3 days ago
SC refuses to halt insolvency proceedings against Future Ideas, a part of erstwhile Kishore Biyani-led Future Group
The Supreme Court has refused to stay the
insolvency proceedings
initiated against
Future Ideas Company Ltd
(FICL), a part of the erstwhile Kishore Biyani-led Future Group. However, it sought response from
Axis Trustee Services
and resolution professional
Ritesh Agarwal
on an appeal by
Anil Biyani
, the suspended director of FICL.
A Bench led by Justice Sanjay Karol posted the matter for further hearing on August 8.
Senior counsel Siddharth Luthra and counsel Pallavi Pratap, on behalf of Anil, sought stay on the constitution of the Committee of Creditors and stay on the insolvency proceedings.
The
National Company Law Appellate Tribunal
had on May 19 upheld the Mumbai bench of the National Company Law Tribunal's order that admitted FICL into insolvency on a plea by Axis Trustee Services, which had cited a default of Rs 122.83 crore as of September 2022.
While seeking setting aside of the appellate tribunal's order, Anil in his appeal stated that the NCLAT does not have the power under Section 7 of the IBC to declare a contract which is acted upon by all relevant parties as void. 'The same is a power vested only in a civil court. Such power of the NCLT/NCLAT, if any, under the Code would only arise when the corporate debtor's insolvency resolution has begun,' it added.
According to the appeal, the NCLAT had sought strict compliance of the Debenture Trust cum Mortgage Deed (DTMD) from FICL but has failed to consider its terms and non-compliance of Axis Trusteeship to provide authority to file the proceedings before the
NCLT
seeking initiation of CIRP of FICL.
In 2018, a
debenture trustee agreement
was executed between FICL and Axis Trustee Services, which was a debenture trustee on behalf of debenture holders Franklin India Short Term Income Plan and Franklin India Income Opportunities Plan.
The debt arose from non-convertible debentures issued by FICL across four series in 2018, which were due for redemption starting January 31, 2020. FUCL was required to redeem the debentures and pay interest as specified in the Transaction Documents. However, due to a default in redemption of debentures on April 30, 2021, an
Event of Default
was allegedly triggered.
It was alleged that despite a notice in 2022 demanding payment, FICL failed to comply with the same. Consequently, Axis Trustee moved the tribunal to start insolvency proceedings against FICL.
