The Mumbai bench of the National Company Law Tribunal (NCLT) on Wednesday admitted Bank of India’s petition to initiate corporate insolvency resolution proceedings against Kishore Biyani led-Future Retail Ltd (FRL).
NCLT on 27 June had reserved its orders. The petition has been admitted under Section 7 of Insolvency and Bankruptcy Code (IBC).
A bench led by Justice Justice Shyam Babu Gautam and Justice Pradeep Narhari Deshmukh, after hearing both the parties at length, admitted the petition. The bench appointed Vijay Kumar Iyer as the interim resolution professional for the company.
The bench also dismissed the intervention application filed by Amazon that opposed the initiation of insolvency proceedings against the debt-laden firm. This is likely to lead Amazon in moving the National Company Law Appellate Tribunal against the NCLT order.
Future Retail owes its creditors led by Bank of India more than ₹15,000 crores, which led the lenders to drag the company to the dedicated bankruptcy court.
As per the IBC regulations, a Section 7 petition should be admitted by the tribunal within 14 days. However, it took more than two months for this petition to be admitted. Bank of India had on 14 April initiated insolvency against Future Group for non-payment of dues that were due under the terms of the framework agreement entered into between the company and the bank.
Bank of India’s petition was opposed by Amazon alleging that the 26 banks colluded with Future Group to deny Amazon its rights.
Amazon has filed an intervention application under section 65 of the IBC. Section 65 of the IBC deals with the provisions relating to the penalty for fraudulent or malicious initiation of proceedings. The adjudicating authority can impose the penalty upon the applicant if it initiates CIRP fraudulently or with malicious intent for any purpose other than for the resolution of insolvency.
The US giant’s application also sought NCLT’s directions to investigate fraudulent and malicious initiation of proceedings against the lender while also asking the court to dismiss the bank’s petition.
However, the state-run lender said that Amazon until now in no way has been able to prove such allegations to the court adding that the US giant’s intervention was just a pure tactic to delay the entire insolvency proceedings. It requested the tribunal to expedite the process of pronouncing orders. Bank of India had also asked the tribunal to impose costs on the petition filed by Amazon for delaying the resolution process led by the banks.
The counsel had requested the NCLT to pass an interim direction in protecting the value of the company’s assets. “Everyone has argued that the company is in absolute dilapidated state, the assets have completely eroded in terms of value for everyone. We request expediting the orders in the matter,” the company said.
