The Future-Reliance-Amazon Case Is Tied Up In Knots
Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Author of Cyber Scams in India, Digital Arrest, The Money Trap and The Human Hack
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By Sunil Garodia
First publised on 2022-02-05 13:06:14
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Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Author of Cyber Scams in India, Digital Arrest, The Money Trap and The Human Hack
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A consortium of 27 banks has asked the Supreme Court to allow a bidding process for the assets of Future Retail (FRL) to ensure that lenders are not shortchanged. They have said that both the suitors, Reliance and Amazon, should bid for the assets with a floor price of Rs 17000cr. It must be noted here that while Reliance has already offered a sum of Rs 25000cr for FRL, Amazon's offer is only Rs 7000cr. Further, there are issues regarding the deals that FRL is supposed to have conducted with Amazon in the past for which both the parties are embroiled in several court cases including an arbitration in Singapore. Hence, the case is complicated and it does not seem that bidding is the way out, at least not in the immediate future.
The Supreme Court, on its part, has set aside all interim orders of the Delhi HC and asked it look at the FRL-Reliance-Amazon dispute over the acquisition of FRL assets afresh. It is also ready to pass orders to allow FRL to go ahead and file a scheme for sale of assets before the National Company Law Tribunal (NCLT) for its approval.
But the banks have a point when they say that since FRL is a defaulter, it has no rights over its assets and a sale of the same cannot be conducted without the approval of the lenders. In this regard, the Supreme Court has already refused to pass any interim orders restraining the banks from taking coercive steps against FRL for loan defaults. The banks are ready to invoke the IBC as it is clear that even if FRL gets Rs 25000 from Reliance, the amount will not be enough to pay back all the creditors.
The FRL-Reliance-Amazon case is tied up in knots. It will take a huge effort on part of the Delhi High Court to hear the matter in its entirety with a clean slate (as suggested by the apex court) and come out with a solution. But any solution will most likely be challenged by the loser in the Supreme Court. Hence, it will be good if the Delhi HC can hear the matter at a stretch and finds a solution. Otherwise, as the banks have said, their outstanding will balloon further and the only solution will be to invoke the IBC.
