Open Access Research Article
White Black Legal – International Law Journal · ISSN 2581-8503
Reconciling Insolvency Resolution with Merger Control: The Evolution of CCI Approval Requirements under Section 31(4) of the IBC, 2016 - From the NCLAT’s Directory Approach to Independent Sugar Corporation and the IBC (Amendment) Act, 2026
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Abstract
RECONCILING INSOLVENCY RESOLUTION WITH MERGER
CONTROL: THE EVOLUTION OF CCI APPROVAL REQUIREMENTS UNDER SECTION 31(4) OF THE
IBC, 2016 - FROM THE NCLAT’S DIRECTORY APPROACH TO INDEPENDENT SUGAR
CORPORATION AND THE IBC (AMENDMENT) ACT, 2026
AUTHORED
BY - MADHUR ANAND,
AMITABH
KUMAR SAXENA & RADHIKA BADERIA
Abstract
Section 31(4) of the Insolvency and
Bankruptcy Code, 2016 sits at the fault line of two statutory regimes that
pursue different first principles: the Code’s commitment to time-bound,
value-maximising resolution, and the Competition Act, 2002’s commitment to
ex-ante control of market structure. For nearly six years after the 2018
amendment inserted a proviso requiring approval of the Competition Commission
of India for resolution plans involving a “combination”, the National Company
Law Appellate Tribunal treated the sequencing requirement - CCI approval prior
to consideration of the plan by the Committee of Creditors - as merely
directory, permitting approval at any point up to the Adjudicating Authority’s
sanction. The Supreme Court’s decision in Independent Sugar Corporation Ltd.
v Girish Sriram Juneja, 2025 repudiated that line of authority, holding the
proviso mandatory and restoring antitrust review to its intended place ahead of
the Committee of Creditors’ commercial vote. Parliament has since responded
through the Insolvency and Bankruptcy Code (Amendment) Act, 2026, which
relocates the point of mandatory CCI approval to a stage after the Committee’s
vote but before the Adjudicating Authority’s sanction. This paper traces that
doctrinal and legislative arc, evaluates the competing institutional logics
that produced it, and asks whether the 2026 amendment restores workable
coordination between insolvency and competition law or merely defers the
tension the Supreme Court sought to resolve.
I. Introduction
The Insolvency and Bankruptcy Code, 2016
(“Code”)[1]
was conceived as a single, time-bound window through which a distressed
corporate debtor could either be rescued through a resolution plan or sent to
liquidation. Speed and certainty were its organising virtues: the Code
prescribes strict timelines for the corporate insolvency resolution process
(“CIRP”), vests the Committee of Creditors (“CoC”) with wide commercial
discretion, and generally treats external regulatory approvals as matters to be
tidied up within a year of the plan’s sanction rather than as conditions
precedent to it. Yet where a resolution plan proposes the acquisition of a
corporate debtor by an existing market player, the transaction is also a
“combination” for the purposes of the Competition Act, 2002[2],
and falls within the jurisdiction of the Competition Commission of India
(“CCI”), whose mandate is to prevent transactions that are likely to cause an
appreciable adverse effect on competition. These two statutory schemes do not
merely coexist; in resolution plans involving combinations, they must operate
sequentially, and the sequencing itself decides how much weight competition
policy is given relative to the exigencies of insolvency resolution.
The statutory hinge on which this
relationship turns is the proviso to Section 31(4) of the IBC, inserted by the
Insolvency and Bankruptcy Code (Amendment) Act, 2018. It provides that where a
resolution plan contains a provision for combination, the resolution applicant
must obtain the approval of the CCI prior to the approval of such resolution
plan by the CoC.[3] Read literally, the
proviso subordinates the CoC’s commercial vote to prior antitrust clearance.
Yet between 2019 and 2025, the NCLAT consistently declined to read the proviso
literally, holding in a line of decisions beginning with Arcelor Mittal
India Pvt. Ltd. v Abhijit Guhathakurta, 2019[4] that the
requirement of obtaining CCI approval before the CoC’s vote was directory
rather than mandatory, so long as approval was secured before the resolution
plan reached the Adjudicating Authority. This “directory approach” became
settled practice, was twice left undisturbed by the Supreme Court on appeal,
and shaped the deal-making behaviour of resolution applicants, insolvency
professionals and lenders for the better part of six years.
