Civil appeals challenging decisions by the National Company Law Appellate Tribunal (NCLAT) and the National Company Law Tribunal (NCLT). The core dispute revolves around the Corporate Insolvency Resolution Process (CIRP) of Hindustan National Glass and Industries Ltd. (HNGIL) and its proposed combination with AGI GreenpacLtd.. A central point of contention is the mandatory or directory nature of obtaining Competition Commission of India (CCI) approval for such combinations prior to the Committee of Creditors (CoC) approval of a resolution plan under Section 31(4) of the Insolvency and Bankruptcy Code (IBC). The appeals also address alleged procedural deficiencies in the CCI’s approval process and discrepancies in data provided by the parties, with one Justice disagreeing with the majority on the interpretation of the IBC proviso.
(A) Insolvency and Bankruptcy Code, 2016, Section 31(4) – Insolvency and Bankruptcy – Resolution Plan – Held that AGI Greenpac’s Resolution Plan is unsustainable as it failed to secure prior approval from the CCI, as mandated under the proviso to Section 31(4) of the IBC – Consequently, the approval granted by the CoC to the Resolution Plan dated 28.10.2022 without the requisite CCI approval, cannot be sustained and is hereby set aside and quashed – Any action taken pursuant to the Resolution Plan shall stand nullified, and the rights of all stakeholders shall be restored as per status quo ante, prior to the approval of the Resolution Plan by the CoC on 28.10.2022 – Consequently, the CoC shall reconsider the Appellant’s Resolution Plan and any other Resolution Plans which possessed the requisite CCI approval as on 28.10.2022 i.e., the date on which the CoC voted upon the submitted Resolution Plans.
(Majority Judgment per Hrishikesh Roy J., Para 155, S.V.N. Bhatti J dissenting)
(B) Insolvency and Bankruptcy Code, 2016, Section 61, 62 – Appeal – Locus standi –Term ‘any person aggrieved’ – Preliminary objection regarding the locus standi of the Appellant(s) to prefer the present Appeal(s) – Section 61 of the IBC provides the statutory framework for appeals against orders of the Adjudicating Authority i.e., the NCLT, stipulating that ‘any person aggrieved’ by such an order may prefer an appeal to the Appellate Authority i.e., the NCLAT in this case – Further, Section 62 extends this right of appeal to the Supreme Court – Once the CIRP is initiated, the nature of proceedings are no longer in personam but rather become in rem – In light of the same, the expression ‘any person aggrieved’ in the context of the IBC has been held to be indicative of there being no rigid locus requirements to institute an appeal challenging an order of the NCLT before the NCLAT or an order of the NCLAT before this Court – Held that the term ‘any person aggrieved’ appearing in Section 62 of the IBC and Section 53T of the Competition Act must be understood widely and not in a restricted fashion – Appellant as an unsuccessful resolution applicant whose Resolution Plan could have otherwise been approved by the CoC, satisfies the requirement of being aggrieved. This preliminary locus standi objection vis-à-vis the Appellant, therefore, does not merit acceptance.
(Majority Judgment per Hrishikesh Roy J., Para 24 to 27)
(C) Insolvency and Bankruptcy Code, 2016, Section 31(4) – Insolvency and Bankruptcy – Approval – Whether the approval of a proposed combination by the CCI must mandatorily precede the approval of the Resolution Plan, by the CoC, as stipulated under the proviso to Section 31 (4) of IBC – Held that the introduction of a proviso, specifically addressing those Resolution Plans with provisions for combination, and the use of the term ‘prior’ therein, makes it starkly clear that the intent of the legislature was to create an exception This ensures that in cases containing combination proposals, the approval of the CCI i.e., the regulatory body designated to ensure fair competition in markets and preventing anti-competitive practices, should first be obtained before the same is approved by the CoC – No other provision of the IBC has been pointed out that might suggest otherwise or cause disharmony between the scheme and intent of the IBC or the said proviso to Section 31(4) of the IBC – The above provision makes it abundantly clear that the proviso herein creates an exception for those Resolution Plans that contain provisions for combination – The language used therein appears to be clear, precise & straightforward. As such, to understand the legislative intent, the Rule of Plain Reading or literal interpretation should find favour rather than the rule of purposive interpretation as is suggested by the other side.
