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AGI Greenpac bid for Hindustan National Glass unsustainable: Supreme Court

The case pertains to HNG, which was admitted to insolvency in October 2021. Two bidders, AGI Greenpac and Independent Sugar Corp. (INSCO), were vying for HNG

SC, Supreme Court

(Photo: PTI)

Bhavini Mishra New Delhi

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The Supreme Court on Wednesday said that AGI Greenpac Ltd’s bid for the acquisition of insolvent Hindustan National Glass (HNG) Ltd without the Competition Commission of India’s (CCI) approval is unsustainable and must be set aside.
 
“AGI Greenpac’s resolution plan is unsustainable as it failed to secure prior approval from the CCI, as mandated under the proviso to Section 31(4) of the Insolvency and Bankruptcy Code (IBC). Consequently, the approval granted by the Committee of Creditors (CoC) to the resolution plan dated October 28, 2022, without the requisite CCI approval, cannot be sustained and is hereby set aside and quashed,” the order said.
 
 
The court stated that any action taken pursuant to the resolution plan shall stand nullified, and the rights of all stakeholders shall be restored to their position prior to the approval of the resolution plan by the CoC on October 28, 2022.
 
The court further stated that fresh bids will now be considered for HNG’s acquisition.
 
The case pertains to HNG, which was admitted to insolvency in October 2021. Two bidders, AGI Greenpac and Independent Sugar Corp. (INSCO), were vying for HNG.
 
HNG holds a 60 per cent market share in the glass packaging industry in India and has manufacturing plants located in Bahadurgarh (Haryana), Rishra (West Bengal), Neemrana (Rajasthan), Naidupeta (Andhra Pradesh), Sinnar (Maharashtra), Puducherry, and Rishikesh (Uttarakhand). It caters to a wide range of industries, including pharmaceutical and wellness, cosmetics, food and beverage, and alco-beverages.
 
AGI Greenpac Ltd, the successful bidder and the second-largest company in the glass packaging and manufacturing industry in India after HNG, had proposed combining HNG with itself. INSCO had also submitted its bid in 2022.
 
INSCO secured CCI clearance in 2022, but AGI Greenpac emerged as the successful bidder chosen by the CoC, despite not having received CCI approval at the time. INSCO challenged this in the National Company Law Tribunal (NCLT).
 
The crux of the dispute was whether CCI approval was mandatory before the CoC approves a resolution plan or if it could be granted afterward.
 
The NCLT and the National Company Law Appellate Tribunal (NCLAT) both held that although CCI approval was mandatory, it did not have to be granted before the CoC's approval of the resolution plan, stating that the requirement was only directory in nature.
 
The Supreme Court, however, ruled that AGI’s resolution plan, as approved by the CoC, was in contravention of Section 6 of the Competition Act.
 
“Only after the proposed divestment by AGI Greenpac did the CCI approve the proposed combination. Importantly, much before the proposed divestment and the approval of such combination was given by the CCI, the resolution plan was placed, voted upon, and approved by the CoC. Therefore, it is apparent that AGI Greenpac’s resolution plan, as approved by the CoC, was without the requisite approval of the CCI on that date. This would be in contravention of Section 6(1) of the Competition Act for the combination in question,” the order said.
 
Under combination, a resolution applicant proposes to combine multiple companies as part of their restructuring strategy, requiring prior approval from the Competition Commission of India (CCI) due to potential competition concerns under the Competition Act, 2002.
 
AGI Greenpac shares declined as much as 19 per cent on Wednesday following the verdict.

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First Published: Jan 29 2025 | 8:23 PM IST

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