IN THE NATIONAL COMPANY LAW TRIBUNAL,

MUMBAI BENCH, COURT – II

C.P.(IB)-527(MB)/2022

(Under Section 7 of the Insolvency and

Bankruptcy Code, 2016 read with Rule 4 of the
Insolvency and Bankruptcy (Application to
Adjudication Authority) Rule 2016.)

In the matter of
Bank of India

Having Head Office at: Star House, C-5, ‘G’

Block, Bandra-Kurla Complex, Bandra (East),
Mumbai, Maharashtra- 400001.

……Financial Creditor/Applicant

Vs

Future Retail Limited

Having Registered Office at: Knowledge

House, Shyam Nagar, Off. Jogeshwari-
Vikhroli Link Road, Jogeshwari(E)
Maharashtra -400021.
..…..Corporate Debtor/Respondent

Order delivered on: 20.07.2022

Coram:

Hon’ble Member (Judicial) : Justice P.N. Deshmukh (Retd.)

Hon’ble Member (Technical) : Shri Shyam Babu Gautam

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C.P.(IB)/527(MB)2022

Appearances:

For the Financial Creditor : Senior Counsel, Mr. Ravi Kadam

a/w Counsel, Mr. Pulkit Sharma
For the Corporate Debtor : Counsel, Mr. Shyam Kapadia

ORDER
Per- Coram

1. The Present Company Petition (IB)-527(MB)/2022 is filed

under section 7 of Insolvency and Bankruptcy Code, 2016 (for
brevity ‘IBC, 2016’) read with Rule 4 of the Insolvency and
Bankruptcy (Application to Adjudicating Authority) Rules, 2016
(for brevity ‘the Rules’) by Bank of India (for brevity ‘Financial
Creditor’) through its Authorised Signatory, Mr. Harish V, who has
been duly authorised vide Power of Attorney dated 05.11.2019 for
initiating Corporate Insolvency Resolution Process (CIRP) against
Future Retail Limited (for brevity ‘Corporate Debtor’) for default in
repaying an amount of ₹856.10 Crores (Indian Rupees Eight
Hundred and Fifty-Six Crores and Ten Lacs), as on 31.12.2021.

2. On perusal of the Company Petition, it reveals that the

Corporate Debtor is a public listed company engaged in the
business of multi-brand retail and operating stores across the
Country. The Financial Creditor has provided the various credit
facilities to the Corporate Debtor in the form of Cash credit limit,
working capital term loan, funded interest term loans

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amounting to ₹1249.48 Crores and non-fund-based limits

amounting to ₹192.14 Crores, which were extended from time to
time. The said facilities were restructured under sanction Letter
MLCB/CC/2021-22/44 and Framework Agreement dated
17.04.2021 and 26.04.2021 respectively.
In order to secure the facilities availed from the Financial
Creditor, the Corporate Debtor created and perfected security over
certain assets for the benefit of the Applicant Bank. The facilities
were also secured by the Personal Guarantee of Mr. Kishore
Biyani (promoter, the Corporate Debtor) and Corporate Guarantee
from Future Enterprises Limited and created pledge over
unencumbered shares of the Corporate Debtor. The Corporate
Debtor has also availed substantial facilities from certain other
banks and financial institutions including public sector banks,
private sector banks, private non-banking financial institutions
and foreign banks (for brevity ‘Lenders’), which had advanced
certain long-term loans, short term loans, working capital term
loans and various other facilities.

3. Further, the Corporate Debtor defaulted in repayment and as

per Income Recognition and Asset classification norms notified by
the RBI, the account was required to be classified as NPA on
30.11.2020. However, due to stay on asset classification imposed
by the Hon’ble Supreme Court of India vide order dated
03.09.2020, the asset classification was maintained as standard
and account was not downgraded on 30.11.2020, although the
default persisted. Meanwhile on 27.09.2020, the Corporate
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Debtor issued a letter to the Financial Creditor and certain other

lenders, applying for one-time restructuring the facilities under
the “Resolution Framework for Covid-19 related stress” (for brevity
“RBI Circular”) dated 06.08.2020, which permits one-time
restructuring in respect of eligible borrowers facing stress on
account of Covid-19. The request was considered by the Lenders
(including the Financial Creditor) allowing one-time restructuring
under the RBI Circular on 29.10.2020. The Corporate Debtor and
the Lenders (including the Financial Creditor) executed the
Framework Agreement dated 26.04.2021 for restructuring of the
existing outstanding amounts. As per the terms of the Framework
Agreement, the Corporate Debtor was under an obligation to
repay an amount of atleast Rs. 788.40 Crores to the Financial
Creditor and the other lenders by 31.03.2022.
The provisions of the Framework Agreement and RBI Circular
read in conjunction imply that the Event of Default under the
Framework Agreement requires an automatic and retrospective
downgrade of the loan account to an NPA, at the end of the review
period of 30 days, and upon occurrence of such an event of default
under the Framework Agreement, the defaults existing prior to
the Framework Agreement stand revived. In view of this, the
classification of the facilities given to the Corporate Debtor has
been downgraded to “NPA” in the books of the Financial Creditor
on 31.01.2022.

