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Informist, Wednesday, Jan. 29, 2025

 

--SC rejects AGI Greenpac's resolution plan for Hindustan National Glass

--SC: CCI's prior approval mandatory before lenders' panel OK to IBC plan  

--SC allows Independent Sugar Corp plea in Hindustan National Glass IBC case 

--SC: Lenders' panel to reconsider plan that got CCI OK as of Oct 28, 2022 

 

NEW DELHI – The Supreme Court on Wednesday rejected AGI Greenpac Ltd.'s resolution plan for debt-ridden Hindustan National Glass & Industries Ltd. as the plan failed to secure prior approval from the Competition Commission of India. The apex court held that the competition watchdog's prior approval is mandatory before the committee of creditors can approve a resolution plan.

 

The top court said AGI Greenpac's resolution plan is unsustainable and quashed its approval by the committee of creditors. On Oct. 28, 2022, the committee of creditors had approved AGI Greenpac's plan with 98?vourable votes despite no prior approval from the competition commission. The top court said the committee of creditors should reconsider the resolution plan, which had got the requisite competition commission's approval as of Oct. 28, 2022.

 

Further, the top court allowed an appeal by resolution applicant Independent Sugar Corp. Ltd., which had secured the necessary approval from the competition commission. Independent Sugar's resolution plan had received only 88?vourable votes from the committee of creditors. 

 

Justice Hrishikesh Roy and Justice Sudhanshu Dhulia held the same opinion on the case, while Justice S.V.N. Bhatti differed. Justice Roy said India aspires to be a global manufacturing and investment hub, so it is imperative to provide a robust business environment. In this regard, the Green Channel is a significant step, he added. The Green Channel approval route for combination filings states that combinations which meet certain criteria are deemed to be approved upon filing a valid short form notification (Form-I) with the competition commission. Such transactions are deemed to be approved without the need to wait for a formal approval notification from the competition watchdog. "However, to ensure that entities operate with the utmost confidence, the objectives of IBC (Insolvency and Bankruptcy Code, 2016) and Competition Act, 2002, must be in harmony with one another," he said.

 

The Insolvency and Bankruptcy Code aims at timely resolution of stressed assets, but the significant delays pose a major hurdle, Justice Roy said. "In the present case, Section 31(4) of IBC is affirmed and, thus, approval of the COC (committee of creditors) must be after the Competition Commission of India's decision," he added.

 

On the other hand, Justice Bhatti said that courts must go beyond the literal interpretation of a statute. "If we treat proviso as mandatory, it will not be in sync with other provisions of Section 31," he said. 

 

In 2021, the Kolkata bench of the National Company Law Tribunal had admitted a petition by DBS Bank to start insolvency proceedings against Hindustan National Glass & Industries. In March 2022, Hindustan National Glass' resolution professional issued an invitation for expressions of interest. The request for a resolution plan contained a provision of mandatory approval by the Competition Commission of India, prior to approval by the committee of creditors. 

 

Two resolution applicants--Independent Sugar and AGI Greenpac--submitted their resolution plans in April 2022. In September 2022, AGI Greenpac submitted an application for approval of its plan to the competition commission. The same month, Independent Sugar received the requisite approval from the competition commission. In October 2022, the competition watchdog declared the application filed by AGI Greenpac as not valid.

 

However, the committee of creditors approved AGI Greenpac's resolution plan. In November 2022, AGI Greenpac submitted another application before the competition commission for its approval. In March 2023, the competition commission gave its approval to the resolution plan.

 

In April 2023, the Kolkata bench of the National Company Law Tribunal rejected Independent Sugar's plea, which sought setting aside of the selection of the resolution plan submitted by AGI Greenpac.

 

On an appeal by Independent Sugar, the National Company Law Appellate Tribunal held, "We, thus, are of the view that Section 31, sub-section (4) proviso (of Insolvency and Bankruptcy Code, 2016) has to be read to mean that though the approval by the CCI is 'mandatory', the approval by the CCI prior to approval of CoC is 'directory'." 

 

At 1237 IST, shares of AGI Greenpac were down 15% at INR 799.10 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Namrata Rao

 

 

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