The Supreme Court’s decision in Independent
Sugar Corporation Ltd. v Girish Sriram Juneja & Ors., 2025[5] unsettled that
consensus. Arising out of the competitive bidding for Hindustan National Glass
and Industries Ltd. (“HNGIL”), the case squarely presented the question of
whether the CoC could approve a resolution plan involving a combination before
the CCI had cleared it. By a 2:1 majority, the Court held that the proviso to
Section 31(4) is mandatory, that prior CCI approval is a jurisdictional fact
without which the CoC lacks the competence to vote on a plan involving a
combination, and that the NCLAT’s directory reading over the preceding six
years had been wrong. The judgment was immediately controversial: hailed by
competition law scholars as a restoration of ex-ante merger control, and
criticised by insolvency practitioners as a source of delay, forum uncertainty
and disincentive to bidding for distressed assets with market power
implications.
Parliament has since intervened. The
Insolvency and Bankruptcy Code (Amendment) Act, 2026[6] -
assented to by the President on 6 April 2026 and, insofar as it touches Section
31, in force from 26 May 2026, recalibrates the timing requirement that the
Supreme Court had just settled. Rather than requiring CCI approval before the
CoC’s vote, the amended provision permits CCI approval to be obtained after the
CoC approves the resolution plan, so long as it precedes the Adjudicating
Authority’s approval under Section 30(6)/31 of the Code. In substance,
Parliament has legislated around the Supreme Court’s reading without disturbing
the proposition that CCI approval is mandatory; what has changed is only where,
in the sequence of CIRP milestones, that approval must be procured.
This paper examines that full arc, from the
NCLAT’s directory jurisprudence, through the Supreme Court’s mandatory reading
in Independent Sugar, to the 2026 legislative recalibration, and asks two
connected questions. First, doctrinally, what values did each stage of this
evolution prioritise, and on what interpretive grounds? Second, and more
normatively, does the 2026 amendment achieve a durable reconciliation between
the IBC’s commitment to time-bound resolution and the Competition Act’s
commitment to ex-ante merger control, or does it merely relocate the point of
institutional friction while diluting the substantive protection the Supreme
Court sought to secure? Part II sets out the statutory architecture. Part III
traces the NCLAT’s directory jurisprudence. Part IV analyses Independent Sugar
Corporation in detail. Part V offers a critical assessment of the judgment.
Part VI examines the IBC (Amendment) Act, 2026. Part VII asks whether the
amendment reopens the sequencing gap the Supreme Court closed. Part VIII draws
broader lessons for institutional coordination between the IBBI and the CCI,
before Part IX concludes.
II. The Statutory Framework: Section 31(4) of
the IBC and Its Interface with the Competition Act, 2002
A. The 2018 Amendment and the Proviso to
Section 31(4)
As originally enacted, Section 31(4) of the
IBC required a resolution applicant, where the resolution plan approved by the
Adjudicating Authority required any approval from a person under any law for
the time being in force, to obtain such approval within one year of the
approval of the resolution plan or within the period specified in such law,
whichever is later. The provision thus treated regulatory approvals, of
whatever kind, as post-sanction formalities, consistent with the Code’s
underlying preference for keeping the resolution timeline uncluttered by
external regulatory processes.
The 2018 amendment carved out a specific
exception for combinations. It inserted a proviso stating that where the
resolution plan contains a provision for combination, as defined under Section
5 of the Competition Act, 2002, the resolution applicant must obtain the
approval of the Competition Commission of India prior to the approval of such
resolution plan by the Committee of Creditors. This was a deliberate
legislative departure from the general “approve now, comply later” architecture
of Section 31(4), and it reflected a specific policy judgment: that antitrust
review of transactions altering market structure should occur before, not
after, the CoC commits itself to a particular resolution applicant. The Report
of the Insolvency Law Committee[7]
that preceded the amendment had flagged the risk that allowing combinations to
proceed without prior competition scrutiny could permit anti-competitive
concentrations to be effected under the shelter of the insolvency process,
effectively converting the CIRP into a route around ordinary merger control.
B. “Combination” under Section 5 of the
Competition Act, 2002
A transaction qualifies as a combination
under Section 5 of the Competition Act where it crosses specified asset or
turnover thresholds and involves the acquisition of control, shares, voting
rights or assets, or a merger or amalgamation of enterprises. Combinations
exceeding these thresholds must be notified to the CCI under Section 6 and
cannot ordinarily be given effect until approved.[8]
Where a resolution plan proposes that a bidder, often an existing competitor,
supplier or customer of the corporate debtor in the same or an adjacent market,
will acquire control of the debtor’s business, the plan is a combination in
substance even though it arises through an insolvency process rather than an
ordinary share purchase agreement. The Competition Act does not carve out an
insolvency exemption from the requirement of notification and approval; the
only accommodation the statute makes for distressed transactions is the CCI’s
“green channel” mechanism for combinations unlikely to raise competition
concerns, and expedited timelines that are, in practice, still measured in
weeks rather than days.
