A recent Supreme Court judgment has called into question the tactics used by the Competition Commission of India (CCI) and AGI Greenpac in a high-profile HNGIL insolvency case, alleging that extreme and unlikely examples were used to create an artificial conflict between the Insolvency and Bankruptcy Code (IBC) and the Competition Act timelines.
The case, involving Hindustan National Glass and Industries Ltd. (HNGIL) ‘s corporate resolution process, has highlighted the problematic arguments CCI and AGI Greenpac use to justify delays and procedural roadblocks.
Supreme Court dismisses fabricated disharmony
In its ruling, the Supreme Court took a firm stance against the alleged manipulation of legal timelines. Point 90 of the judgment explicitly states that the Competition Act’s 210-day approval timeline applies only in cases with an “extremely high degree of Appreciable Adverse Effect on Competition (AAEC),” a scenario described as exceedingly rare. The court noted that the average approval time for combination applications before the CCI is just 21 working days, with no recorded instance of an approval exceeding 120 days.
The judgment further emphasized that out of 99 combination proposals approved by the CCI, a staggering 85 were cleared within 30 days, and the remaining 14 were resolved within 120 days. This data contradicts the extreme hypothetical situations projected by AGI Greenpac and the Committee of Creditors (CoC), which the court deemed unrepresentative of the typical regulatory process.
“The extreme and rare examples projected by the counsel for AGI Greenpac and CoC need not be given undue importance in the present interpretative exercise,” the court ruled.
The exception that proves the rule
Following its observations in Point 90, the Supreme Court elaborated in Point 91 that in exceedingly rare cases involving a high degree of AAEC, public consultation and behavioural remedies may be required, which could lead to an elongated timeline beyond 120 days. However, the court pointed out that only one such case had been recorded in recent years, further reinforcing the argument that the 210-day timeline was an extreme exception rather than a standard regulatory practice.
By highlighting this fact, the court effectively negated AGI Greenpac and CCI’s claims that delays under the Competition Act were an unavoidable conflict with the IBC’s 330-day resolution process. Instead, the judgment reaffirmed that such delays were statistically insignificant and should not be used as justification for procedural roadblocks in insolvency resolutions.
Legal manipulation to delay CIRP
The argument presented by AGI Greenpac and CCI revolved around the premise that the resolution process under IBC would inevitably clash with the CCI’s extended review period. This narrative, however, was firmly rejected by the court, which found that the supposed delay was artificially constructed to derail the IBC’s 330-day resolution timeline.
In reality, the judgment clarified that the application for CCI approval could have been submitted at multiple stages in the resolution process—well before the final resolution plan was placed before the CoC. This would have ensured compliance with both regulatory frameworks without undue delay.
“The submission of an application before the CCI can be done at different stages and need not necessarily wait until the Resolution Plan is submitted,” the judgment stated, reinforcing that the artificial disharmony was unfounded.
Implications for future insolvency cases
The Supreme Court’s ruling is a significant blow to any future attempts to manipulate regulatory timelines as a means to stall insolvency proceedings. By firmly establishing that procedural efficiency must not be sacrificed to hypothetical scenarios, the judgment reinforces the IBC’s objective of time-bound resolutions.
Legal experts believe that this ruling will prevent the misuse of extreme scenarios to delay insolvency resolution. “This judgment ensures that businesses cannot use inflated regulatory concerns as an excuse to derail insolvency proceedings. It’s a necessary safeguard against procedural abuse,” said a senior insolvency lawyer.
With this verdict, the Supreme Court has reaffirmed its commitment to preventing legal loopholes from being exploited, ensuring that insolvency resolutions remain efficient and free from unnecessary obstructions.
Earlier, OpIndia published a series of articles where it was demonstrated how AGI Greenpac, the second-largest glass manufacturer, wanted to acquire HNGIL, the largest manufacturer of glass, without taking prior approval from the CCI. The merger of the two companies would lead to a monopolistic company – something that the Resolution Professional and AGI Greenpac attempted to skirt by manipulating the procedural requirements.
