Introduction
The convergence of insolvency and competition laws in India has been thrust into the spotlight by a landmark Supreme Court ruling delivered on January 29, 2025, in the case of Independent Sugar Corporation Ltd. v. Girish Sriram Juneja, 2025 INSC 124. This decision, passed by a 2:1 majority, establishes that resolution plans under the Insolvency and Bankruptcy Code (IBC) involving combinations—such as mergers, acquisitions, or amalgamations—must obtain prior approval from the Competition Commission of India (CCI) before being submitted to the Committee of Creditors (CoC).
This ruling resolves a critical regulatory ambiguity, ensuring that insolvency resolutions align with India’s competition law objectives while introducing new procedural complexities for stakeholders.
Understanding the Legal Framework
The Insolvency and Bankruptcy Code, 2016 (IBC), is a cornerstone of India’s economic reforms, designed to facilitate the time-bound resolution of insolvency for distressed companies and individuals. The IBC establishes the Corporate Insolvency Resolution Process (CIRP), which must typically be completed within 330 days, including extensions, under the oversight of the National Company Law Tribunal (NCLT).
During this process, resolution applicants submit plans to revive the corporate debtor, which are evaluated by the CoC and ultimately approved by the NCLT. The IBC’s primary objectives include maximizing asset value, promoting entrepreneurship, and balancing creditor interests. However, its interaction with other regulatory frameworks, particularly competition law, has posed significant challenges, necessitating judicial clarification.
The Competition Act, 2002, governs India’s antitrust regime, with the CCI tasked with preventing anti-competitive practices, promoting fair competition, and protecting consumer interests. Section 5 of the Act defines “combinations” as mergers, acquisitions, or amalgamations that exceed specified asset or turnover thresholds, requiring mandatory CCI approval under Section 6 to prevent an appreciable adverse effect on competition (AAEC).
When an IBC resolution plan involves such a combination, it triggers the Competition Act’s requirements, as the transaction could potentially alter market dynamics, consolidate market share, or reduce consumer choice. The Supreme Court’s ruling addresses this overlap, mandating that CCI approval be obtained before the CoC can consider the plan, thereby ensuring that insolvency resolutions do not undermine competitive markets.
The need for CCI clearance in IBC resolutions arises from the potential for large-scale corporate transactions to impact market competition. For example, acquiring a distressed company could lead to market consolidation, creating monopolistic tendencies that harm consumers. The CCI’s role is to scrutinize these transactions to ensure they align with the principles of fair competition. The Supreme Court’s decision clarifies that this scrutiny is not optional but a mandatory prerequisite, reinforcing the importance of regulatory compliance in insolvency proceedings.
The Supreme Court’s Landmark Judgment
The case of Independent Sugar Corporation Ltd. v. Girish Sriram Juneja (Civil Appeal No. 6071 of 2023) originated from a dispute over a resolution plan for Hindustan National Glass & Industries Ltd. (HNGIL), a company undergoing CIRP. AGI Greenpac, a resolution applicant, proposed a plan involving a combination, which the CoC approved on October 27, 2022, without prior CCI clearance.
The CCI later approved the plan with modifications, including a divestment plan, but the appellant, an unsuccessful resolution applicant, challenged the process, arguing that the absence of prior CCI approval violated statutory requirements. The Supreme Court’s intervention was sought to resolve this regulatory ambiguity, resulting in a ruling that has reshaped the insolvency landscape.
In a 2:1 majority decision, Justices Hrishikesh Roy and Sudhanshu Dhulia ruled that CCI approval must precede CoC approval for resolution plans involving combinations. The Court relied on the proviso to Section 31(4) of the IBC, inserted through the 2018 Amendment, which explicitly states that where a resolution plan contains a provision for a combination as referred to in Section 5 of the Competition Act, 2002, the resolution applicant shall obtain CCI approval prior to CoC approval.