C. The Rationale for Ex-Ante Merger Review
inside a Time-Bound Insolvency Process
The tension embedded in the proviso to
Section 31(4) is structural rather than incidental. The IBC’s efficacy is
measured substantially by the speed and finality of resolution: the statute
prescribes a maximum CIRP period, empowers the CoC to approve a plan by a
defined majority of voting share, and, through the judicially developed clean
slate” doctrine, extinguishes claims not part of the approved plan so that the
resolution applicant takes over the corporate debtor free of historical
liabilities. Competition law, by contrast, is indifferent to the urgency of a
particular transaction; its concern is the durable effect of a change in market
structure on consumers and rivals, a concern that does not diminish merely
because the target company is under financial stress. Requiring CCI clearance
before the CoC votes forces the two temporalities to collide at the earliest
possible point, before the CoC has committed itself, financially and
politically, to a resolution applicant, so that a doomed combination is filtered
out before it can consume further CIRP time. Requiring it only after the CoC
has voted, or only before the Adjudicating Authority’s sanction, defers that
collision to a later point, by which time the CoC’s commercial position, and
the market’s expectations around the winning bidder, are substantially settled.
The entire doctrinal history recounted in this paper is, in an important sense,
an argument about which of these two moments should carry the weight of
antitrust scrutiny.
III. The NCLAT’s Directory Approach: Genesis
and Consolidation
A. Arcelor Mittal India Pvt. Ltd. v Abhijit
Guhathakurta, 2019
The foundational precedent for the directory
reading arose out of the CIRP of Essar Steel India Ltd., one of the earliest
and most closely watched insolvency resolutions under the Code. ArcelorMittal’s
resolution plan received CCI approval only after the CoC had already approved
the plan, prompting a challenge that the sequence violated the proviso to
Section 31(4). The NCLAT rejected the challenge, holding that the proviso,
though requiring CCI approval as a mandatory element of a valid resolution plan,
did not mandate that such approval necessarily precede the CoC’s vote; it was
sufficient, in the Tribunal’s view, that CCI approval be secured before the
plan reached the Adjudicating Authority for sanction under Section 31(1). The
Tribunal’s reasoning rested on the practical difficulty that a resolution
applicant does not control the CCI’s timeline, and that treating the proviso as
a rigid precondition to the CoC’s vote risked stalling the CIRP indefinitely
while an application for combination approval remained pending before an
independent regulator with its own statutory clock.
B. Consolidation: Vishal Vijay Kalantri,
Makalu Trading and Related Decisions
The Arcelor Mittal position was not an
isolated aberration; it hardened into settled NCLAT doctrine over the following
years. In Vishal Vijay Kalantri v Shailen Shah[9], the Tribunal
reaffirmed that a resolution plan remains compliant with Section 30(2) and the
other provisions of the Code so long as CCI approval is obtained at any point
before the Adjudicating Authority grants sanction, even if that approval
post-dates the CoC’s vote. In Makalu Trading v Rajiv Chakraborty[10], the NCLAT
similarly held that a plan does not violate the proviso to Section 31(4) as
long as CCI clearance is secured before the plan is placed before the
Adjudicating Authority. Notably, in both Vishal Vijay Kalantri and Makalu
Trading, the Supreme Court declined to disturb the NCLAT’s view on appeal, a
fact that resolution applicants and insolvency professionals reasonably treated
as tacit endorsement of the directory approach at the highest judicial level,
even though the Court had not in either case engaged with the interpretive
question on the merits with the depth it would later bring to bear in
Independent Sugar Corporation.
