A bench headed by Chief Justice N V Ramana, hearing FRL's plea seeking a direction to the banks that no coercive action be taken against it for a certain time period due to non-payment of debt, did not pass any interim order and adjourned the hearing at the request of the company.
A consortium of 27 banks Thursday told the Supreme Court that the money lent to Future Retail Ltd (FRL) belonged to the depositors and to safeguard the “public interest”, the entire assets of FRL can be subjected to open bids by Amazon and Reliance with a reserve price of Rs 17,000 crore.
A bench headed by Chief Justice N V Ramana, hearing FRL's plea seeking a direction to the banks that no coercive action be taken against it for a certain time period due to non-payment of debt, did not pass any interim order and adjourned the hearing at the request of the company.
At the outset, senior advocate Harish Salve, appearing for FRL, said the hearing be deferred for a week or 10 days so that the company may try to work out some kind of settlement overpayment of dues.
“Please give me a week or ten days and let me try talking to the banks and if I can get them some assurance and get to hold back something,” Salve said.
The bench, also comprising Justices A S Bopanna and Hima Kohli, took note of the submissions and said the hearing may be deferred as it was FRL’s plea only.
Senior advocate Rakesh Dwivedi, appearing for the consortium of banks, raised preliminary objections and said that FRL’s plea was not maintainable as a violation of fundamental rights cannot be alleged against banks acting out of contracts.
Banks’ contracts involved depositors' interest and hence pertained to the public interest which needed to be safeguarded first, he said.
“We have a loan of Rs 17,000 crore. If it is pushed back to later.., as requested by FRL, the loan will grow to Rs 25,000 crore...and ultimately they are not certain, whether Amazon or Reliance will get it (FRL). So we are looking at uncertain litigation,” he said.
"If Amazon wins then Rs 7000 crore will come in, but our loan amount only to FRL is Rs 17,000 crore. If Reliance wins, Future will get Rs 25,000 crore, but for the entire group. So in any case, the banks will have to invoke the Insolvency and Bankruptcy Code," Dwivedi said.
The lawyer then suggested that the entire assets of FRL can be subjected to open bids by Amazon and Reliance with a reserve price of Rs 17,000 crore and the bids in sealed cover be submitted in the apex court.
"Whosoever bids high, let them take. We will get our money, and whoever bids high will get the Future", Dwivedi said.
Salve responded by saying that the FRL was agreeable to the suggestion, but Amazon, the US-based e-commerce giant, cannot deposit a single rupee being a foreign multi-brand company.
Senior Advocate Gopal Subramanium, appearing for Amazon, said however that the US firm has no issues in discussing the matter with the banks.
The apex court, on February 1, had observed that no party will benefit from consequential punitive actions against FRL for defaults in loan repayment and asked the consortium to file the response to a plea by the firm.
“Out of 27 banks, 10 are private and three are foreign banks. How can a writ petition be maintainable against us. There should not be any interim order... We have nothing to do with Amazon or their arbitration. We are not parties to the arbitration. Moreover, the default has already occurred one month ago,” Dwivedi had said.
"You have to take a realistic approach otherwise no party will get any benefit out of this. If writ can be maintainable or not is a different story," the CJI had orally observed, adding “If this is your stand, why don't you file the affidavit.”
FRL has sought directions restraining the banks from declaring it as non-performing asset (NPA) and extending the timeline stipulated under the Framework Agreement for monetization of the Small Format Stores in line with the minutes of the meeting it had with the banks.
Earlier, the same bench delivered the verdict on a separate batch of pleas of FRL and set aside three Delhi High Court orders including the refusal to grant a stay on the final arbitral award which had restrained FRL from going ahead with its Rs 24,731 crore merger deal with Reliance Retail and ordered fresh adjudication.