Undoing Independent Sugar: A Competition Law Lens to Section 31(4) IBC

Vikram Raj Nanda is a fourth-year student at the National Law School of India University, Bengaluru.

Introduction

Recently, the Parliament enacted the Insolvency and Bankruptcy Code (Amendment) Act, 2026, which amends the proviso to Section 31(4) in a manner that allows the Resolution Professional, in cases where a Resolution Plan involves a ‘combination’, to obtain approval from the Competition Commission of India (CCI) ‘before the resolution plan is submitted to the Adjudicating Authority’ during a Corporate Insolvency Resolution Process (CIRP). This marks an effective reversal from the earlier position, as affirmed in Independent Sugar v. Girish Sriram Juneja, which mandated prior approval of the CCI before the plan was laid before the Committee of Creditors (CoC). This position was subsequently reaffirmed in the review petition, thereby reinforcing the sequential approval mechanism under which CCI approval had to be obtained before the CoC considered the resolution plan. The amendment, however, departs from this position by permitting CCI approval to be obtained at any stage thereafter, so long as it is secured before the resolution plan is submitted to the Adjudicating Authority.

This paper supports the majority judgment in Independent Sugar and argues: first, that the claim that the sequencing mandated in Independent Sugar causes further delays is incorrect, second, that the structure and ex ante logic of the Competition Act, 2002, independently support prior CCI approval before CoC consideration and third, that deferring competition scrutiny till after CoC approval undermines the principle of deference to the CoC’s commercial wisdom, which is a fundamental thread that runs through the IBC and its judicial interpretations.

The Myth of Delay: Will the Amendment Actually Save Time?

The Report of the Select Committee on the Insolvency and Bankruptcy Bill cites ‘delay’ as being the primary justification for the proposed amendment to Section 31(4) of the IBC. This concern is frequently invoked in light of the broader problem of delays that have plagued insolvency proceedings. However, it is argued that such concerns are often not only unsupported empirically, but the proposed amendment may further end up aggravating delays (further discussed below).

The difficulty lies in the temporal mismatch created by pushing CCI approval to a late stage of the CIRP. The primary reason for this is the lack of precise delineation on when the approval of CCI is to be secured: prior to approval of the Resolution Plan by the CoC or after such approval. In this regard, Regulation 40A of the CIRP Regulations, 2016, containing the model timelines for the CIRP, stipulates that resolution plans shall be received by the CoC at most within 135 days of commencement of the CIRP (T + 135d). Then, the CoC shall approve and submit the plans at T + 165d to the AA, which in turn, is expected to approve the said plan by T + 180d.

Assuming that these timelines are adhered to, as they ideally ought to be, the effect of the proposed amendment is that the Successful Resolution Applicant (SRA) may be compelled to seek approval of the CCI in the narrow window of around 15  days between CoC approval and adjudication by the Adjudicating Authority. Evidently, such a timeline is not feasible.

More importantly, under Section 31(1) of the IBC, the Adjudicating Authority can only approve a plan that satisfies the requirements of Section 30(2), including the mandate under clause (e) that the plan not contravene any law in force. In the absence of prior CCI approval, a plan involving a notifiable combination may  fail to meet this requirement, thereby preventing approval by the Adjudicating Authority and necessitating further adjournments of the CIRP process. Hence, rather than streamlining the insolvency process to assist its adherence to the model timelines, the amendment risks introducing further bottlenecks.

It is acknowledged that in Committee of Creditors of Essar Steel India Limited v Satish Kumar Gupta, the Supreme Court diluted the rigidity of the 330-day outer limit in limited circumstances by permitting reasonable extensions where delay is not attributable to the parties. However, this concession still cannot diminish the importance of timely resolution – an integral objective of promulgating the IBC in the first place – as prolonged delay continues to erode asset value and heighten the risk of liquidation.

Additionally, the CCI’s Annual Report further highlights that CCI takes on an average 16 days for approving most combinations. In fact, in 2024-25, none of the approvals took more than 60 days in total. This trend has been continuing for several years (with the average being 16 days in 2023-24, and 21 days in 2022-23) and empirically, there is no indication that these timelines are likely to change. In sum, both empirically and as a matter of statutory design and objective, the concerns surrounding delay appear to be misplaced.

Structure of the Competition Act: Ex Ante Review and Harmonious Construction

Moving beyond these concerns even if the CIRP timelines are assumed not to be in conflict, the interpretation adopted in Independent Sugar is nevertheless supported by the structural design of the Competition Act, which not only permits, but also contemplates the initiation of competition scrutiny at an earlier stage.

Under Section 6(2) of the Act, a combination becomes notifiable after approval by the Board of Directors or on the execution of ‘any’ agreement or ‘other document’ for acquisition of control. As per the Explanation to Section 6(2), the phrase ‘other document’ is of a wide import and encompasses  any document conveying a decision or an agreement to acquire control. The notification obligation under the Competition Act is therefore triggered not by the consummation of the transaction, but by the existence of a sufficiently concrete proposal to acquire control. This stands in contrast to the IBC, under which a Resolution Plan acquires binding legal effect only upon its approval by the Adjudicating Authority under Section 31(1).

