In Independent Sugar Corporation v. Girish Sriram Juneja, the Supreme Court ruled by a 2:1 majority that corporate insolvency resolution plans involving combinations (mergers, acquisitions, etc.) must first receive approval from the Competition Commission of India (CCI) before being approved by a Committee of Creditors (CoC). Justice SVN Bhatti dissented from the ruling, which Justices Hrishikesh Roy and Sudhanshu Dhulia supported.
The interpretation of the proviso to Section 31(4) of the IBC, which states that if a resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC) involves a combination, the resolution applicant “shall” obtain CCI approval “prior to” the CoC approving such a resolution plan, was the main focal point. Judges Roy and Dhulia strictly interpreted this clause and determined it was required.
We believe that the CCI’s approval of a combination resolution plan must come before the CoC’s review and approval, and that the CoC’s approval should only come after the CCI’s decision. The majority decided that this interpretation upholds the original legislative objective and that departing from it would not only compromise the statute but also damage stakeholders’ confidence in the integrity of our legal and regulatory system. The two judges went on to say that even while the IBC aims for a quick resolution of corporate insolvency, the legal process must be followed.
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