This matter arises from the Corporate Insolvency Resolution Process of Hindustan National Glass and Industries Limited, commonly known as HNGIL. It is not a small or ordinary company.
It is the dominant force in the Indian glass packaging market, accounting for about sixty percent of the national share.
Its glass products service the food and beverage industry, pharmaceuticals, cosmetics, alcoholic beverages, and wellness sectors.
It has manufacturing plants across Haryana, West Bengal, Rajasthan, Andhra Pradesh, Maharashtra, Puducherry, and Uttarakhand.
That means any entity that acquires HNGIL inherits market power across different sub-industries.
Two bidders came forward with competing resolution plans. One was Independent Sugar Corporation Ltd., registered in Bermuda and actively participating in the CIRP.
The other was AGI Greenpac, already the second-largest glass manufacturing company in India.
Together, AGI and HNGIL would occupy upwards of eighty percent of the food and beverage packaging market and between forty-five and fifty percent of the alcoholic beverages packaging market.
The Supreme Court noted that such a concentration raised a key question of competition law, because the combination was
“likely to result in an Appreciable Adverse Effect on Competition.”
This background is crucial because the Insolvency and Bankruptcy Code does not exist in isolation. When insolvency resolution involves market concentration or merger, the Competition Commission of India is a mandatory regulator.
That regulator does not deal with financial viability or creditors’ returns, but with the health of the market itself. That is why the law links antitrust scrutiny with insolvency approvals.
Procedural Journey
After insolvency proceedings were admitted in October 2021, an Expression of Interest was issued in March 2022. The Resolution Professional listed conditions.
One of those was explicit and placed in the Request for Resolution Plan: Competition Commission approval must be secured before the plan is put to vote before the Committee of Creditors.
Both AGI Greenpac and INSCO submitted full resolution plans. Shortly after, AGI filed a Form I combination notice before the Competition Commission, but the Commission declared the filing “not valid”.
At that moment, AGI had no valid competition approval. Despite this, the Resolution Professional permitted the Committee of Creditors to vote. AGI’s plan received ninety eight percent votes, while INSCO’s plan received eighty eight percent.
AGI later filed a Form II, and eventually the Competition Commission approved the combination, but subject to divestment conditions regarding one of HNGIL’s plants in Uttarakhand.
INSCO challenged the approval, arguing that AGI’s plan should never have been put before creditors because, at the time of voting, it lacked Competition Commission clearance.
INSCO also challenged the Competition Commission order on the grounds of improper procedure and alleged misinformation.
Both challenges were rejected by the National Company Law Appellate Tribunal. The tribunal reasoned that although Competition Commission approval is mandatory in principle, the requirement that it must be obtained before the Committee of Creditors is merely directory, not mandatory.
That is how the case reached the Supreme Court.
Who Has the Right to Challenge: Locus Standi
The Supreme Court dealt first with a preliminary objection raised by AGI and the Resolution Professional. They argued that INSCO lacked the right to appeal because it was merely an unsuccessful bidder. The Court rejected this objection.
It explained that insolvency proceedings are not disputes between private individuals. Once a company enters CIRP, the matter becomes in rem and affects all stakeholders.
Therefore, persons whose resolution plan would otherwise have been considered can be “aggrieved” under Sections 61 and 62 of the Insolvency Code.
This is a critical point because it reinforces that the CIRP is not a closed club of preferred parties. A rival resolution applicant can legitimately challenge illegality affecting the process.
The Court stated that the expression “any person aggrieved” must be understood broadly.
The Central Question: The Proviso to Section 31(4)
The heart of the case was whether Competition Commission approval must be obtained before approval of the resolution plan by the Committee of Creditors.
The proviso to Section 31(4) clearly states that where a resolution plan contains a combination,
“the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.”
There is no interpretive puzzle in the word prior. No ambiguity exists. The Supreme Court refused to dilute statutory clarity merely because it inconvenienced one bidder or because insolvency timelines are tight.
The Court emphasized that the legislature deliberately used the expression ‘prior’ and courts are bound to give effect to ordinary meaning.
The judgment states in a strong line that captures the entire interpretive philosophy:
“The language used therein appears to be clear, precise & straightforward. As such, to understand the legislative intent, the Rule of Plain Reading or literal interpretation should find favour rather than the rule of purposive interpretation.”
