Bombay HC Directs BOI To Not Take Any Action Against Future Group Founder

Bombay HC

The Bombay High Court has recently directed the Bank of India to refrain from taking any action against Future Group founder, Kishore Biyani, until October 23, when the court will next hear his petition.

Biyani has approached the court, disputing the forensic audit process and the report on the accounts of Future Retail Ltd, a company under his group. A forensic auditor named BDO India LLP, appointed by BoI, filed the report regarding alleged fraudulent transactions. Biyani’s plea demanded immediate relief from coercive action, in addition to an order to nullify and set aside the report.

A lawyer representing BDO India told the court that, the report they released was only a preliminary one, and that the final report was yet to come. It was on the basis of this statement that the court issued directions to BoI.

Previously in July 2022, the National Company Law Tribunal in Mumbai admitted the petition filed by BoI and began insolvency proceedings against FRL.

BoI claimed that FRL defaulted on a one-time restructuring plan provided by the bank, amounting to ¹3,495 crore. A resolution professional named Vijaykumar Iyer was also appointed to manage the company’s affairs.

At the same time, BoI designated BDO India as a forensic auditor to investigate FRL’s accounts, invoking the provision of the RBI Master Circular on Classification and Reporting of Fraud by Commercial Banks and Select Financial Institutions. BoI justified this by stating that the FRL availed credit facilities that turned into non-performing assets in January 2022. A report, received in August 2023, classified certain transactions as fraudulent.

Furthermore, BoI requested responses from the resolution professional and the promoters of FRL, including Biyani, regarding the contents of the report.

Biyani appealed to the High Court against the report, asserting that it was based on inadequate, unverified information and speculation. Biyani feared severe consequences if other lenders were allowed to rely on the report.

Biyani’s petition requested that the report be presented with all the materials used while preparing it. He also requested an order permanently restraining BoI and BDO from taking any step based on the report.

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About the Author: Meera Verma