly, the Top Court requested the Single Judge of the Delhi High Court, to consider all the contentions raised by both the parties in this regard and pass appropriate order as to continuation of the NCLT proceedings, uninfluenced by any observations.