The Supreme Court has recently declined to put a stop to the insolvency proceedings against Future Ideas Company Ltd (FICL), a part of the former Kishore Biyani-led Future Group. However, the court has requested responses from Axis Trustee Services and the resolution professional, Ritesh Agarwal, regarding an appeal filed by Anil Biyani, a suspended director of FICL. The next hearing is scheduled for August 8.
Anil Biyani's appeal challenges an order from the National Company Law Appellate Tribunal (NCLAT) that upheld the admission of FICL into insolvency. This admission was based on a default of ₹122.83 crore owed to Axis Trustee Services as of September 2022.
Senior counsel Siddharth Luthra and counsel Pallavi Pratap, representing Anil Biyani, had requested a stay on the formation of a Committee of Creditors (CoC) and on the overall insolvency proceedings. The NCLAT's May 19 decision supported the earlier order from the Mumbai bench of the National Company Law Tribunal (NCLT), which had admitted FICL into insolvency following a petition by Axis Trustee Services, acting as a debenture trustee for Franklin Templeton Asset Management. A debenture trustee represents the interests of debenture holders while holding debentures for them.
In his appeal, Anil Biyani argues that the NCLAT lacks the authority under Section 7 of the Insolvency and Bankruptcy Code (IBC) to invalidate a contract that has already been acted upon by all relevant parties, contending that such power is reserved for a civil court. He further argues that any such power of the NCLT/NCLAT under the Code would only arise after the corporate debtor's insolvency resolution has commenced. The appeal also claims that while the NCLAT insisted on strict compliance with the Debenture Trust cum Mortgage Deed (DTMD) from FICL, it failed to consider the deed's terms and Axis Trusteeship's non-compliance in providing the authority to file proceedings before the NCLT seeking the initiation of CIRP against FICL.
The insolvency proceedings against Future Ideas began when the NCLT Mumbai admitted a petition filed by Axis Trustee Services, citing the default of ₹122.83 crore. The tribunal then declared a moratorium on the company's assets and appointed Ritesh Agarwal as the Interim Resolution Professional (IRP) to oversee the Corporate Insolvency Resolution Process (CIRP).
Future Ideas Company had contested the petition, arguing that its liabilities related to the non-convertible debentures (NCDs) had been transferred to Rivaaz Trade Ventures Pvt. Ltd (RTVPL) through an Acquisition Agreement in August 2020, thus claiming that Axis Trustee Services no longer held creditor status. The debt in question stemmed from NCDs issued by FICL across four series in 2018, with redemption dates starting in January 2020. The NCLT, however, determined that the default occurred on April 30, 2021, which fell outside the COVID-19-related insolvency suspension period (March 25, 2020 – March 24, 2021), making the application admissible. The NCLT also stated that the transfer of liabilities to RTVPL lacked statutory consent from debenture holders and contravened the Debenture Trust Deed, and that Axis Trustee Services retained the authority as the debenture trustee to act on behalf of investors.
