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Competition LawSupreme Court of India

Independent Sugar Corporation Ltd. v. Girish Sriram Juneja & Ors.

Civil Appeal · 2025 INSC 124Decided 29 Jan 2025
Civil Appeal No. 6071 of 2023 (with connected Civil Appeal Nos. 4954, 4924, 4937, 5018, 5401, 6847, 6055, 6123, 6177, 7037, 7038, 6771 and 7428 of 2023)
Justice Hrishikesh Roy · Justice Sudhanshu Dhulia · Justice S.V.N. Bhatti

Background

Hindustan National Glass and Industries Ltd. (HNGIL), India's largest glass-packaging maker, went through insolvency proceedings after being admitted to CIRP in 2021. Two resolution applicants competed for it: Independent Sugar Corporation Ltd. (INSCO), which had already obtained Competition Commission of India (CCI) approval for its plan before the Committee of Creditors (CoC) voted, and AGI Greenpac Ltd., a rival glass manufacturer whose own CCI application had been rejected as "not valid" and was still pending when the CoC approved its plan by a 98% vote in October 2022. AGI Greenpac obtained CCI approval only months later, in March 2023, after proposing to divest one of HNGIL's plants, and the National Company Law Appellate Tribunal (NCLAT) upheld both that approval and the CoC's decision, treating the requirement of prior CCI approval as merely "directory" rather than mandatory. INSCO challenged both NCLAT rulings before the Supreme Court.

Decision Breakdown

By a 2:1 majority (Justice Hrishikesh Roy, with Justice Sudhanshu Dhulia concurring; Justice S.V.N. Bhatti dissenting on this point), the Court held that the proviso to Section 31(4) of the IBC is mandatory, not directory: where a resolution plan involves a "combination" under the Competition Act, CCI approval must be obtained before, not after, the CoC approves the plan. Since AGI Greenpac's plan was approved by the CoC without the required prior CCI clearance, the majority set aside that approval, nullified all actions taken under the plan, and directed the CoC to reconsider INSCO's plan (and any other plan that did have CCI approval as of the original voting date). In a related but separately decided batch of appeals directly challenging the CCI's own approval order on procedural grounds under Section 29 of the Competition Act (such as the lack of a show-cause notice to HNGIL as target company), the Court found no procedural violation and dismissed those appeals, deferring to the CCI's expert assessment on the substance of the combination.

Lesson Learnt

In insolvency sales that involve a merger or acquisition triggering competition-law scrutiny, regulatory approval from the Competition Commission of India must be secured before the creditors vote to approve the resolution plan, not afterward: a resolution applicant cannot get a leg up in a bidding contest by promising to sort out competition clearance later. This was a rare 2:1 split verdict among the judges, showing that even senior judges can genuinely disagree on how strictly to read a statutory proviso.

Independent Sugar Corporation Ltd. v. Girish Sriram Juneja & Ors. – Legal Case Shots | LegalAware