Future gets Supreme Court's nod for Reliance deal

New Delhi: The Supreme Court Tuesday granted liberty to Future Retail Ltd (FRL) to move the Delhi High Court for seeking continuation of its merger proceedings with Reliance Retail before the National Company Law Tribunal (NCLT) beyond the eighth stage of meeting of shareholders and creditors. A Bench headed by Chief Justice NV Ramana took note of the submission that FRL, incurring expenditure on daily basis, has been facing imminent threat of insolvency and any delay in the merger proceedings before the NCLT may virtually render the deal 'redundant', besides putting at stake the livelihood of over 22,000 employees.

"In view of the submissions, we 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 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 Bench, also comprising Justices AS Bopanna and Hima Kohli, said in the order. The apex court on February 3 had reserved its order on the FRL plea seeking continuation of the merger deal process before the NCLT. Writing the 12-page order for the bench, the CJI referred to the legal history of cases between Future group and US e-commerce major Amazon, over the Rs24,731 crore FRL-Reliance Retail merger deal. Amazon and the Future group have been engaged in a legal battle for over a year as the US major is opposing the merger of FRL with Reliance Retail. The top court took note of the submissions that out of total 15 stages required for finalisation of a merger deal, the NCLT has reached at 8 one stage pertaining to meeting of the shareholders and creditors.

Senior advocate Harish Salve, appearing for the Future group, had contended that it would take six to eight months to complete the entire process and for actual sanctioning of the scheme by the NCLT. He had said 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. Moreover, FRL is incurring expenditure everyday and there is an imminent threat of insolvency and any delay in the proceedings before the NCLT will have serious ramifications and virtually render the agreement between FRL­ and Reliance group redundant, he had said.

Furthermore, the livelihood of 22,000 employees of FRL are also at stake and continuation of the NCLT proceedings will not adversely affect Amazon in any manner, the FRL had said. Taking note of the submissions, the top court, in its order, granted FRL liberty to move the High Court with its plea seeking permission to continue with the merger proceedings before the NCLT. Prior to this, the apex court, in a verdict on February 1, had set aside three Delhi High Court orders including attachment of properties of FRL and its directors and the refusal to grant a stay on the final arbitral award which had restrained FRL from going ahead with its Rs 24,731 crore merger deal with Reliance Retail and had ordered fresh adjudication.

The top court had set aside the High Court's order of February 2, 2021, by which it had directed FRL to maintain the status quo concerning the merger deal. The March 18, 2021, order of the High Court, upholding the EA's award, imposing a cost of Rs20 lakh on it as well as its directors and attaching their properties, was also set aside by the top court which remanded the pleas of Future Group firms relating to arbitral award on the merger deal with Reliance Retail back to the Delhi High Court.

It had also quashed the October 29, 2021, order of the High Court declining a stay on an arbitration tribunal decision refusing to interfere with the Emergency Award (EA) of the Singapore International Arbitration Centre (SIAC). The EA had restrained FRL from going ahead with the merger deal. On September 9, 2021, the apex court had stayed for four weeks all proceedings before the High Court concerning the implementation of the EA and also directed statutory authorities like National Company Law Tribunal (NCLT), Competition Commission of India (CCI), and Securities and Exchange Board of India (Sebi) not to pass any final order related to the merger deal in the meantime.