C. The Underlying Logic of the Directory
Approach
Three threads run through the NCLAT’s
directory jurisprudence. First, an argument from practical control: because the
CCI’s decision-making timeline is outside the resolution applicant’s control,
and because the Competition Act itself allows for a review period that can, in
a contested case, extend well beyond the ordinary window, treating prior
approval as an absolute precondition risked converting a regulatory delay into
an existential threat to the CIRP itself, given the Code’s own outer time
limits. Second, an argument from statutory purpose: the Tribunal repeatedly
invoked the IBC’s core objective of maximising the value of the corporate
debtor’s assets through timely resolution, reasoning that a rigid reading of
the proviso, one that could force the CIRP to lapse or a viable plan to be
discarded merely because CCI clearance was still pending, would defeat rather
than serve that objective. Third, an argument from analogy to other IBC
timelines: drawing on the Supreme Court’s own treatment of the 330-day outer
limit for CIRP completion in Committee of Creditors of Essar Steel v. Satish
Kumar Gupta, 2020[11]
as directory rather than mandatory, the NCLAT reasoned that Parliament’s use of
prescriptive language elsewhere in the Code had not always been read literally
where a literal reading would frustrate the statute’s central purpose, and that
the proviso to Section 31(4) should be approached in the same spirit.
The consequence of six years of this
jurisprudence was a settled market practice: resolution professionals routinely
structured expressions of interest and requests for resolution plans on the
understanding that CCI approval could be obtained in parallel with, or even
after, the CoC’s deliberation and vote, provided it preceded final sanction.
Competing resolution applicants who secured CCI clearance early, as a matter of
prudence or competitive positioning, gained no formal procedural advantage over
rivals who left clearance for later, a state of affairs that the facts of
Independent Sugar Corporation would throw into sharp relief.
IV. Independent Sugar Corporation Ltd. v.
Girish Sriram Juneja: Facts, Holding and Reasoning
A. Facts
The dispute arose out of the CIRP of
Hindustan National Glass and Industries Ltd. (“HNGIL”), then India’s largest
glass packaging manufacturer with roughly sixty per cent of the domestic
market, admitted into insolvency on an application by DBS Bank under Section 7
of the Code in October 2021. Two resolution applicants emerged as serious
contenders: AGI Greenpac Ltd., itself the second-largest player in Indian glass
packaging, and Independent Sugar Corporation Ltd. (“INSCO”). Because AGI
Greenpac was an existing competitor of HNGIL in the same relevant market, its
proposed acquisition of HNGIL plainly constituted a combination likely to raise
appreciable adverse effects on competition in the glass packaging sector;
INSCO’s plan, by contrast, involved a diversification acquisition by a company
outside that market and posed no comparable structural concern.
The request for resolution plan issued by the
resolution professional had itself stipulated that CCI approval was a mandatory
requirement to be obtained prior to the CoC’s consideration of a plan.
Notwithstanding that stipulation, the resolution professional subsequently
relaxed the requirement by way of an email clarification, permitting CCI
approval to be obtained after the CoC’s vote but before the Adjudicating
Authority’s sanction. Acting on that relaxation, the CoC proceeded to approve
AGI Greenpac’s resolution plan with roughly ninety-eight per cent voting share
before AGI Greenpac had secured CCI clearance for the combination. INSCO’s
competing plan, which had already obtained prior CCI approval, received a lower
but still qualifying vote share of approximately eighty-eight per cent. INSCO
challenged the CoC’s approval of AGI Greenpac’s plan before the NCLT and, on
appeal, the NCLAT, arguing that the CoC lacked the competence to vote on a plan
involving a combination in the absence of prior CCI clearance.
B. Proceedings Below
Both the NCLT and, on appeal, the NCLAT ruled
against INSCO, applying the settled directory reading traceable to Arcelor
Mittal. The NCLAT held that while CCI approval was itself a mandatory
requirement for any resolution plan involving a combination, the timing
requirement, that such approval precede the CoC’s vote, was merely directory,
and that the resolution professional’s relaxation permitting post-vote
approval, so long as clearance was obtained before the Adjudicating Authority’s
sanction under Section 31(1), was consistent with the Code. INSCO appealed to
the Supreme Court.
C. The Majority Opinion
A three-judge bench comprising Justices
Hrishikesh Roy, Sudhanshu Dhulia and S.V.N. Bhatti heard the appeal. By a 2:1
majority, with Justice Roy writing for himself and Justice Dhulia, the Court
allowed INSCO’s appeal and set aside the NCLAT’s judgment. The majority’s
reasoning proceeded along several connected lines.
First, on plain meaning, the Court held that
the language of the proviso – “the resolution applicant shall obtain the
approval of the Competition Commission ... prior to the approval of such
resolution plan by the committee of creditors” - was unambiguous and left no
room for a directory construction. The use of “prior to” fixed a specific
sequential relationship between two identifiable events, the CCI’s approval and
the CoC’s vote, and the majority declined to read that sequencing requirement
out of the statute merely because compliance might, in a given case, prove
administratively inconvenient.
