2023 (9) TMI 820 - AT - Insolvency and Bankruptcy

Approval of Resolution Plan - Plan approved by CoC with 98% vote share - seeking reconsideration of the plan - HELD THAT - The approval of the CCI, which is provided for a combination and the time prescribed under the Competition Act is 210 days. It is also noticed that CIRP Regulations also provide a timeline. Section 12 of the Code, contemplate completion of CIRP within 180 days, subject to further extension. Section 12, further provides that CIRP shall be completed within a period of 330 days from the insolvency commencement date. It is noticed that timeline prescribed under Regulation 40A for submission of Resolution Plan to CoC take additional 30 days and 135 days are provided for submission of Resolution Plan. Till the submission of Plan and by 165 days, the Plan is required to be considered by the CoC. The question of obtaining approval from the CCI only arises when Resolution Plan submitted contains a combination and require approval from the CCI. After submission of Plan, the Resolution Applicant applies for approval of combination from the CCI. It is not in his hand that as to when CCI will grant the approval. The CCI has to act as per statutory provisions of the Competition Act and it has been given 210 days to take a decision - It cannot be held that since provision is there, approval by CCI has to be obtained prior to approval of Plan by the Adjudicating Authority - it is noticed that the judgments of this Tribunal where it has been laid down that approval by CCI, prior to approval by the CoC is directory because there is no consequences provided for non-compliance of Section 31(4) proviso. In the present case, RFRP provided that CCI s approval has to be obtained prior to approval of Plan by the CoC, which RFRP was in accordance with Section 31(4). Although, the RP subsequently clarified that approval can be obtained even after the approval by the CoC, which was in accordance with the prevalent legal position as settled by this Tribunal in Arcelor Mittal and other cases - Section 31, sub-section (4) proviso has to be read to mean that though the approval by the CCI is mandatory , the approval by the CCI prior to approval of CoC is directory - there are no error in the order of the Adjudicating Authority dated 28.04.2023 rejecting the I.A. No.1497/KB/2022 filed by the Independent Sugar Corporation Ltd. There are no ground to interfere with the impugned order - appeal dismissed.

Summary

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.