(Majority Judgment per Hrishikesh Roy J., Para 34 and 35, S.V.N. Bhatti J dissenting)
(D) Insolvency and Bankruptcy Code, 2016, Section 31(4) – Interpretation of statute – Legislative Intent – The legislative intent behind inserting the proviso to Section 31(4) of the IBC would suggest that prior approval of the CCI was specifically mandated and it should not be seen as a flexible provision to be ignored in certain exigencies – In fact, a contrary interpretation of the said proviso, i.e., that the prior approval is directory, would distort the objective for which the legislature inserted the proviso, thereby rendering the proviso totally inconsequential – The use of the word ‘prior’ at the appropriate place in the proviso besides being direct, clear and unambiguous also does not lead to any absurd consequences. The proviso to Section 31(4) of IBC mentions that the approval to the Resolution Plan from CCI shall be obtained ‘prior’ to its approval by the CoC – Therefore, to interpret the specific word to mean that such an approval can be obtained even ‘after’ and not necessarily ‘prior’ to the approval by the CoC would amount to reconstructing a statutory provision, which is not permissible.
( Majority Judgment per Hrishikesh Roy J., Para 55 and 65, S.V.N. Bhatti J dissenting)
(E) Interpretation of statute – Literal interpretation – Where the language is clear, plain and unambiguous, the courts are duty-bound to give effect to the meaning that can be inferred from a statute, irrespective of the consequences – Mere inconvenience being caused to a party, by virtue of the plain and literal interpretation accorded to a statute, cannot be reason enough to forego such interpretation.
(Para 42)
(F) Interpretation of statute – Principle of Plain Meaning – Held that when the words used are clear, plain and unambiguous, the courts are duty-bound to give effect to the meaning emerging out of such plain words – The intention of the legislature must be gathered from the language used and also, the words not used – It becomes imperative to understand those words in their natural and ordinary sense, and any interpretation requiring for its support addition or substitution or rejection of words as meaningless, must ordinarily be avoided.
(Majority Judgment per Hrishikesh Roy J., Para 51)
(G) Words and phrases – Terms ‘Scrivener’s Error’ – It is a judicial doctrine developed in the USA – In the literal sense, then, a “scrivener’s error” is a mistake of transcription, which is to say a mismatch between original (e.g., spoken word, manuscript) and copy.
(Majority Judgment per Hrishikesh Roy J., Para 74)
(H) Insolvency and Bankruptcy Code, 2016, Section 31(4) – Insolvency and Bankruptcy – Approval – Whether the approval of a proposed combination by the CCI must mandatorily precede the approval of the Resolution Plan, by the CoC, as stipulated under the proviso to Section 31 (4) of IBC – Held that the proviso to sub-section (4) of section 31 is directory and would be compliant with IBC and the Competition Act – Hence, the combination approval of CCI at the stage of consideration of the resolution plan by the Adjudicating Authority under section 31(1) would be proper and legal – Such interpretation keeps the operations of the successful resolution applicant as a going concern, without deviating from the rigour of the Competition Act, and simultaneously, a one-year window is granted to obtain licenses, permissions, consents and other regulatory approvals envisaged by a host of laws – Therefore, the proviso is interpreted purposively and held that the approval of a combination of CCI at the stage of consideration by CoC is directory and not mandatory – By operation of section 31(2) of the IBC, to avoid rejection of a fully compliant and voted resolution plan, the Adjudicating Authority confirms that the approval of the combination is available before implementing the resolution plan – At best, the use of the words “prior to” is a temporal expression whose mandatory or directory nature is to be determined from the context surrounding section 31 – The view taken by the NCLAT on the question of whether the requirement of proviso to sub-section (4) of section 31 of IBC is mandatory or directory is correct. Thus, the appeals fail.
(Per S.V.N. Bhatti J dissenting Para 238 and 242)
Independent Sugar Corporation Limited V. Girish Sriram Juneja
Supreme Court: 2025 INSC 124: (DoJ 29-01-2025)
