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Supreme Court tells Future to approach Delhi High Court on continuation of NCLT proceedings beyond creditors

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The Supreme Court on Tuesday granted liberty to Future Retail Limited (FRL) to approach the Delhi High  Court by filing an application seeking continuation of NCLT proceedings beyond the meeting of shareholders and creditors.   

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 aforesaid 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.

Emergency Arbitrator, by order dated 25.10.2020, injuncted FRL from taking any steps to materialize the deal, including injunction   against   proceedings   before   various   Regulatory authorities. However, by order dated 21.12.2020, 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,  Competition Commission of India (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 on 26.01.2021, which is pending.

Amazon   filed   a   Petition   for   enforcement   of   Emergency Arbitrator award before the Delhi High Court on 25.01.2021.  Vide   orders  dated 02.02.2021   and   18.03.2021,   Delhi   High   Court   passed orders inter alia, enforcing the emergency award.

When  the  matter  was  carried  by  Amazon  to  this  Court   vide order dated 22.02.2021, the Top   Court   allowed   the   NCLT   proceedings   to   continue without culminating in a final order of Sanction of Scheme.

However the Apex  Court  by   final  order  dated 06.08.2021,  did  not  adjudicate  the merits  of the  case and limited  its reasoning only  to answering the  legal questions concerning  the maintainability  of a  first appeal against an order   of   the    Single   Judge   in   an   enforcement proceeding.

Aggrieved by the merits of the orders of the  Single Judge   dated   02.02.2021   and   18.03.2021 Delhi   High   Court   passed orders inter alia, enforcing the emergency award.

When  the  matter  was  carried  by  Amazon  to  this  Court   vide order dated 22.02.2021, the Top   Court   allowed   the   NCLT   proceedings   to   continue without culminating in a final order of Sanction of Scheme.

However the Apex  Court  by   final  order  dated 06.08.2021,  did  not  adjudicate  the merits  of the  case and limited  its reasoning only  to answering the  legal questions concerning  the maintainability  of a  first appeal against an order   of   the    Single   Judge   in   an   enforcement proceeding.

Aggrieved by the merits of the orders of the  Single Judge   dated   02.02.2021   and   18.03.2021,   FCPL   and   FRL filed appeals directly before the Top Court.

Harish Salve,    Senior  Counsel  appearing   for  FRL stated that it would  take six to eight months for completing   all   the   fifteen   steps   set   out   above.   He   finally submitted   that   it   is   only   when   the   final   Scheme   is sanctioned by the NCLT that the retail assets of FRL would get alienated. So long as the final order of sanctioning is not passed   by   the   NCLT,   Amazon   is   not   prejudiced   in   any manner. 

Mukul  Rohatgi,    Senior  Counsel   appearing   on behalf   of   FCPL   has   submitted   that   the   Competition Commission of India has revoked initial Amazon­FCPL 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.

Accordingly,  he  submitted that  he   is  willing  to  argue on  the consideration before the High Court in remand. 

On  the  contrary,  Gopal  Subramanium,     Senior Counsel  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 in . He stated   that   the  order  of   the Apex  Court  dated  01.02.2022  has clearly remanded the matter for reconsideration by the High Court. 

A bench comprising Chief Justice N.V. Ramana Justices A.S. Bopanna and Hima Kohli observed after hearing the submission grant 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).   

“Accordingly,   we request the learned Single Judge of the
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 beyond the stage mentioned at serial no.   8   and   other   regulatory   approvals   expeditiously, uninfluenced by any observations made herein”, the order read.

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