Second, the majority invoked the doctrine of
jurisdictional fact, reasoning that prior CCI approval was not a mere
procedural nicety but a precondition to the CoC’s very competence to vote on a
resolution plan involving a combination. Absent that jurisdictional fact, the
CoC’s purported approval of AGI Greenpac’s plan was, in the majority’s view, a
nullity rather than a mere irregularity capable of subsequent cure, a
materially stronger consequence than the NCLAT’s treatment of the defect as a
curable procedural lapse.
Third, the majority engaged directly with the
practical concern that had driven the NCLAT’s directory jurisprudence, namely,
that CCI’s own timelines are unpredictable and could stall the CIRP. The Court
found this concern to be substantially overstated on the record, observing that
CCI ordinarily disposes of combination applications well within the statutory
outer limit, with no instance before it of a combination review under the
Competition Act extending anywhere close to the maximum period permitted by that
statute. On the facts, the majority also noted specific procedural infirmities
in the CCI's own handling of AGI Greenpac’s application, including a failure to
issue the mandatory show-cause notice to HNGIL as the target company, and a
failure to obtain the target’s concurrence to a voluntary modification
involving divestment as required under the CCI’s own regulation, findings that
reinforced the majority’s conclusion that antitrust review in this case had
not, in substance, been completed at all by the time the CoC voted.
Fourth, the majority situated the 2018
amendment within its legislative history, treating the deliberate departure
from the general “approve within one year” architecture of Section 31(4) as
clear evidence that Parliament intended combinations to be treated differently
from other regulatory approvals precisely because of the risk that an
anti-competitive combination could otherwise be effected as a fait accompli
before any competition authority had passed judgment on it. Reading the proviso
as directory, the majority reasoned, would collapse this deliberate distinction
and return combinations to the default post-sanction compliance regime that
Parliament had specifically legislated to displace. The majority accordingly
overruled the line of NCLAT authority beginning with Arcelor Mittal, set aside
the CoC’s approval of AGI Greenpac’s plan, and remanded the matter to the NCLT
for reconsideration of the competing resolution plans in a manner consistent
with the mandatory reading of the proviso.
D. The Dissenting Opinion
Justice S.V.N. Bhatti dissented, favouring a
purposive over a literal construction of the proviso. Drawing on the
established Anglo-Indian canon that a statute should be interpreted so as to be
workable rather than self-defeating, the dissent argued that treating the
sequencing requirement as mandatory could, in appropriate cases, force the CIRP
to run aground on a regulatory timeline over which none of the insolvency
stakeholders had any control, undermining the Code’s objective of maximising
the value of the corporate debtor’s assets through timely resolution and
continued operation as a going concern rather than liquidation. The dissent
relied on the same body of NCLAT precedent the majority overruled, and reasoned
that the consequences of any non-compliance with the combination-approval
requirement were more appropriately assessed at the stage of the Adjudicating
Authority's sanction under Section 31(1), where both the Code’s timelines and
the Competition Act's procedural requirements could be reconciled without the
more drastic consequence of invalidating a CoC vote already taken. On the
facts, the dissent also took the view that the procedural steps taken before
the CCI, including notice to the acquirer and consideration of the divestment
proposal, were sufficient, and that the alleged defects identified by the
majority did not warrant setting aside the CoC’s approval.
V. Critical Analysis of Independent Sugar
Corporation
A. The Case for the Majority’s Approach
The majority’s reading has significant merit
as a matter of both text and policy. Textually, the proviso’s use of “prior to”
is difficult to reconcile with a construction that permits approval to be
secured at any point up to sanction; if Parliament had intended CCI approval
merely to precede the Adjudicating Authority’s order, it could readily have
said so, particularly given that the general rule in Section 31(4) already
addresses post-sanction approvals and the proviso was inserted specifically to
depart from that default. As a matter of policy, the mandatory reading also
better protects the ex-ante character of merger control. Once a CoC has voted
overwhelmingly in favour of a particular resolution applicant, the CoC’s own
incentives, commercial commitment to the winning bidder, and reluctance to
reopen a hard-won consensus among diverse financial creditors, make it
structurally difficult for the CoC, the resolution professional or even the
Adjudicating Authority to treat a subsequent adverse CCI finding as anything other
than a crisis to be worked around, rather than a substantive veto to be
respected. Requiring clearance before the vote removes that structural bias by
forcing the market-structure question to be answered while the CoC’s position
remains genuinely open. The majority’s finding that CCI review typically
concludes well within CIRP timelines, and its identification of specific
procedural shortcuts in AGI Greenpac’s own CCI process, further undercut the
empirical premise, chronic, unpredictable CCI delay, on which the entire
directory line of authority had rested for six years.
