Approval from Competition Commission not mandatory before Committee of Creditors under Insolvency Code

The Tribunal held that the requirement of obtaining Competition Commission of India (CCI) approval before Committee of Creditors (CoC) approval under Section 31(4) of the Insolvency and Bankruptcy Code is directory, not mandatory. The Tribunal dismissed all appeals challenging the Adjudicating Authority's order and directed the Authority to proceed with considering the Resolution Plan approval application. The decision focused on the interpretation of the Code provision, without addressing other issues raised by the parties.

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Issues Involved:
1. Corporate Insolvency Resolution Process (CIRP) and approval requirements under the Insolvency and Bankruptcy Code, 2016.
2. Mandatory nature of Competition Commission of India (CCI) approval prior to Committee of Creditors (CoC) approval.
3. Locus standi of appellants to challenge the order.

Summary:

1. Corporate Insolvency Resolution Process (CIRP):
The CIRP against the Corporate Debtor commenced on 21.10.2021. The Resolution Professional (RP) issued an Invitation for Expression of Interest on 25.03.2022, which included a mandatory requirement for CCI approval before CoC approval. Two Resolution Applicants, Independent Sugar Corporation Ltd. and AGI Greenpac Ltd., submitted their plans in April 2022. The RP clarified that CCI approval could be obtained post-CoC approval but before filing with the Adjudicating Authority. AGI Greenpac Ltd. received 98% vote share from the CoC, whereas Independent Sugar Corporation Ltd. received 88%. The RP filed for approval of the Resolution Plan in November 2022, and the CCI granted approval to AGI Greenpac Ltd. on 15.03.2023. The Adjudicating Authority rejected the application filed by Independent Sugar Corporation Ltd. to set aside AGI Greenpac Ltd.'s plan selection.

2. Mandatory Nature of CCI Approval:
The primary issue was whether the requirement of obtaining CCI approval prior to CoC approval under Section 31(4) of the Code is mandatory or directory. The Tribunal referred to its previous judgments, including Arcelor Mittal India Pvt. Ltd. vs. Guhathakurta, which held that the proviso to Section 31(4) is directory. The Tribunal emphasized that while CCI approval is mandatory, the timeline for obtaining it before CoC approval is directory. The Tribunal noted that holding the timeline as mandatory would lead to incongruous results, given the statutory timelines under the Code and the Competition Act. The Tribunal concluded that the requirement is directory, and the approval can be obtained before the Adjudicating Authority's approval.

3. Locus Standi of Appellants:
The Tribunal addressed the locus standi of the appellants, particularly Independent Sugar Corporation Ltd., which was L2 in the resolution process. The Tribunal affirmed that Independent Sugar Corporation Ltd. had the locus to challenge the Adjudicating Authority's order. Since one appellant had the locus, the Tribunal did not delve into the locus of other appellants.

Conclusion:
The Tribunal dismissed all appeals, upholding the Adjudicating Authority's order dated 28.04.2023. The Adjudicating Authority was directed to proceed with considering the application for approval of the Resolution Plan. The judgment focused solely on the interpretation of Section 31(4) proviso, without expressing opinions on other issues raised by the parties.

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