Following a hearing on Monday, the NCLT changed its earlier stance by stopping Future Retail from holding the key shareholders’ meeting
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A company court restrained Future Group from calling shareholders’ meetings to seek approval for its proposed ₹24,713 crore asset sale to Reliance Industries Ltd, in a legal setback for the cash-strapped group.
Following a hearing on Monday, the National Company Law Tribunal (NCLT) changed its earlier stance by stopping Future Group companies from holding the meetings.
Last week, Future Retail, along with six other group companies, notified the Securities and Exchange Board of India (Sebi) that it would conduct electronic voting between 6 November and 9 November on the sale of the retail assets of the group.
“NCLT has said that till a detailed verdict, Future Group cannot hold such meetings," said a person familiar with the matter.
Future Group is struggling to close its proposed deal with the retail unit of Reliance Industries amid a legal battle with e-commerce giant Amazon.com Inc.
On Monday, Future Retail filed a special leave petition before the Supreme Court against Delhi high court’s 29 October interim order on the verdict by an arbitration court in Singapore.
Future Coupons Pvt. Ltd (FCPL) and the promoters of Future Retail Ltd (FRL) have also filed an appeal before the Supreme Court of India, a spokesperson from FRL said.
On 29 October, the Delhi high court rejected Future Retail’s plea to stay the 21 October interim order passed by the Singapore arbitration court. The high court asked Amazon to respond to the matter and has scheduled the next hearing for 4 January.
Earlier in October, the Singapore International Arbitration Centre (SIAC) rejected Future Group’s appeal to vacate the interim stay on the company’s deal with Reliance Industries passed in October last year. SIAC had also held that Future Retail is a party to the matter between Amazon and Future Group, rejecting Future Retail’s request to be excluded from the arbitration proceedings.
Amid the legal battle, the independent directors of Future Retail have written to the Competition Commission of India (CCI) to cancel the approval given to Amazon in August 2019 to buy a 49% stake for ₹1,431 crore in Future Coupons.
In the letter on Sunday, the independent directors of FRL alleged that Amazon concealed information regarding its intention to gain control of Future Retail through its investment in FCPL to avoid the hassles of getting regulatory clearances.
Had Amazon expressed its intent to have control in FRL, it would have faced a hurdle due to India’s foreign direct investment norms which do not allow a foreign firm to own a majority stake in an Indian multi-brand retailer.
On the other hand, on 30 October, Amazon wrote to Sebi and exchanges, urging the latter to direct Future Group to disclose complete information regarding the orders passed by the courts and prevent Future Retail from calling a shareholders’ meeting to get approval on the deal with Reliance Industries.
Earlier, Amazon had sought a stay on the operation of the notice of meetings dated 11 October issued by FRL, restraining the convening of any meeting pertaining to FRL, the stock exchange filing said.
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