Future-Reliance Retail Deal: NCLT Reserves Order On Group’s Plea To Hold Shareholder Meet

The National Company Law Tribunal has reserved its order on Future Group's plea to hold shareholders meeting and seeking their approval for consolidation of its entities—which is the first step in its ultimate sale to Reliance Retail Ventures Ltd.

The Future Group entities have filed an application under sections 230-232 of the Companies Act, 2013, which deals with schemes of arrangement, mergers and amalgamation. The scheme involves merger of as many as 19 group entities, including five listed and 11 promoter companies, into Future Enterprises Ltd.

A bench comprising members Suchitra Kanuparthi and Chandrabhan Singh, that heard the matter through video conference has directed Amazon and other parties to make written submissions within three days.

To be sure, Reliance Retail has also filed a separate application with the NCLT, seeking approval to proceed with its merger with the Future Group entities. The tribunal is yet to hear the matter.

NCLT Mustn't Approve Future Group Plea: Amazon

Senior counsels Zal Andhyarujina and Arun Kathpalia, who represented Amazon, said the NCLT mustn't approve Future Group's plea on the following grounds:

• The award granted by the Singapore emergency arbitrator is valid in India as it has been recognised and not set aside by the Delhi High Court. The award was in accordance with Indian law and injuncts parties from making any further move.
• Amazon has a locus to object to the scheme as Future Group's move would result in a breach of an existing and valid order.
• Future Group's move undermines Amazon's contractual rights. Considering the composite and consolidated nature of the scheme, no event can be separated from the other. As such, Future Group's application mustn't go ahead.

Amazon Has No Locus To Object, Future Group Says

Darius Khambata, senior counsel representing Future Group entities, questioned Amazon's objections arguing that it was not a party to this case. He argued that:

• Seeking shareholder approval is the first step in the planned sale to Reliance Retail Ventures.
• Amazon is neither a shareholder nor creditor to the 19 Future Group entities which are party to the scheme of arrangement.
• Emergency arbitrator's award cannot bind statutory authorities and regulators in India. Amazon's objections can be addressed at the time when NCLT sanctions the main transaction.
• A division bench of the Delhi High Court has lifted the status quo order passed by a single-judge bench. The court hasn't restricted the tribunal from proceeding with the matter.
• Even stock exchanges have approved the deal while noting that Future Group must notify the tribunal about Amazon's objections when the the main merger scheme is finally taken up for approval.

Senior counsel Janak Dwarkadas appeared on behalf of Reliance group entities.