A Resolution Plan Involving a Combination Needs CCI Approval Before CoC Consideration, as Required u/s 31(4) of IBC | SC

Case Details: Independent Sugar Corporation Ltd. v. Girish Sriram Juneja - [2025] 170 taxmann.com 868 (SC)

Judiciary and Counsel Details

• Hrishikesh Roy, Sudhanshu Dhulia & S.V.N. Bhatti, JJ.

Facts of the Case

In the instant case, the CIRP was initiated against the corporate debtor, and resolution plans were submitted by the appellant (unsuccessful resolution applicant) and AGI (successful resolution applicant).

The AGI’s acquisition of the corporate debtor would create an 80-85% market share in the F&B segment and 45-50% in the alco-beverage segment, raising anti-competition concerns.

The appellant objected to the CoC’s approval of the AGI’s resolution plan citing lack of prior CCI clearance, as required under section 31(4) of the IBC. Despite the objection, the CoC approved the AGI’s plan with 98% votes. The CCI approval was obtained only later, subject to divestment conditions. The NCLT upheld the CoC’s approval, citing subsequent compliance.

NCLAT Held

The NCLAT upheld the said decision, ruling that prior CCI approval was directory, not mandatory. Thereafter, an appeal was made before the Supreme Court.

It was noted that a resolution plan involving a combination requires prior CCI approval as mandated under section 31(4) of the IBC. Further, section 29(1) of the Competition Act mandates issuance of a Show Cause Notice (SCN) to the parties to combination if the CCI forms a prima facie opinion that combination is likely to cause or has caused AAEC in the relevant market.

The Supreme Court held that the CCI’s failure to issue a mandatory SCN under section 29(1) of the Act to all the affected parties, including the corporate debtor, constituted a major procedural lapse. Further, AGI’s resolution plan, lacking prior CCI clearance, violated sections 30 and 34 of the IBC and therefore, being legally unsustainable had to be set aside.