NCLT snubs Amazon as it dismisses latter’s plea against insolvency petition of Future Retail
The Mumbai bench of the National Company Law Tribunal (NCLT) on Wednesday admitted Bank of India’s plea to initiate corporate insolvency resolution process (CIRP) against Future Retail for defaulting on a payment of Rs 856 crore. The NCLT order came as a blow to e-commerce giant Amazon, which tried hard at preventing the BOI’s plea being admitted by the adjudicating authority.
The US e-commerce giant had filed an intervention application to thwart the insolvency proceeding being admitted by the NCLT.
However, NCLT not only dismissed Amazon’s plea but made some harsh observation against the latter’s plea.
The NCLT observed that the entire basis of the Intervention Application is speculative in nature and remains unsubstantiated with evidence, documentary or otherwise. It further said that the Intervention Application is riddled with speculations insofar the Applicant has contended that, “it appears that the lender Banks are not only silent spectators but willing collaborators in the fraud.”
Amazon contented that the creditors entered into a Framework Agreement on 26 April 2021 with FRL despite their knowledge of the fact that the Singapore International Arbitration Court (SIAC) had through an emergency arbitration directed Future Retail to not enter into any such agreement. It also argued that the insolvency petition arose because of Future Retails inability to comply with the clauses of the agreement, which itself is void.
It also contended that if the insolvency proceeding against Future Retail, it would be handed over to the Reliance Group at throwaway prices.
Therefore, Amazon had requested the NCLT to order an investigation into fraudulent and malicious initiation of the insolvency proceedings by the financial creditor; pass an order/direction(s) dismissing the present Petition purportedly filed under Section 7 of the Code by the financial creditor; and pass an order/direction(s) imposing penalty on the Financial creditor and FRL in accordance with Section 65(1) of the Code.
However, the NCLT found these allegations speculative.
“The above allegations are not only speculative but also contemptuous insofar as aspersions have been cast upon the process under Indian law which upon admission of the Section 7 Petition will be carried out under the aegis of this Hon’ble Adjudicating Authority,” said the NCLT.
It further said that the Adjudicating Authority must take a serious view of such statements which are not just speculative and baseless but also contemptuous and dismiss the present Application and impose costs on Amazon for filing a frivolous Intervention Application on the basis of such submissions.
It must be reminded here that Amazon had dragged Future Retail to arbitration at SIAC in October 2020. Amazon argued that FRL violated their contract by entering into a deal for the sale of its assets to Reliance Retail on a slump sale basis for Rs 24,500 crore.
Also Read: Amazon opposes insolvency petition against Future Retail
