Future Retail Limited (FRL) counsel on Friday, 1 April, told the Supreme Court that nobody wants to do business with it today as Section 7 of the IBC may come any day, and the company owes landlords thousands of crores in rentals, as Amazon could not get Future Retail, it destroyed the company.
Senior advocate Harish Salve, representing Future Retail, submitted before a bench headed by Chief Justice N V Ramana that Reliance entered into agreement with the landlords, and Future Retail owes Rs 3,000 crore in rentals.
He added that once this goes into Section 7 of IBC, all this will come to an end, and no one wants to do business with it, as section 7 may come in any day.
'Future Retail Hanging by a Thread'
Salve said Amazon for Rs 1,400 crore, destroyed his client's company. "They could not get Future Retail, they destroyed Future Retail", he said, adding that Big Bazaar is gone and also all the assets. "All my accounts are frozen, nobody wants to touch us...Future Retail cash flow further deteriorated, after states imposed lockdown... Hanging by a thread," said Salve.
Senior advocate Gopal Subramanium, representing Amazon, at the beginning of the hearing said as far as resumption of arbitration is concerned it appears that both parties have found common ground, and they are interested in resumption.
However, Subramanium vehemently objected to the sudden handover of Future Retail assets. Citing a prayer in Amazon's application, Subramanium opposed the alienation of Future Retail assets and added, "Can't be a magical switch...Future Retail shops should continue to remain with it; operated by FRL until the matter is resolved by an arbitral tribunal".
Citing Future Retail's accounts, he submitted that in their own annual return they say that they have enough money to pay all rentals and they told the bank they're in a situation to pay their rentals. "It is just a smoke screen," said Subramanium, on Future's claim that they have no money to pay rentals of the shops.
What Transpired at the Court?
Senior advocate Aspi Chinoy, another counsel for Amazon, said the transfer of shops is a collusive act and the counter filed by FRL establishes that transfer to shops to MDA group was collusive and consensual act. "800 of these leases are then handed over to MDA group and as lessees they allow the same FRL to be the licensee... Is this remotely possible without connivance... I haven't heard of such cooperative lessees in India," said Chinoy.
The bench, also comprising Justices Krishna Murari and Hima Kohli, said 'if the landlords are not before us how can court pass an order injuncting them from taking possession'.
Salve said his client's bank accounts are frozen and everyone's hoping if the scheme gets through, Reliance comes in, everyone will get the money and it is the hard reality that's where Amazon has got us.
The Chief Justice queried Salve, "What you want to say is 835 stores people asked you to vacate and you vacated, and these shops were leased to Reliance by owners themselves?" Salve replied yes. The bench further queried, "What happens to your stocks and rights etc.?"
Salve added that in February this year, his client could not find a solution to NPA, and bank accounts were frozen. "Nobody today is willing to give us anything today. 374 stores somehow, we are running today, we're managing. Most employees have left," he said.
The bench asked Salve, "If order is in Amazon's favour what happens to you?"
Salve said "They'll have to get in the queue of unsecured creditors...Amazon wanted to destroy us and they have destroyed us".
The top court will continue to hear the matter on Monday.
The top court was hearing an application filed by Amazon raising the issue of Future Retail's shops and assets being taken over by Reliance, besides resumption of arbitration over FRL's merger deal with Reliance Retail.
Last month, Amazon alleged that 80 per cent of FRL shops have been surrendered to Reliance. Future Retail said no asset has been transferred.
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