The Court adopted a literal interpretation of the word “prior,” supported by precedents such as Kanailal Sur v. Paramnidhi Sadhu Khan (1957 SCC OnLine SC 8) and Bhavnagar University v. Palitana Sugar Mill Private Limited, AIR 2003 SC 511, emphasizing that statutory language must be strictly followed. Consequently, AGI Greenpac’s resolution plan was quashed, and the CoC was directed to reconsider plans, including the appellants, only after obtaining requisite CCI approval.
Justice SVN Bhatti dissented, arguing that the proviso to Section 31(4) is directory rather than mandatory. He suggested that CCI approval could be obtained after CoC approval but before final NCLT adjudication under Section 31(1), providing flexibility within the IBC’s tight timelines. Bhatti’s dissent highlights the tension between the need for expediency in insolvency resolutions and the rigorous scrutiny required under competition law. However, the majority opinion prevails, making prior CCI clearance a non-negotiable requirement.
The Court also addressed procedural lapses by the CCI, noting its failure to issue a Show Cause Notice (SCN) to all relevant parties, including the target company (HNGIL), as required under Section 29(1) of the Competition Act and Regulation 2(f) of the CCI (Procedure in Regard to the Transaction of Business Relating to Combinations) Regulations, 2011. This lapse undermined the fairness of the process, as it denied stakeholders the opportunity to respond to potential competition concerns.
Additionally, the Court criticized the Resolution Professional, NCLT, and National Company Law Appellate Tribunal (NCLAT) for overlooking the mandatory requirement of prior CCI approval, reinforcing the need for strict adherence to statutory provisions.
The ruling further clarified the timelines involved, noting that CCI approvals are typically processed efficiently. According to the CCI’s 2022–2023 Annual General Report, combinations are approved within an average of 21 working days, with 85 out of 99 proposals approved within 30 days and the remainder within 120 days. The Competition (Amendment) Act, 2023, has further reduced the timeline for CCI approvals from 210 days to 150 days, with a prima facie opinion now required within 15 days.
This efficiency makes it feasible for resolution applicants to obtain CCI approval within the IBC’s 330-day CIRP timeline, provided they initiate the process early, such as at the Expression of Interest (EOI) stage or when issuing the Request for Resolution Plans (RFRP).
Implications for Stakeholders
The Supreme Court’s ruling has profound implications for all stakeholders involved in IBC resolutions. For resolution applicants, the mandate introduces an additional layer of regulatory scrutiny, requiring them to secure CCI approval before submitting plans to the CoC. This process involves preparing a detailed notice to the CCI, outlining the proposed combination, its market impact, and justifying why it does not cause an AAEC.
The CCI’s review, which can take between 30 to 150 days, necessitates early engagement with legal and competition law experts to ensure compliance and avoid delays. Failure to obtain prior approval, as demonstrated in the AGI Greenpac case, can result in the plan being set aside, nullifying months of effort and incurring significant costs.
For the CoC, the ruling imposes a new responsibility to verify that resolution plans have obtained all necessary regulatory approvals, including CCI clearance, before approval. This added diligence ensures that only compliant plans proceed, reducing the risk of legal challenges but requiring closer coordination with resolution professionals. The CoC must also be mindful of the IBC’s timeline constraints, ensuring that the CIRP remains on track despite the additional regulatory step.
The CCI’s role is significantly strengthened by this ruling, positioning it as a critical gatekeeper in IBC resolutions involving combinations. The Court’s criticism of procedural lapses, such as the failure to issue SCNs, underscores the need for the CCI to enhance its procedural rigor. This includes ensuring that all relevant parties are notified and given an opportunity to respond, thereby upholding transparency and fairness in the approval process.
The NCLT, as the adjudicating authority, must now exercise greater scrutiny when approving resolution plans, confirming compliance with all statutory mandates, including CCI approval. The Supreme Court’s rebuke of the NCLT and NCLAT for overlooking this requirement highlights the tribunal’s pivotal role in upholding legal standards and preventing procedural oversights.
Procedural Requirements for CCI Clearance
Obtaining CCI approval is mandatory for resolution plans involving combinations that meet the thresholds under Section 5 of the Competition Act, based on the combined assets or turnover of the resolution applicant and the corporate debtor. For instance, domestic combinations require approval if the parties’ combined assets exceed INR 2,000 crore or turnover exceeds INR 6,000 crore.