B. The Case for Caution: Costs to the
Insolvency Process
The judgment nonetheless imposes real costs
on the resolution process that commentators have not been slow to identify.[12]
First, it introduces a sequencing rigidity that assumes resolution applicants
can, and will, seek CCI approval for a transaction whose final commercial
terms, and indeed whose ultimate viability as against competing plans, are not
yet settled, since the CoC has not yet voted. [13]A
resolution applicant may be reluctant to commit the time and expense of a full
combination filing, including any divestment or modification proposals the CCI
may require, before knowing whether its plan will in fact secure the requisite
CoC majority; conversely, requiring every serious combination-implicated bidder
to file in parallel, on a purely contingent basis, multiplies regulatory cost
across a competitive process in which only one bidder will ultimately prevail.
Second, the ruling deepens the practical entanglement of two regulators, the
Insolvency and Bankruptcy Board of India’s overall CIRP architecture and the
CCI’s independent statutory timeline, without any corresponding mechanism for
institutional coordination between them; the absence of any protocol for
expedited or insolvency-specific review before the CCI, beyond its general
green-channel mechanism, means that the burden of reconciling the two timelines
falls entirely on resolution applicants and resolution professionals rather
than on the regulators themselves. Third, by treating the defect as
jurisdictional rather than curable, the majority’s approach risks unwinding CoC
votes taken in good-faith reliance on six years of settled NCLAT practice,
generating exactly the kind of retrospective uncertainty and relitigation of
concluded processes that the Code’s finality-oriented architecture is designed
to prevent, a concern the Court sought to manage through remand rather than
outright annulment, but one that persisted for pending and recently concluded
resolutions structured on the old understanding.
C. A Comparative Note
The tension the Court confronted is not
unique to India. Merger-control regimes elsewhere generally do not create
bespoke insolvency exceptions from ex-ante notification requirements, though
several build in expedited procedures or substantive accommodations for
distressed transactions. The European Union’s merger control framework permits,
in appropriate circumstances, a “failing firm” defence under which a
transaction that would otherwise raise competition concerns may nonetheless be
cleared where the target would in any event have exited the market absent the
merger and no less anti-competitive alternative purchaser existed; the
doctrine, however, operates within the Commission’s ordinary ex-ante review
rather than by dispensing with prior clearance altogether. United States
antitrust enforcers likewise generally insist on compliance with the
Hart-Scott-Rodino pre-merger notification regime even for acquisitions arising
out of Chapter 11 proceedings, while accommodating the bankruptcy court’s own
timeline through expedited review where the target’s ongoing viability is
genuinely at risk. The broad international pattern, in other words, favours
preserving ex-ante review while building institutional flexibility into its
timing and substantive tests - a pattern that lends comparative support to the
Independent Sugar Corporation majority’s insistence on the primacy of prior
clearance, even as it also suggests that India’s framework, both before and
after the 2026 amendment, remains comparatively under-developed in the
mechanisms available to reconcile that primacy with insolvency’s own time
pressures.
VI. The Legislative Response: The IBC
(Amendment) Act, 2026
A. Legislative Background
The Insolvency and Bankruptcy (Amendment)
Bill, 2025 was introduced in the Lok Sabha on 12 August 2025, roughly eighteen
months after Independent Sugar Corporation was decided, as part of a broader
package of reforms addressing admission timelines, CoC oversight, liquidation
supervision, avoidance transactions, and new mechanisms for creditor-initiated
resolution and group and cross-border insolvency.[14]
The Bill received the assent of both Houses of Parliament and was signed into
law by the President on 6 April 2026 as Act No. 6 of 2026, styled the
Insolvency and Bankruptcy Code (Amendment) Act, 2026.[15]
The provisions touching Section 31 and the CCI-approval sequencing requirement
came into force on 26 May 2026.
