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A resolution plan involving a combination needs CCI approval before CoC consideration, as required u/s 31(4) of IBC: SC
In the instant case, the CIRP was initiated against the corporate debtor, and resolution plans were submitted by the appellant (unsuccessful resolution applicant) and AGI (successful resolution applicant).
The AGI’s acquisition of the corporate debtor would create an 80-85% market share in the F&B segment and 45-50% in the alco-beverage segment, raising anti-competition concerns.
The appellant objected to the CoC's approval of the AGI’s resolution plan citing lack of prior CCI clearance, as required under section 31(4) of the IBC. Despite the objection, the CoC approved the AGI’s plan with 98% votes. The CCI approval was obtained only later, subject to divestment conditions. The NCLT upheld the CoC’s approval, citing subsequent compliance.
The NCLAT upheld the said decision, ruling that prior CCI approval was directory, not mandatory. Thereafter, an appeal was made before the Supreme Court.
It was noted that a resolution plan involving a combination requires prior CCI approval as mandated under section 31(4) of the IBC. Further, section 29(1) of the Competition Act mandates issuance of a Show Cause Notice (SCN) to the parties to combination if the CCI forms a prima facie opinion that combination is likely to cause or has caused AAEC in the relevant market.
The Supreme Court held that the CCI’s failure to issue a mandatory SCN under section 29(1) of the Act to all the affected parties, including the corporate debtor, constituted a major procedural lapse. Further, AGI’s resolution plan, lacking prior CCI clearance, violated sections 30 and 34 of the IBC and therefore, being legally unsustainable had to be set aside.
CCI finds PSU – IREL (India) Ltd. dominant in beach sand ilmenite market but rules out abuse of dominance
In the instant case, OP was a PSU, engaged in mining and production of certain minerals, rare earths and chemicals. The Informant, comprising members involved in beach minerals industries, filed the information against OP alleging that OP was abusing its dominant position in the relevant market of ‘mining and supply of Beach Sand Ilmenite in India’.
It was alleged that OP was adopting practices such as imposition of unfair or discriminatory conditions in the sale of Ilmenite, restricted/limited supply to domestic consumers and charging excessive prices.
OP submitted that as it catered to the supply of key strategic minerals, chemicals etc., meant for the atomic energy program in the country, all its operations were incidental to the sovereign functions of the Government of India (GoI) and, hence, it did not fall within the meaning of ‘enterprise’ defined under section 2(h) of the Competition Act, 2002.
It was noted that Ilmenite (FeTiO2) was obtained from Beach Sand Deposits as another by-product, which was mined and extracted by OP devoid of Prescribed Substance and free of radioactive content and, hence, mining and supply of Ilmenite was simply an economic activity performed by OP.
The CCI observed that OP was an enterprise under section 2(h) of the Act with respect to mining and selling of Ilmenite. Further, OP was in a dominant position in the relevant market of ‘mining and supply of beach sand Ilmenite in India’.
The CCI held that though OP was covered under the ambit of ‘enterprise’ prescribed under Section 2(h) of the Act and was found to be in a dominant position in the relevant market of ‘mining and sale of Beach Sand Ilmenite in India’, no case of contravention of the provisions of section 4(2)(a)(i), 4(2)(a)(ii) or 4(2)(c) was made out against OP.
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