No Rigid Locus Standi Requirements To Institute Appeal Against NCLT & NCLAT Orders: Supreme Court
The Apex Court emphasised that, under the Competition Act, 2002, even those persons that bring to CCI information of practices that are contrary to the provisions of the said Act, could be said to be 'aggrieved'.
The Supreme Court in an important Judgment, reiterated that there is no rigid locus standi requirement to institute an Appeal against the Order of the National Company Law Tribunal (NCLT) before the National Company Law Appellate Tribunal (NCLAT) or an Order of NCLAT before the Apex Court.
The Court was deciding a batch of Civil Appeals preferred against the Judgment of NCLAT pertaining to the Corporate Insolvency Resolution Process (CIRP) of the Hindustan National Glass and Industries Ltd. (HNGIL).
The three-Judge Bench of Justice Hrishikesh Roy, Justice Sudhanshu Dhulia, and Justice S.V.N. Bhatti observed, “Once the CIRP is initiated, the nature of proceedings are no longer in personam but rather become in rem. In light of the same, the expression ‘any person aggrieved’ in the context of the IBC has been held to be indicative of there being no rigid locus requirements to institute an appeal challenging an order of the NCLT before the NCLAT or an order of the NCLAT before this Court.”
The Bench emphasised that, in the context of the Competition Act, 2002, even those persons that bring to CCI (Competition Commission of India) information of practices that are contrary to the provisions of the Competition Act, could be said to be ‘aggrieved’ and therefore, the term ‘any person aggrieved’ appearing in Section 62 of the IBC (Insolvency and Bankruptcy Code, 2016) and Section 53T of the Competition Act must be understood widely and not in a restricted fashion.
Senior Advocates Abhishek Manu Singhvi, Mahesh Jethmalani, Rajshekhar Rao, Dushyant Dave, Dhruv Mehta and Balbir Singh represented the Appellants. Senior Advocate P. Chidambaram represented the Resolution Professional while Solicitor General Tushar Mehta represented the CoC. Senior Advocates Mukul Rohatgi and Parag Tripathi represented the Successful Resolution Applicant.
Facts of the Case
HNGIL was the Corporate Debtor/Target Company with a 60% market share of the glass packaging industry in India and the Resolution Professional (RP) represented it. Combining with HNGIL was AGI Greenpac Ltd. i.e., the Successful Resolution Applicant which was the second largest company in the field of glass packaging and manufacturing in India, after HNGIL. The combination between AGI Greenpac and HNGIL was generating a key issue for adjudication since it was likely to result in an Appreciable Adverse Effect on Competition (AAEC) in the glass packaging industry. The main contesting party to the proposed combination was the Appellant i.e., Independent Sugar Corporation Ltd. (INSCO). After the CIRP was initiated against HNGIL, the NCLT, Kolkata admitted the matter and an Expression of Interest (EOI) was floated by RP prescribing a mandatory requirement of approval from CCI prior to CoC’s approval.
Subsequently, the RP granted relaxation to Resolution Applicants to procure CCI approval after CoC’s approval of the Resolution Plan but prior to filing Application before NCLT. Thereafter, AGI Greenpac submitted an Application with CCI, intimating that it proposed to enter into a combination with HNGIL by acquiring 100% of HNGIL’s shareholding and business. CCI declared this Application as ‘not valid’ and final Resolution Plans were submitted for consideration by CoC. Immediately then, the Appellant objected to the approval accorded to AGI Greenpac’s Resolution Plan. However, CoC approved AGI’s Resolution Plan with 98% votes while the Appellant’s Resolution Plan received 88% votes. Hence, AGI sought approval before CCI and the same was granted. Challenging this, the Appellant approached NCLT but its application was rejected. Then the Appellant approached NCLAT but it also upheld the said approval. Hence, the case was before the Apex Court.
Reasoning
The Supreme Court in the above context of the case, noted, “In the present case, the Appellant as an unsuccessful resolution applicant whose Resolution Plan could have otherwise been approved by the CoC, satisfies the requirement of being aggrieved. This preliminary locus standi objection vis-à-vis the Appellant, therefore, does not merit acceptance.”
The Court further held that for a Resolution Plan containing a combination, the CCI’s approval to the Resolution Plan must be obtained before and consequently, the CoC’s examination and approval should be only after the CCI’s decision.
The Court added that, where the provisions allow for dilution or departure from the intended scheme of the IBC or the Competition Act, it is the responsibility of the legislature to rectify such inconsistencies through appropriate legislative measures and the Judiciary should not normally venture into the legislative domain.
“The legislative intent in the proviso to Section 31(4) IBC, is in clear and unambiguous terms. The same specifically provides for prior approval of the CCI before the approval of the Resolution Plan, by the COC. This provision introduced with straightforward and clear words must be interpreted and understood as being mandatory in nature. Otherwise the object behind the enactment of the said proviso, would be defeated”, it also observed.
The Court elucidated that after the COC’s approval, the Resolution Plan cannot be modified in any manner since the Adjudicating Authority can only approve the Resolution Plan, as has been approved by the CoC and the same is made clear by Section 31(1) of the IBC.
“The interplay between the provisions of the Competition Act and the IBC necessitates a careful balancing of competing interests, underscoring the indispensability of procedural compliance. The lack of participation by the Target in the voluntary modification process, especially where the modification entails the divestment of their assets, vitiates the approval granted by the CCI and warrants remedial intervention by this Court”, it added.
Furthermore, the Court remarked that, as India aspires to establish itself as a global manufacturing powerhouse and investment hub, it is imperative that it is able to provide a reliable, robust and competitive business environment for both domestic and international stakeholders.
“… a balance between the need for expeditious relief and adherence to the statutory framework must necessarily be maintained, in order to ensure that the objectives of both, the IBC and the Competition Act are met in a manner that supports India's long-term economic aspirations”, it also enunciated.
Accordingly, the Apex Court allowed the INSCO’s Appeal and quashed the impugned approval.
Cause Title- Independent Sugar Corporation Ltd. v. Girish Shriram Juneja & Ors. (Neutral Citation: 2025 INSC 124)
