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The Supreme Court on Tuesday allowed Future Retail Ltd (FRL) to move the Delhi High Court for seeking nod to proceed with the legal formalities to go ahead with the proposed merger with Reliance Retail.
If the Delhi High Court gives its approval, then Future Retail can pursue its application with the National Company Law Tribunal (NCLT) seeking permission to go ahead with the ₹24,731 crore merger deal with Reliance Retail.
The bench headed by Chief Justice NV Ramana, said, “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).”
It further said that it requested the “Single Judge of the Delhi High Court, to consider allcontentions raised by both parties in this regard and pass appropriate order as to continuation of the NCLT proceedings beyond the stage and other regulatory approvals expeditiously, uninfluenced by any observations made herein.”
On February 03, the Supreme Court had reserved its order on the plea of FRL seeking continuation of the merger deal process before the NCLT.
“This Supreme Court order remitting the proceedings to the Single Judge of the Delhi High Court is likely to provide a breather to FRL and its lenders if the High Court grants its nod to proceed with the scheme of merger proceedings before the NCLT. It would mean a continuation of business as usual for FRL and could prove a stumbling block for Amazon even if no final order to sanction the scheme is passed in the interim,” said Ketan Mukhija, Partner, Link Legal.
However, K Giri Director-General of the Delhi-based think tank Empower India, said “It is a surprising move. Court had ignored the 8 steps which indicate the law has been broken. The onus is back to the High Court.”
Meanwhile, Future Retail’s net loss widened by around 26 per cent in the December quarter (Q3) of financial year 2021-22 (FY22) to ₹1,063.36 crore, compared with a loss of ₹846.92 crore in the corresponding period a year ago. The deal with Reliance is crucial for the company as lenders are on the verge of starting the insolvency proceedings against the company after it defaulted on payments.
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