📜 Supreme Court Clarifies: CCI Approval Must Precede CoC Vote in Insolvency Resolution Plans
In a landmark judgment with significant implications for India’s insolvency and competition law regime, the Hon’ble Supreme Court in Independent Sugar Corporation Ltd. v. Girish Sriram Juneja & Ors., 2025 INSC 124, settled a crucial legal question: Whether prior approval from the Competition Commission of India (CCI) is mandatory before a Committee of Creditors (CoC) can approve a Resolution Plan that involves a combination under the Competition Act, 2002.
A Bench comprising Justices Hrishikesh Roy, Sudhansu Dhulia, and SVN Bhatti (dissenting) ruled by majority that prior CCI approval is a mandatory prerequisite for CoC consideration of such Resolution Plans under Section 31(4) of the Insolvency and Bankruptcy Code, 2016 (IBC).
⚖️ Background: The Battle for HNGIL
The case revolved around the Corporate Insolvency Resolution Process (CIRP) of Hindustan National Glass and Industries Ltd. (HNGIL), a dominant glass packaging company in India. Two competing resolution applicants—Independent Sugar Corporation Ltd. (INSCO) and AGI Greenpac Ltd.—submitted plans for HNGIL’s revival.
AGI Greenpac, the second-largest player in the same market, proposed acquiring HNGIL entirely—a combination that would effectively control 80-85% of the F&B segment and 45-50% of the alco-beverages segment. This triggered concerns of an Appreciable Adverse Effect on Competition (AAEC) under the Competition Act.
Despite lacking prior CCI clearance, AGI’s Resolution Plan was approved by the CoC with a resounding 98% vote on 28.10.2022. INSCO challenged this, arguing that such approval was statutorily impermissible.
🧑⚖️ Key Legal Questions
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Is prior approval from the CCI mandatory before CoC can approve a Resolution Plan involving a combination?
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Did NCLAT err in treating this requirement as merely “directory”?
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Was AGI Greenpac’s plan valid despite lacking CCI approval at the CoC voting stage?
🧠 Majority Verdict: Literal Interpretation Prevails
The Court’s majority opinion, authored by Justice Hrishikesh Roy, delivered a clear and unambiguous message: the word “prior” in the proviso to Section 31(4) IBC means exactly that—prior. Literal interpretation was favoured over purposive, and the judgment emphasized:
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Plain meaning rule: When the statute is unambiguous, the courts must give effect to the words used.
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Legislative intent: The 2018 amendment that introduced the proviso was deliberate in making CCI approval a pre-condition for CoC consideration.
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Harmonization with competition law: Since the CCI may impose modifications, placing the Plan before the CoC without such regulatory scrutiny compromises its commercial evaluation.
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Regulatory timelines are not conflicting: The Court noted that CCI typically clears such combinations within 30 days, making any delay-based argument unsubstantiated.
🛑 Procedural Irregularities: Red Flags Galore
The Supreme Court also highlighted serious procedural lapses in the CCI’s approval of AGI Greenpac’s acquisition:
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CCI failed to issue the mandatory Show Cause Notice (SCN) to HNGIL, the target company, under Section 29(1) of the Competition Act.
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Voluntary modifications proposed by AGI (including divestment of a plant) were not approved by HNGIL, as required under Regulation 25(1A).
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The Court found that these lapses not only violated competition law but also compromised the integrity of the IBC process.
🧑⚖️ Dissent by Justice SVN Bhatti: A Flexible View
Justice SVN Bhatti dissented, advocating a purposive interpretation of Section 31(4)’s proviso. He argued:
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The term “prior” should be read as “before NCLT approval” and not necessarily “before CoC vote”.
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Making prior CCI approval mandatory at the CoC stage could exclude capable applicants, disrupt CIRP timelines, and hinder value maximization.
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The CoC's commercial wisdom should remain unrestricted by procedural rigidity.
While persuasive in parts, the dissent was ultimately overruled by the majority.
📌 Conclusion: A Precedent with Teeth
This decision sets a binding precedent that ensures regulatory due diligence precedes commercial decision-making in CIRP. It:
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Reinforces the coherence between insolvency and competition frameworks;
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Clarifies the obligations of resolution applicants and resolution professionals;
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Prevents CoC from rubber-stamping legally non-compliant plans.
The matter has now been remanded to the NCLT for reconsideration of Resolution Plans in compliance with this interpretation.
💡 Takeaway for Practitioners:
If your resolution plan involves a “combination” under the Competition Act, obtain CCI approval before facing the CoC.
Delay or bypass at this stage is no longer an option.