4. In addition to this Framework Agreement dated

26.04.2021, this Financial Creditor has also filed the Copies of
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the following agreements between the Financial Creditor and the

Corporate Debtor:
i.) Sanction Letter No. MLCB/SJ/2018-19/215, dated 14.06.2018
ii.) Sanction Letter No. MLCB/RKM/2020-21/618, dated 20.12.2019
iii.) Sanction Letter No. MLCB/RKM/2020-21/192, dated 10.09.2020
iv.) Working Capital Consortium Agreement, dated 29.03.2017
v.) First Supplemental Working Capital Consortium Agreement, dated
23.08.2017

This Applicant/Financial Creditor has also filed Copy of the

Commercial Credit Information Report maintained by Trans
Union CIBIL bank account statement; True copies of the
certified statement of accounts maintained by the Financial
Creditor/Applicant Bank showing entries of disbursement of
amount to Corporate Debtor and Certificate in terms of
Section 2A of the Bankers Book Evidence Act, 1891. The list
of other documents attached to this application in order to prove
the existence of Financial debt are as:

i.) A copy of the Annual Report of the Corporate Debtor for the FY
2020-2021
ii.) Letter dated 27.09.2020 and 31.12.2021 issued by the Corporate
Debtor to the Financial Creditor.
iii.) Default notice dated 05.01.2022.
iv.) Resolution dated 11.01.2022, passed by the Board of Directors of
the Corporate Debtor.
v.) Minutes of the meeting dated 04.02.2022.
vi.) Intimation dated 01.04.2022, under the SEBI (Listing Obligations
& Disclosure Requirements) Regulation, 2015.

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5. In reply to this, the Corporate Debtor contended that the

subject-matter of the present Petition is pending adjudication
before the Hon’ble Supreme Court of India in a Writ Petition
bearing W.P. (C) No. 48 /2022 (Writ Petition") filed by the
Corporate Debtor against the Lenders, including the Financial
Creditor.
In this regard, the Financial Creditor has submitted that the
Corporate Debtor has not been granted any interim reliefs despite
the Corporate Debtor seeking such relief. In fact, subsequent to
the last hearing in the Writ Petition on 03.02.2022, the Corporate
Debtor has not even moved the Hon'ble Supreme Court for the
listing of the Writ Petition. Moreover, the payment obligation of
the Corporate Debtor under the Framework Agreement in terms
of Clause 2.2.1 read with Schedule VIlI of the framework
Agreement is entirely independent of its obligation to monetise the
small format stores, therefore, irrespective of its inability to
monetise the small format stores, it is required to pay the Lenders.
Hence, there is no merit in any event to the submissions of the
Corporate Debtor on this count. Further, having moved the
Hon'ble Supreme Court on the issues faced by it in monetization
of stores, the Corporate Debtor is precluded from taking the same
grounds in the present Petition, as it has been duly heard by the
Hon'ble Apex Court. Further, the Financial Creditor relied on
Atma Ram Properties (P) Ltd. v. Federal Motors (P) Ltd. (2005)
I SCC705 and submitted that it is well settled that mere
preferring of an appeal does not operate as stay on the decree or

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order appealed against nor on the proceedings in the court below.

Hence, the pendency of a Writ Petition before the Hon’ble Supreme
Court cannot operate as a reason for staying the present Petition.
Further on the day of Final hearing, the Senior Counsel for the
Petitioner argued that the existence of a dispute is not relevant for
the purpose of admitting a Petition under Section 7 of the Code
and relied on Innoventive Industries Ltd. Vs. ICICI Bank and
Anr. (2018) 1SCC 407 wherein, the Hon’ble Supreme Court of
India held that ‘debt’ means a liability of obligation in respect of a
'claim' and 'claim' means a right to payment even if it is disputed.
The Code gets triggered, the moment default is of Rupees one lakh
or more. Thus, the existence of a dispute cannot be a ground for
the dismissal of the present Petition, in which the existence of
‘debt’ and ‘default’ is admitted and established.

