Independent Sugar Corporation Ltd. v. Competition Commission of India, Supreme Court, 29 January 2025

The decision that settles the sequence between merger control and the insolvency process. The proviso to Section 31(4) of the Insolvency and Bankruptcy Code, 2016 requires a resolution applicant whose plan contains a combination to obtain the approval of the Commission prior to the approval of the plan by the committee of creditors. Whether that requirement is mandatory or merely directory had divided practice, because the insolvency timeline is tight and the Commission's review takes time. By majority the Supreme Court held it to be mandatory.

1. The Question

A resolution plan for a company in insolvency frequently involves the acquisition of the corporate debtor by a resolution applicant, and where the thresholds in Section 5 are crossed that acquisition is a combination requiring notification. The proviso to Section 31(4) of the Code requires the applicant to obtain the Commission's approval before the committee of creditors approves the plan. The practice that had grown up was to obtain the approval later, before the adjudicating authority sanctioned the plan, on the footing that the requirement was directory and that insolvency is a time-bound process in which the commercial wisdom of the committee should not be delayed.

2. The Competing Arguments

	For a directory reading	For a mandatory reading
Timeline	The Code prescribes strict outer limits, and waiting for merger clearance may defeat them	A plan that cannot lawfully be implemented is worth nothing however quickly it is approved
Commercial wisdom	The committee's assessment is commercial and should not depend on a regulatory step	The committee must know whether the plan can be implemented, and on what conditions, before it votes
Conditions	Conditions imposed by the Commission can be accommodated later	Conditions may change the value of the plan materially, and a committee that has already voted cannot reassess it
Language	The provision should be read purposively in a time-bound statute	The word prior is express, and the legislature chose the sequence deliberately

3. The Decision

The requirement is mandatory. The approval of the Commission must precede the approval of the resolution plan by the committee of creditors. The word prior in the proviso is not surplusage, and the sequence it prescribes is deliberate.
The reason of substance. The committee of creditors votes on the commercial merits of a plan, and it cannot assess those merits unless it knows whether the combination will be permitted and on what conditions. Conditions such as a divestiture alter what the resolution applicant will actually acquire and what it can pay.
The consequence. A plan approved by the committee without the prior approval of the Commission cannot stand, and the process must be corrected.
The dissent. The judgment was by majority, the minority view taking the purposive approach and emphasising the time-bound character of the insolvency process.

The Commission filed a review petition, which was disposed of on 16 May 2025. Any advice on a live transaction should be given on the current position, since the practical consequences of the decision for ongoing resolution processes were the subject of further consideration.

⚠ What the decision means in practice

A resolution applicant proposing a combination must build the Commission's timeline into the insolvency timeline rather than treating merger clearance as a formality to be completed later. Three steps follow. Notifiability must be assessed at the stage the plan is being prepared, not after it is approved. The filing should be made early, using the green channel where the criteria are satisfied and pre-filing consultation where they may not be. And the plan itself should address what happens if the Commission imposes conditions, since a condition that changes the value of the acquisition after the committee has voted is precisely the difficulty the decision is directed at.

4. The Wider Point

The case belongs to the family of questions about how the Competition Act fits with other statutes. Section 62 provides that the Act is in addition to and not in derogation of other laws, so both regimes apply; what neither Section 60 nor Section 62 answers is the question of sequence, which must be decided on the language and purpose of the provisions concerned. Here the Code itself supplied the answer by using the word prior. In the sectoral regulator context the answer came from Competition Commission of India v. Bharti Airtel Ltd., (2019) 2 SCC 521, where the regulator goes first because the competition complaint cannot be decided without facts within its domain. The common lesson is that overlapping jurisdiction is resolved by ordering the steps rather than by excluding one authority.

5. Related Topics and Provisions

Topic or provision	Connection
Interface with Other Laws	Sections 60 and 62 and the sequencing question
Regulation of Combinations: Sections 5 and 6	Notification, timelines and conditional approval
Gun Jumping and Failure to Notify Compared	The consequences of proceeding without approval
Section 31(4), Insolvency and Bankruptcy Code, 2016	The provision construed
Sections 5, 6, 31 and 62, Competition Act, 2002	The merger regime and the saving of other laws