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2022 (9) TMI 1217 - Tri - Insolvency and BankruptcyApproval of Resolution Plan - section 31 of IBC - HELD THAT - Reliance placed in the BANK OF MAHARASHTRA AND ORS. VERSUS VIDEOCON INDUSTRIES LTD. AND ORS. 2021 (7) TMI 1292 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI , wherein the Hon ble NCLAT had observed that Statutory compliances does not fall under the commercial wisdom of the CoC. Hence, the statutory compliances as mandated by proviso to Section 31(4), have to be ensured before the Resolution Plan is approved by CoC. In the present case, it is clear that before approval of the Resolution Plan, all the compliances have to be met by the Resolution Applicants. At this stage the Resolution Plans are under consideration of the Committee of Creditors and no decision has been arrived at with respect to the approval of the Resolution Plans submitted by the Respondent Nos. 3, 4 and 5 respectively. It is found that the Applicant is not affected merely by the submission of the Resolution Plans by the Respondent Nos. 3, 4 and 5 respectively. Petition dismissed - List the main Company Petition on 31.10.2022.
Issues Involved:
1. Locus standi of the Applicant. 2. Requirement of prior approval from the Competition Commission of India (CCI) for the Resolution Plans. 3. Validity of the Intervention Petition based on alleged market competition concerns. Comprehensive, Issue-Wise Detailed Analysis: 1. Locus Standi of the Applicant: The Applicant, a Non-Government Company representing Small and Medium Enterprises (SMEs) in the glass industry, filed an Intervention Petition based on news articles indicating that Respondent No. 3 and Respondent No. 4 submitted Resolution Plans for the Corporate Debtor. The Applicant argued that these plans might contravene the Competition Act, 2002, due to potential market dominance issues. The learned Counsel for the Committee of Creditors (CoC) countered this by asserting that the Applicant, neither a Financial Creditor nor an Operational Creditor, has no right to object to the Resolution Plans. The CoC emphasized that the Applicant is not related to the Corporate Debtor and thus lacks the locus standi to file the application under Section 30(2) and Section 30(3) of the Insolvency and Bankruptcy Code (IBC). The Tribunal agreed, stating that the Applicant, being an outsider to the Corporate Insolvency Resolution Process (CIRP), has no locus to file the present Intervention Petition. 2. Requirement of Prior Approval from the Competition Commission of India (CCI): The Applicant argued that the Resolution Plans submitted by Respondent Nos. 3, 4, and 5 would result in combinations under Section 5 of the Competition Act, 2002, necessitating prior approval from the CCI. The learned Counsel for Respondent No. 2 (CoC) contended that Section 31(4) of the IBC requires a Resolution Applicant to obtain CCI approval before the CoC approves the Resolution Plan. However, the CoC argued that this requirement is directory, not mandatory, and the approval can be obtained after the CoC's approval but before the Adjudicating Authority's approval. The Tribunal referred to the Bank of Maharashtra v. Videocon Industries Ltd. case, emphasizing that statutory compliances must be ensured before the CoC approves the Resolution Plan. However, at this stage, the Resolution Plans are still under consideration by the CoC, and no decision has been made regarding their approval. 3. Validity of the Intervention Petition Based on Alleged Market Competition Concerns: The Applicant raised concerns that the acquisition of the Corporate Debtor by Respondent Nos. 3 or 4 would adversely affect market competition due to their significant market shares in soda ash and glass manufacturing, respectively. The Applicant cited various sections of the Competition Act, 2002, and previous judgments to support their claim that prior CCI approval is mandatory. The learned Counsel for Respondent No. 3 argued that the Intervention Petition is non-maintainable and should be dismissed, as the Applicant is an outsider to the CIRP process. The Tribunal agreed, stating that the Applicant is not affected merely by the submission of the Resolution Plans and has no locus standi to file the present Intervention Petition. The Tribunal also noted that it is not within its jurisdiction to adjudicate whether there is a combination under Section 5 of the Competition Act, 2002, as this falls within the domain of the CCI. Conclusion: The Tribunal rejected the Intervention Petition, stating that the Applicant lacks locus standi and that all statutory compliances, including CCI approval, must be ensured before the CoC approves the Resolution Plan. The Tribunal emphasized that the Applicant, being an outsider to the CIRP, has no right to file the present application. The main Company Petition was listed for further proceedings on 31.10.2022.
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