The Court rejected the argument that judges must interpret the provision to rescue insolvency timelines. When the legislature’s words are clear, convenience cannot override legality.
The Court explained that only when words are vague, uncertain, or lead to absurdity should the judiciary look beyond literal meaning. Here, none of those conditions existed.
Literal Interpretation over Purposive Flexibility
Counsel for AGI argued that by making approval timing mandatory, the Court would paralyze the insolvency framework.
They insisted the tribunal’s interpretation, which treated the timing requirement as directory, better aligned with the “spirit of the Code”.
The Supreme Court responded with one of the most powerful passages of the judgment. It warned against vague appeals to “spirit”:
“The so-called ‘spirit of the law’ is an indeterminate construct, whose nature renders it subjective and susceptible to varied interpretations… when the language is unambiguous, as in the present matter, the courts must respect its ordinary and natural meaning.”
The Court refused to stretch the statute. It cited the well-established rule that where a statute prescribes a method, that method must be followed. The judgment brings forward an authoritative principle from precedent:
“where a statute requires to do a certain thing in a certain manner, the thing must be done in that way or not at all.”
This line is the cornerstone of the Court’s reasoning. The proviso tells applicants what to do and when to do it. The Court saw no lawful basis to redesign the timeline for anyone’s benefit.
Why Competition Approval Must Come Before Committee Approval
The Supreme Court then explained the structural logic of the Code. The Committee of Creditors makes business decisions, based on “commercial wisdom.” That wisdom is not speculative. It is based on verified information.
If Competition Commission approval comes after the Committee approves a plan, the Committee decides blindly.
The Court explained the danger in a clear sentence:
“Otherwise, an illogical situation may arise since any modifications so directed by the CCI, would be kept out of the scrutiny of the CoC and the CoC would be forced to exercise its commercial wisdom without complete information.”
A competition regulator may require divestment of assets, reduction of market concentration, or behavioral commitments. The Committee must evaluate the actual approved plan, not a hypothetical version.
If the plan receives CoC approval first and the Competition Commission demands changes later, those modifications escape the Committee’s review entirely. That structure is legally unacceptable.
The Court logically reasoned that a combination must be filtered through regulatory law first and only then be put to commercial decision-makers. Insolvency aims at revival, not monopolistic consolidation.
Arguments on Delay and Insolvency Timelines
AGI and the Committee of Creditors tried to persuade the Court by referring to the Competition Act’s maximum time frame of two hundred and ten days.
They claimed that if the approval requirement is treated as mandatory before CoC voting, insolvency cases will stall.
The Supreme Court directly examined empirical records. It found that the Competition Commission rarely takes the maximum time and most approvals are issued within twenty one to thirty working days. Massive delays occur only in exceptional scenarios involving complex antitrust implications.
The Court refused to legislate based on hypothetical worst-case timelines. It emphasized that model timelines under regulations cannot override clear statutory provisions.
The insolvency framework cannot be interpreted in a way that contradicts the Competition Act when Parliament has already integrated both through Section 31(4).
The judges made their interpretive approach unmistakable:
“The efforts must therefore be to construe any text, phrase and/or proviso in a reasonable manner without going beyond the limited range of permissibility within which the legislative meaning can be captured.”
The Court saw no “reasonable range” that would convert “prior” into “later”, “flexible”, or “optional”. Doing so would be rewriting the law, which is the domain of Parliament.
The Scrivener’s Error Argument
AGI attempted to argue that the law contains a drafting mistake. They referenced explanatory documents stating that Competition Commission approval should be prior to “approval by Adjudicating Authority”, not the Committee of Creditors.
They asked the Court to apply the doctrine of Scrivener’s Error, a principle used when legislative text accidentally misstates what Parliament intended.
The Supreme Court rejected this line of defense entirely. The judges held that no drafting mistake exists because the statutory text is consistent, coherent, and internally logical.
They stressed that if any conflict exists between explanatory memoranda and enacted provisions, the statute prevails.
The Court said plainly:
“The Court’s exercise cannot be stretched to involve a re-writing, re-casting or re-framing of the legislation or statute.”
The judiciary cannot rewrite the law just because the explanatory memorandum and notes use different phrasing. Parliament chose to write CoC into the proviso, and that choice must be respected.
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