Prior Approval of Competition Commission Mandatory for Resolution Plan Involving Combination Before CoC Review : Supreme Court
The Supreme Court, in Independent Sugar Corporation Ltd. v. Girish Sriram Juneja & Ors., ruled by a 2:1 majority that a resolution plan under the Insolvency and Bankruptcy Code (IBC) involving a proposed combination (merger/amalgamation) must be approved by the Competition Commission of India (CCI) before being placed before the Committee of Creditors (CoC). Justices Hrishikesh Roy and Sudhanshu Dhulia emphasized that the term "prior" in Section 31(4) of the IBC signifies a legislative intent to make CCI approval a prerequisite for CoC consideration. They held that deviation from this requirement would undermine the legal framework.
However, Justice SVN Bhatti dissented, stating that prior approval from CCI was directory, not mandatory. He opined that obtaining CCI clearance at the adjudicating authority stage under Section 31(1) of the IBC would be sufficient, allowing the successful resolution applicant to continue operations while securing necessary regulatory approvals.
The case arose when the appellant submitted a resolution plan for Hindustan National Glass and Industries Ltd. (HNGIL), while the respondent, AGI Greenpac, applied for CCI approval for its combination with HNGIL. The CCI initially deemed the application invalid but later approved the combination with modifications, including a divestment plan. The CoC approved AGI Greenpac’s plan before CCI clearance, prompting the appellant to challenge the decision before the NCLT, NCLAT, and eventually the Supreme Court.
The Court upheld the appellant’s locus standi, interpreting "any person aggrieved" under the IBC and Competition Act broadly. It ruled that legislative intent mandates strict adherence to statutory provisions, meaning a resolution plan cannot be approved by the CoC without prior CCI clearance. Since AGI Greenpac’s plan was approved without CCI approval, it contravened Section 6(1) of the Competition Act and was deemed unsustainable. The Court quashed the plan and directed the CoC to reconsider the appellant’s plan and any other resolution plans with requisite CCI approval.