Independent Sugar Corporation Limited v. Girish Sriram Juneja(2025)

Introduction  

This landmark Supreme Court case examined the critical intersection between insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC) and competition law requirements under the Competition Act, 2002. The case arose from statutory appeals challenging the approval of a resolution plan involving a major combination in India's glass packaging industry. The three-judge bench delivered a split verdict on whether Competition Commission of India (CCI) approval must precede Committee of Creditors (CoC) approval in insolvency resolution processes involving combinations. 

Facts 

• Hindustan National Glass and Industries Ltd. (HNGIL), incorporated in 1946, commanded a 60% market share in India's glass packaging industry with seven manufacturing plants across the country serving pharmaceutical, cosmetics, food & beverage, and alco-beverage sectors. AGI Greenpac Ltd., the second-largest player in glass packaging with two manufacturing plants in Telangana, emerged as the successful resolution applicant. The proposed combination would create a dominant entity with 80-85% market share in the F&B segment and 45-50% in the alco-beverage segment. 
• DBS Bank initiated Corporate Insolvency Resolution Process (CIRP) against HNGIL under Section 7 of the IBC, which was admitted by the National Company Law Tribunal (NCLT) Kolkata Bench on 21st October, 2021. The Resolution Professional floated an Expression of Interest (EOI) on 25th March 2022, with mandatory clauses 3.3 and 4.1.1(k) requiring CCI approval prior to CoC approval of any resolution plan. 
• Both Independent Sugar Corporation Ltd. (INSCO) and AGI Greenpac submitted resolution plans in April 2022 and were placed on the provisional eligible list. AGI Greenpac initially submitted Form I application with CCI on 27th September, 2022, intimating its proposal to acquire 100% of HNGIL's shareholding and business. However, CCI declared this application invalid on 22nd October, 2022, requiring a detailed Form II submission. 
• On 28th October, 2022, the CoC approved AGI Greenpac's resolution plan with 98% votes while INSCO's plan received 88% votes, despite AGI Greenpac lacking requisite CCI approval at the time of voting. INSCO immediately objected, highlighting that the mandatory condition precedent of CCI approval had not been fulfilled and pointing out serious contradictions in the process. 
• AGI Greenpac submitted a detailed Form II application on 3rd November, 2022, and later presented a voluntary divestment plan on March 10, 2023, proposing to divest one of HNGIL's seven plants (Rishikesh, Uttarakhand). CCI granted approval on 15th March, 2023, subject to compliance with certain modifications including the mandated divestment. 
• NCLT Kolkata rejected INSCO's challenge on 28th April, 2023, upholding AGI Greenpac's resolution plan approval. NCLAT subsequently upheld this decision on 18th September, 2023, ruling that while CCI approval was mandatory, its prior approval before CoC was merely directory. INSCO challenged both these decisions before the Supreme Court, leading to the present appeals. 

Court’s Observations 

Justice Hrishikesh Roy's Majority Opinion (Concurred by Justice Sudhanshu Dhulia): 

• Justice Roy applied the principle of plain meaning interpretation, holding that the statutory language of the proviso to Section 31(4) IBC clearly mandates CCI approval prior to CoC approval when a resolution plan involves a combination. The Court emphasized that interpreting this requirement as merely directory would contradict legislative intent and weaken the provision's effectiveness. 
• The majority opinion examined the legislative intent behind inserting the proviso to Section 31(4) IBC, concluding that prior CCI approval was specifically mandated to ensure the CoC exercises commercial wisdom with complete regulatory information. The Court noted that CCI's role under Section 31(3) of the Competition Act and Regulation 25(1)(A) requires approval, rejection, or modification of combinations before CoC consideration. 
• Justice Roy rejected NCLAT's reasoning that mandatory prior approval would disrupt CIRP timelines, emphasizing that statutory provisions take precedence over subordinate regulations. The Court observed that CCI typically approves combination proposals within 21 working days with no recorded instance exceeding 120 days, making delay concerns largely theoretical. 
• The majority opinion highlighted critical procedural failures, including CCI's failure to issue mandatory Show Cause Notice to HNGIL as the target company under Section 29(1) of the Competition Act. The Court emphasized that Regulation 25(1A) requires target company approval for voluntary modifications like divestment, which was not obtained in this case. 

Justice S.V.N. Bhatti's Dissenting Opinion: 

• Justice Bhatti advocated for purposive interpretation over rigid literalism, citing Corp of the City of Victoria vs Bishop of Vancouver Island to emphasize that statutory interpretation should ensure workability and avoid disrupting the IBC's objective of efficient insolvency resolution. 
• The dissenting opinion argued that the phrase "prior to" in the proviso should be interpreted flexibly, allowing CCI approval to be obtained before Adjudicating Authority approval rather than mandatorily before CoC stage. Justice Bhatti emphasized that mandating CCI approval before CoC voting could exclude viable applicants and hinder competition. 
• Justice Bhatti relied on judicial precedents including ArcelorMittal and Essar Steel cases to argue that the commercial wisdom of CoC should not be constrained by regulatory conditions that can be addressed later in the resolution process. He held that Section 31(4) should be treated as directory rather than mandatory. 
• The dissenting judge concluded that consequences of non-compliance with combination approval requirements should be assessed at the Adjudicating Authority stage, ensuring adherence to both IBC and Competition Act without disrupting the resolution process. 

Conclusion 

The Supreme Court's split verdict in this case represents a significant development in Indian insolvency and competition law jurisprudence. The majority decision by Justice Roy, establishing the mandatory nature of prior CCI approval before CoC consideration, sets a precedent that strengthens regulatory oversight in insolvency proceedings involving combinations. However, Justice Bhatti's dissenting opinion raises important concerns about practical implementation and the need to balance regulatory compliance with efficient insolvency resolution. This judicial discourse reflects the evolving nature of law at the intersection of insolvency and competition regulation, ultimately contributing to the development of more robust legal frameworks for corporate restructuring in India.