The significance of this distinction is that the Competition Act does not predicate the CCI's jurisdiction on the legal finality of the underlying transaction. Consequently, although a resolution plan remains contingent and non-binding for the purposes of the IBC, it may nevertheless constitute an ‘other document’ sufficient to trigger the notification requirement under Section 6(2).

This was recognised by the majority in Independent Sugar (p. 93), and is a point often missed by its scholarly criticism.

Additionally, this is reinforced by CCI’s decisional practice, wherein the CCI often grants approval at the stage of the submission of Resolution Plan, prior to approval by the CoC.^[1] Further, in Independent Sugar, the Court held that approval can be sought not only at the stage of submission of Resolution Plans to the CoC (T + 135d), but also prior to that at the stage of issuance of Request for Resolution Plans (T + 105d), or upon submission of plans to the Resolution Professional before they are taken up for consideration by the CoC.

This must be read in light of the object of the Act. The suspensory regime therein is an ex ante review, analysing combinations before they have attained binding legal effect.  Merger control is designed to prevent distortions to market structure before they occur, rather than to remedy anti-competitive harm ex post facto. Hence, far from creating inconsistency, this approach aligns with the ex ante logic of merger control.

Deferring to the Commercial Wisdom of the CoC

In addition to the structure of the Competition Act, the interpretation adopted by the majority in Independent Sugar is further supported by the design and the intended operation of the IBC.

One of the primary objectives of the Code was to entrust commercial  decisions to the CoC, instead of judicial forums. This is evident in the manner in which Section 31(1) and Section 61(3) of IBC are structured, allowing courts very limited grounds for interfering with the CoC’s decision.  The Supreme Court also recognised deference to the CoC’s ‘commercial wisdom’ as a foundational principle of the IBC. Notably, in Swiss Ribbons v Union of India, the Court emphasised that the CoC, composed of financial creditors, is best placed to assess the feasibility of restructuring and reorganisation of the corporate debtor and its decision should remain final.

However, the objectives pursued by the CoC and the CCI are distinct and may, in practice, conflict. The CoC is concerned with maximising the value of the corporate debtor through a commercially viable resolution, whereas the CCI is tasked with ensuring that the proposed acquisition does not substantially lessen competition.

This divergence becomes particularly apparent in the context of the failing business consideration recognised under Section 20(4)(k) of the Competition Act. While the insolvency of the target may justify permitting an otherwise anti-competitive acquisition where the business would inevitably exit the market, the CCI must first satisfy itself that the target is genuinely a failing business, that its exit is unavoidable, and that no less anti-competitive purchaser or transaction is reasonably available. These considerations are fundamentally different from those that guide the CoC, whose inquiry centres on maximising creditor recoveries and identifying the most commercially feasible resolution applicant. It is therefore entirely possible for the CoC to conclude that a particular resolution plan is commercially optimal, while the CCI, applying competition law principles, concludes that the same transaction can only be approved subject to structural modifications, such as divestitures, or that another purchaser would preserve competition more effectively.

Hence, permitting CCI approval to be sought after CoC approval may undermine the  principle of respecting the CoC’s commercial wisdom. Since the CCI may under Section 31(3) of the Competition Act, direct modifications to a combination that may involve both structural and behavioural remedies, the CoC's commercial assessment ceases to be final and instead becomes contingent upon a subsequent determination by the CCI. . In effect, this may result in a situation where a plan that has already been approved by the CoC would subsequently be altered in material respects pursuant to directions issued by the CCI. This fundamentally unsettles the finality that is sought to be awarded to the CoC’s commercial determination (vide Swiss Ribbons).  An instance of this was evident in the factual scenario of Independent Sugar itself, where the CCI approved the plan conditional on the divestment of the Rishikesh plant by AGI Greenpac. Furthermore, in the case of non-approval by the CCI, the resolution process itself may be derailed, exacerbating delay which erodes the asset value of the corporate debtor, and increases the likelihood of liquidation.

This analysis also fundamentally addresses Justice Bhatti’s dissent in Independent Sugar which proceeds on the premise that the CoC is only concerned with the ‘viability and feasibility’ of the plan, with the domain of its legality and regulatory compliance being under the purview of the Adjudicating Authority. Though correct, this does not imply that its commercial judgment can be meaningfully exercised in the absence of final and certain clarity on the legal viability of the plan. A plan that remains contingent upon CCI’s approval remains fundamentally indeterminate.

Furthermore, the contention that prior competition approval would reduce the pool of eligible resolution applicants is circular (vide Justice Bhatti’s dissent), mistaking the intended effect of the statute as the cause. The exclusion of plans that are incapable of complying with the Act is not an unintended consequence of the framework, but a deliberate and necessary feature of a resolution process that seeks to ensure that only legally and commercially viable plans are placed before the CoC for consideration.

Conclusion

In conclusion, this paper has argued that the proposed amendment to Section 31(4) of the IBC undermines both the statutory architecture and economic rationale governing insolvency resolution in India. Through an examination of CIRP timelines, the structure of the Competition Act, the principle of commercial wisdom, it has been shown that deferring competition scrutiny to a post-CoC stage neither meaningfully reduces delays nor enhances overall gains.

^[1] See R Pande, Notice of Combinations in Insolvency Resolution [2021] 14(1) NUJS Law Review, 9-10. The article undertakes an empirical assessment of the stage at which parties usually apply for CCI’s approval.