6. The Corporate Debtor has also further alleged that the

Lender’s decision to refuse to continue Holding on operations
severely impacted the Corporate Debtor’s business and resulted
in its failure to meet its repayment obligations. Further alleged
that the Lenders, including the Financial Creditor could have
taken possession of and sold the assets of the Corporate Debtor
over which the Lenders security extended.
In this regard, the Petitioner’s Counsel argued that the
contention is untenable, as the first payment default in terms of
the Framework Agreement occurred on 31.12.2021, whereas the
decision of the Lenders to allow holding on operations was taken
much later in the Lenders meeting with the Corporate Debtor
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dated 04.02.2022, as admitted by the Corporate Debtor in its

reply. Further, in relation to sell the assets of the Corporate
Debtor, the Petitioner submitted that the Corporate Debtor cannot
be allowed to dictate the actions taken/to be taken by the Lenders
in the exercise of their contractual and statutory rights.

7. As per the records, the Amazon.com NV Investment Holdings

LLC has filed an Intervention Petition/1/2022 in
CP/527/MB/2022 seeking investigation into fraudulent and
malicious intention of the present proceedings by the Financial
Creditor and to dismiss the present petition by imposing penalty
on the Financial Creditor and the Corporate Debtor in accordance
with Section 65(1) of the Code, same has been dealt separately
vide order dated 20.07.2022. Moreover, the Corporate Debtor on
the payment obligation under the OTR scheme, admitted the
default of its repayment as on 31.12.2021. Further, on
04.02.2022, the Corporate Debtor admitted in its meeting with the
Lenders that the Events of default continue to subsist.
Furthermore, the Corporate Debtor issued an intimation under
Regulation 30 and other regular regulations of Securities and
Exchange Board of India (Listing Obligations & Disclosure
Requirements) Regulations, 2015 admitting the default of its
repayment obligations under the Framework Agreement as on
31.03.2022 as well as 31.12.2021. Looking at the aforementioned
facts, this Bench is of the view that the existence of debt and
default has been proved, therefore, we hereby admit this company
petition and also looking at the consent given by the Insolvency
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Professional, we hereby appoint Mr. Vijay Kumar V Iyer as an

IRP, with a direction to the Financial Creditor to pay remuneration
to the IRP and his expenses until the constitution of CoC.

8. Accordingly, this Company Petition is hereby admitted with

the following directions:

a. The above Company Petition (IB) 527(MB)/2022 is

hereby allowed and initiation of Corporate Insolvency
Resolution Process (CIRP) is ordered against M/s Future
Retail Limited.

b. This Bench hereby appoints Mr. Vijay Kumar V Iyer,

having Registration No: IBBI/IPA-001/IP-P00261/2017-
2018/10490, Address: Deloitte India Insolvency
Professionals LLP, One International Center, Tower 3,
32nd Floor, Senapati Bapat Marg, Elphinstone Road
(West), Maharashtra, 400013; E-mail:
[email protected], Ph.No: +91 9821219493 as the
Interim Resolution Professional to carry out the functions
as mentioned under the Insolvency & Bankruptcy Code,
2016.

c. The Financial Creditor shall deposit an amount of

Rs. 5 Lakh towards the initial CIRP cost by way of a
Demand Draft drawn in favour of the Interim Resolution
Professional appointed herein, immediately upon
communication of this Order.
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d. That this Bench hereby prohibits the institution of suits or

continuation of pending suits or proceedings against the
corporate debtor including execution of any judgment,
decree or order in any court of law, tribunal, arbitration
panel or other authority, transferring, encumbering,
alienating or disposing of by the corporate debtor any of its
assets or any legal right or beneficial interest therein; any
action to foreclose, recover enforce any security interest
created by the corporate debtor in respect of its property
including any action under the Securitization and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002; the recovery of any property by
an owner or lessor where such property is occupied by or
in the possession of the Corporate Debtor.

e. That the supply of essential goods or services to the

Corporate Debtor, if continuing, shall not be terminated or
suspended or interrupted during moratorium period.

f. That the provisions of sub-section (1) of Section 14 shall

not apply to such transactions as may be notified by the
Central Government in consultation with any financial
sector regulator.

g. That the order of moratorium shall have effect from the date
of pronouncement of this order till the completion of the
corporate insolvency resolution process or until this Bench

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approves the resolution plan under sub- section (1) of

section 31 or passes an order for liquidation of corporate
debtor under section 33, as the case may be.

h. That the public announcement of the corporate insolvency

resolution process shall be made immediately as specified
under section 13 of the Code.

i. During the CIRP period, the management of the corporate

debtor will vest in the IRP/RP. The suspended directors and
employees of the Corporate Debtor shall provide all
documents in their possession and furnish every
information in their knowledge to the IRP/RP.

j. Registry shall send a copy of this order to the concerned

Registrar of Companies for updating the Master Data of the
Corporate Debtor.

9. The Registry is hereby directed to communicate this order to

both the parties and to IRP immediately.

SD/- SD/-
SHYAM BABU GAUTAM JUSTICE P.N. DESHMUKH
(MEMBER TECHNICAL) (MEMBER JUDICIAL)

Arpan, LRA

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