The process begins with the resolution applicant filing a notice with the CCI, detailing the proposed combination, including its structure, market impact, and financial details. The CCI conducts a preliminary review within 15 days to determine if the combination raises competition concerns. If concerns are identified, a detailed investigation may follow, potentially extending the process up to 150 days.
If the CCI identifies a potential AAEC, it issues an SCN to all relevant parties, including the target company, allowing them to respond. The CCI may then approve the combination, impose conditions (such as divestitures), or reject it if it significantly harms competition. The Supreme Court noted that procedural lapses, such as failing to issue an SCN, can undermine the process, as seen in the AGI Greenpac case, where the target company was not notified.
The IBC’s 330-day CIRP timeline, though tight, is compatible with the CCI’s approval process, as approvals can be initiated early in the CIRP, such as at the EOI stage (T+60 days), provisional list stage (T+85 days), or RFRP issuance stage (T+105 days). Resolution applicants must plan strategically to align these timelines, ensuring that CCI approval is obtained without derailing the CIRP.
| Aspect | Details |
| Trigger for CCI Approval | Combinations exceeding asset/turnover thresholds under Section 5 of the Competition Act |
| Filing Requirement | Notice to CCI with details of the combination |
| Review Timeline | 15–150 days, with most approvals within 30 days |
| IBC CIRP Timeline | Maximum 330 days, including extensions |
| Key Challenge | Aligning CCI approval with IBC’s time-bound process |
Global Perspectives on Insolvency and Antitrust
The interplay between insolvency and antitrust laws varies across jurisdictions, offering valuable lessons for India. In the United States, the “failing firm” defense allows antitrust exemptions for acquisitions of distressed companies, provided the target has no viable alternative and the acquisition does not substantially lessen competition.
The European Union’s Merger Regulation permits expedited reviews for failing firms but requires rigorous competition assessments. India’s approach, as clarified by the Supreme Court, prioritizes prior CCI approval, aligning with global standards of regulatory oversight while reflecting the unique constraints of the IBC’s timeline-driven process.
International practices suggest that flexibility, such as expedited reviews or automatic approvals for low-risk combinations, could ease the burden on IBC stakeholders. For instance, the EU’s streamlined procedures for failing firms could inspire similar mechanisms in India, such as the proposed “green channel” route for automatic CCI approvals, which could reduce delays while maintaining regulatory oversight.
Future Outlook and Potential Developments
The Supreme Court’s ruling sets a high standard for compliance, but ongoing developments may shape its implementation. In 2019, the Competition Law Review Committee recommended a “green channel” route for automatic CCI approval of certain combinations, including those arising from IBC processes. If implemented, this could streamline approvals for low-risk transactions, balancing efficiency and compliance. However, any such reforms must align with the Court’s mandate for prior CCI clearance.
As of April 2025, there are indications of pending review petitions challenging the ruling. While the majority opinion is currently binding, a successful review could refine or alter the mandate, potentially offering more flexibility in the sequencing of approvals.
Additionally, legislative or regulatory amendments may be needed to harmonize the IBC’s 330-day timeline with the CCI’s 150-day review period. Clear guidelines on expedited CCI reviews for IBC cases or exemptions for certain combinations could enhance efficiency, while procedural reforms, such as mandatory SCNs, could strengthen the CCI’s process.
Conclusion: Strengthening India’s Insolvency and Competition Framework
The Supreme Court’s ruling on mandatory CCI clearance for IBC resolutions is a watershed moment that clarifies the interplay between insolvency and competition laws. By prioritizing statutory compliance, it ensures that resolution plans are both commercially viable and aligned with India’s competition objectives, fostering transparency and fairness in the market.
While the decision introduces procedural complexities, it strengthens the institutional framework governing insolvency and antitrust, supporting economic growth and market integrity. As stakeholders adapt to this new mandate, ongoing reforms and judicial developments will continue to shape the future of this critical legal intersection, ensuring that India’s insolvency and competition regimes work in harmony to achieve their respective goals.
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