Future Market Networks Limited (FMNL) has announced a significant corporate action involving the surrender of its leasehold rights for the Diamond Plaza Mall in Kolkata. The company's board of directors has approved this strategic move, which is expected to have a substantial impact on its operations and financial position.

Key Details of the Transaction

Financial Impact

The Diamond Plaza Mall has been a significant contributor to FMNL's revenue stream. In the last financial year, it accounted for:

• Revenue: ₹41.14 crore
• Percentage of Total Turnover: 45.19%

This substantial contribution underscores the importance of this transaction to the company's financial structure and future strategies.

Corporate Governance and Compliance

FMNL is taking several steps to ensure proper corporate governance and regulatory compliance:

1. Shareholder Approval: The company will seek approval from its shareholders through a special resolution, as required under Section 180(1)(a) and Section 110 of the Companies Act, 2013.

2. Regulatory Compliance: The transaction will adhere to Regulation 37A of the SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations.

3. Postal Ballot: A postal ballot process will be conducted to obtain shareholder approval.

Transaction Insights

• The lessors, M/s Super Diamond Enterprises, are not related to FMNL's promoter or promoter group, ensuring an arm's length transaction.
• This disposal is outside any scheme of arrangement, necessitating compliance with specific regulatory provisions.
• The transaction is not classified as a related party transaction.

Conclusion

This strategic move by Future Market Networks Limited to surrender the leasehold rights of Diamond Plaza Mall represents a significant shift in its asset portfolio. While the mall has been a major revenue contributor, the minimum consideration of ₹60.00 crore for the surrender suggests that the company sees potential value in this transaction. Shareholders and market observers will be keenly watching how FMNL plans to utilize the proceeds and adjust its business strategy following this substantial change in its property holdings.

Future Market Networks Limited (FMNL) faced a setback as the Calcutta High Court dismissed its application challenging an arbitration award dated May 19, 2016. The court's decision upholds the arbitrator's ruling in a dispute between FMNL and Laxmipat Surana, stemming from a licensing agreement termination.

Key Points of the Dispute

The company contested the award on four main grounds:

1. License fees for a 5-year lock-in period totaling Rs. 13,26,56,751.00
2. Loss of interest on security deposit of Rs. 50,00,000.00
3. Additional license fees of Rs. 3,95,50,500.00
4. Electricity charges of Rs. 14,68,762.00 and water charges of Rs. 11,70,000.00

Court's Ruling

The Calcutta High Court, in its judgment, supported the arbitrator's decision, stating that the arbitrator had correctly interpreted the contract terms and stayed within the scope of reference. The court found no merit in FMNL's objections and dismissed the application under Section 34 of the Arbitration and Conciliation Act, 1996.

Dispute Background

The conflict arose from a licensing agreement between Future Market Networks and Laxmipat Surana. FMNL terminated the agreement without providing the required 30-day notice as stipulated in the contract. This led to the arbitration proceedings and subsequent award in favor of Surana.

Court's Observations

1. Lock-in Period: The court upheld the arbitrator's decision to award license fees for the entire 5-year lock-in period, rejecting FMNL's argument that fees should only be awarded until March 2012.

2. Additional Claims: The court also supported the arbitrator's award for loss of interest on security deposit and additional license fees, finding them within the scope of the arbitration reference.

3. Utility Charges: The electricity and water charges awarded by the arbitrator were deemed appropriate and within the contractual terms.

Legal Implications

The court's decision emphasizes the importance of adhering to contractual obligations, particularly notice periods in termination clauses. It also reinforces the principle that arbitral awards will be upheld unless they are found to be perverse or contrary to the evidence or in conflict with public policy.

Future Market Networks' Response

Future Market Networks Limited has stated its intention to file an appeal against this decision, indicating that the legal battle may continue in higher courts.

This case highlights the complexities of commercial lease agreements and the significant financial implications that can arise from disputes over termination and lock-in periods in the real estate sector.