B. The Amendment to the Section 31(4) Proviso
The central change, for present purposes, is
a recalibration of the timing requirement that Independent Sugar Corporation
had just settled. Rather than requiring CCI approval before the CoC’s vote, the
amended framework permits a resolution applicant to obtain CCI approval after
the CoC has approved the resolution plan, provided that such approval is
secured before the Adjudicating Authority grants its approval to the plan.[16]
Commentary on the amendment has described this change interchangeably as an
amendment to the proviso to Section 31(4) itself and as the insertion of a new
sub-section (5) dealing specifically with the timing of CCI approvals[17];
the underlying substance, however, is consistent across accounts, Parliament
has moved the mandatory point of CCI clearance from before the CoC’s vote to
before the Adjudicating Authority’s sanction, restoring, in effect, the
sequencing that the NCLAT’s directory jurisprudence had permitted as a matter
of judicial interpretation, but now doing so as a matter of express statutory
text rather than contested construction.
The amendment also codifies, in newly
inserted provisions associated with Section 31, the “clean slate” doctrine that
the Supreme Court had earlier articulated in Ghanashyam Mishra & Sons
Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., 2021[18], namely, that
upon the Adjudicating Authority’s approval of a resolution plan, all claims not
forming part of the approved plan stand extinguished, and no proceeding in
respect of such claims may thereafter be initiated or continued against the
corporate debtor or the resolution applicant. Related provisions clarify that
licences, permits, registrations, quotas, concessions and similar statutory
grants held by the corporate debtor are not to be suspended or terminated on
account of the insolvency process, so long as the corporate debtor or the resolution
applicant continues to comply with the applicable conditions, a change directed
at a separate but related practical difficulty long faced by resolution
applicants in regulated sectors. Notably, the amendment provides for
retrospective application of the clean-slate provisions to resolution plans
approved on or after 28 May 2016, the date the Code itself came into force,
except in respect of matters that have already attained finality, a deliberate
legislative attempt to stabilise the legal position for the very large number
of resolutions concluded over the Code’s first decade.
C. Other Related Timeline Reforms
The 2026 Amendment Act makes several further
changes to Section 31 that bear on the same underlying concern with process
certainty.[19] A new proviso permits
phased approval of a resolution plan, allowing the Adjudicating Authority, on
an application made by the resolution professional together with CoC approval
by the requisite voting threshold, to approve the operative or implementation
portions of a plan first and the manner of distribution of assets separately
within a subsequent thirty-day window, a mechanism aimed at preventing
distribution-related disputes from holding up the substantive handover of the
corporate debtor’s business. A newly inserted sub-section requires the
Adjudicating Authority to approve or reject a resolution plan within thirty
days of receiving the resolution professional’s application, and to record
reasons for any delay beyond that period. The amendment further requires the
Adjudicating Authority to give the CoC notice and an opportunity to rectify
defects in a resolution plan before rejecting it outright, reducing the risk
that curable procedural infirmities, of exactly the kind identified in
Independent Sugar Corporation itself, result in the wholesale collapse of an
otherwise viable resolution.
VII. Does the 2026 Amendment Reopen the
Sequencing Gap the Supreme Court Closed?
The central analytical question posed by the
2026 amendment is whether it restores, by statute, the very sequencing that
Independent Sugar Corporation held to be unlawful, or whether it strikes a
materially different and more defensible balance. The answer is qualified. On
one view, the amendment simply reinstates the NCLAT’s directory position under
a different formal label: CCI approval is once again permitted after the CoC
has committed itself to a resolution applicant, meaning that the moment at which
the Committee’s incentives are most likely to favour rationalising or working
around an adverse or delayed CCI outcome, after, rather than before, its vote,
is restored as the operative sequence. Recent commentary on the amendment has
characterised this as an erosion of the ex-ante character of antitrust scrutiny
that the Supreme Court had insisted upon, arguing that moving substantive
competition review to a point after the CoC’s commercial position is already
settled reduces merger control, in practical effect, to a confirmatory rather
than a genuinely gatekeeping function, even though it remains, formally, a
precondition to the Adjudicating Authority’s final sanction.[20]
On another view, however, the amendment is
meaningfully different from the pre-Independent Sugar Corporation position in
at least two respects. First, unlike the NCLAT’s directory construction, which
rested on judicial interpretation of ambiguous statutory language and could, as
the Supreme Court itself demonstrated, be revisited and overturned, the 2026
amendment fixes the sequencing requirement in clear statutory text, removing at
a stroke the interpretive uncertainty that had made the pre-2025 position vulnerable
to exactly the kind of challenge INSCO successfully mounted. Second, and more
substantively, the amendment preserves a genuine backstop: because CCI approval
remains mandatory before the Adjudicating Authority’s sanction, a combination
that the CCI ultimately declines to approve, or approves only subject to
conditions the CoC’s chosen applicant is unwilling or unable to meet, cannot be
given legal effect through the insolvency process regardless of how
emphatically the CoC has voted in its favour. The Adjudicating Authority,
unlike the CoC, is a judicial body less susceptible to the sunk-cost dynamics
that make it structurally difficult for creditors to walk back a concluded
commercial vote, and vesting it with the task of confirming CCI compliance
before final sanction retains at least the formal capacity to prevent an
anti-competitive combination from being consummated.
