Lenders to Future Retail have asked the Supreme Court to allow the sale of the beleaguered retailer through an auction process in which warring suitors Amazon and Reliance Retail could submit bids.

“This is the only solution. The highest bidder can take the company. That is the only way we (the banks) will get our money back,” said Rakesh Dwivedi, a lawyer who is representing over 30 banks and financial institutions that have lent money to the Future group.

Arguing before a bench comprising Chief Justice N.V. Ramana and justices A.S Bopanna and Hina Kohli, Dwivedi claimed that the banks have loans worth over Rs 17,000 crore tied up in the Future group which is locked in a prolonged dispute with Amazon over its attempt to sell its retail assets to Reliance Retail for Rs 24,713 crore under a deal in August 2020.

Amazon is trying to assert its pre-emptive rights embedded in another deal involving another Future group firm to block the deal. It has armed itself with an interim order from the Singapore arbitration centre that it is trying hard to enforce in Indian courts.

Surprisingly, counsel for both Future Retail and Amazon said they were prepared to consider the suggestion made by the lenders.

Future Retail missed a deadline in late December to repay loans worth Rs 3,500 crore — and then failed to stump up the money by January 29, a 30-day extended period given to the lender to pay back or automatically be declared a defaulter.

The Kishore Biyani-owned retailer missed that deadline too and has now been urging the apex court to restrain the lenders from declaring these loans as non-performing assets (NPAs).

The Future group fears that if it is declared a defaulter, it can be dragged into an insolvency process — a prospect that neither the lenders nor the warring suitors particularly relishes.

This is why the prospect of a bidding war has now been thrown up by the lenders.

“We have outstanding loans of Rs 17,000 crore at stake. If a resolution is pushed back to the next year, the sum will go up to Rs 25,000 crore,” Dwivedi told the court. Amazon had offered a sum of Rs 7,500 crore to the Future group to tide over its immediate crisis, which has been spurned.

Dwivedi said the Amazon offer would not solve the lenders’ problem of recovering its entire dues to the Future group. Appearing for FRL, Harish Salve said Amazon may not be able to participate in the bidding process because it is a foreign entity and faces restrictions on investment in the retail sector under the FDI rules. It may have to bring in a local player to bid on its behalf, he added.

“We are not passing any interim orders. We are simply adjourning the matter,” Chief Justice Ramana said after Dwivedi wanted to know if the bank could resort to “coercive action” against FRL. However, the court did not set the date for the next hearing.