The Supreme Court on Tuesday ruled that no party would benefit from consistent criminal action against Future Retail Ltd (FRL) for defaulting on loan repayments and asked a consortium of 27 banks to file a response to a lawsuit filed by the company.
FRL has sought an indication from the lending financial institutions (FIs) that for a certain period no coercive measure will be taken against the non-payment of debts.
A bank led by Chief Justice NV Ramana took note of the fierce opposition of the consortium of lending banks, represented by senior lawyer Rakesh Dwivedi, that no written petition, filed for enforcement of fundamental rights, would lie against them in a case through loan contracts. The bank also consisted of Justice AS Bopanna and Justice Hima Kohli.
Of 27 banks, 10 are private and three are foreign banks. How can a written petition be maintained against us. There should be no interim order … We have nothing to do with Amazon or its arbitrage. We are not parties to the arbitration. Moreover, the standard happened a month ago, Dwivedi said.
“You have to take a realistic approach, otherwise no party will benefit from this. Whether or not writing can be maintained is a different story,” the CJI observed orally, adding If this is your position, why can you not submit the swearing.
The consortium of banks said they would have to take a business call regarding the default in loan repayment.
The case was adjourned Thursday for further hearing.
Initially, senior lawyer Harish Salve, appearing for the Future Group, referred to the company’s financial problems since the first lockdown was imposed in 2020 due to the COVID-19 pandemic.
The company is facing several court rulings after the dispute with U.S. e-commerce giant Amazon began, he said.
The reason we came here is, under the RBI guideline, the next step is the declaration of non-performing assets. Once it has been declared NPA, the next step is Section 7 of the IBC. If this company goes into liquidation, everything will become infructuous, “Salve said.
He said FRL needed some time and if its merger agreement with Reliance Retail continues, all debts could be removed.
The merger will require the NCLT sanction and if things go uninterrupted, hopefully in August, the merger scheme will be finalized, he said.
“If the banks can give time until September, hopefully then the deal will be complete and everyone can be paid. If the Arbitrator thinks we can culminate the deal with Reliance, it’s a relief,” the senior lawyer said on behalf of FRL .
The plea was opposed by the consortium of banks.
FRL has sought guidance restricting banks from declaring it a non-performing asset (NPA) and extending the timeline under the Small Format Stores Monetization Framework Agreement in accordance with the minutes of the meeting with the the bank.
Earlier in the day, the same bank ruled in favor of a separate batch of FRL pleadings and withdrew three orders from the Delhi Supreme Court, including refusing to grant a stay on the final arbitral award that FRL had limited to passing. go with its Rs 24,731 crore merger agreement with Reliance Retail and order fresh adjudication.
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