The more persuasive reading, on balance, is
that the 2026 amendment does not simply restore the pre-Independent Sugar
Corporation status quo, but it does dilute the substantive protection the
Supreme Court’s ruling was designed to secure. The practical reality of
insolvency resolution is that once a CoC has voted with an overwhelming
majority for a particular resolution applicant, considerable institutional,
financial and reputational momentum accumulates behind that choice; an adverse
or heavily conditioned CCI decision arriving only after that vote, however
formally decisive at the Adjudicating Authority stage, will predictably
generate pressure, from the CoC, from the resolution applicant, and from the
exigencies of the Code’s own timelines, to seek accommodation with the CCIs
concerns rather than to discard a resolution plan the creditors have already
endorsed by an overwhelming margin. In this sense, the amendment trades the
doctrinal clarity and behavioural discipline of ex-ante gatekeeping, which Independent
Sugar Corporation sought to install, for the administrative convenience of
allowing resolution applicants to defer costly and contingent regulatory
filings until their plans have secured a measure of commercial validation, a
trade Parliament was entitled to make, but one that should be understood for
what it is, rather than described merely as a technical timing adjustment.
VIII. Toward a Durable Reconciliation:
Institutional Coordination between the IBBI and the CCI
The recurring lesson of this doctrinal
history, from Arcelor Mittal through Independent Sugar Corporation to the 2026
amendment, is that sequencing rules alone, however carefully calibrated, cannot
fully substitute for institutional coordination between the two regulators
whose jurisdictions the proviso to Section 31(4) attempts to reconcile. Several
structural reforms, none of which the 2026 amendment attempts, would
meaningfully reduce the recurring friction this paper has traced.
First, a statutory or regulatory protocol
between the IBBI and the CCI, whether through a formal memorandum of
understanding, a standing liaison mechanism, or amendments to the CCI’s own
regulations, could establish a genuinely expedited review track specifically
for combinations arising out of insolvency proceedings, distinct from and
faster than the CCI’s general green-channel mechanism, with defined outer
timelines calibrated to the Code’s own CIRP milestones rather than to the
Competition Act’s ordinary review periods. Second, resolution professionals
could be required, at the request-for-resolution-plan stage, to identify
prospective bidders whose proposed acquisition would likely constitute a combination,
prompting early and parallel engagement with the CCI well before the CoC’s vote
regardless of which sequencing rule technically governs the ultimate approval,
so that the practical burden of dual-track compliance is distributed across the
bidding process rather than concentrated at a single procedural chokepoint.
Third, the CCI could be given express statutory standing to intervene, or to be
heard, before the Adjudicating Authority at the sanction stage in any
resolution plan involving a combination, rather than relying solely on the
resolution applicant’s own representations as to the status of CCI proceedings,
a change that would strengthen precisely the backstop function on which the
post-2026 sequencing now principally depends. Fourth, procedural failures of
the kind the Court identified in Independent Sugar Corporation itself, a missed
show-cause notice to the target company, or an unaddressed requirement of
target concurrence to a divestment proposal, point to a need for the CCI to
develop insolvency-specific procedural guidance addressing how its ordinary
combination-review procedures should be adapted to the multi-party,
competitively sensitive context of a CIRP, in which the target company’s
management is typically displaced by a resolution professional with divided
loyalties among competing bidders.
None of these reforms require Parliament to
revisit the sequencing question yet again; they operate instead at the level of
institutional design, seeking to narrow the practical gap between the Code's
insistence on speed and the Competition Act’s insistence on prior scrutiny,
regardless of precisely where in the CIRP timeline that scrutiny is formally
required to occur. Absent such coordination, the sequencing debate this paper
has traced is likely to recur in some new form, whether through further litigation
over the 2026 amendment’s own text, through renewed pressure for legislative
revision should a high-profile combination be blocked or unwound late in the
CIRP process, or through continued ad hoc accommodation by resolution
professionals operating, as in Independent Sugar Corporation itself, at the
margins of what the statute strictly permits.
IX. Conclusion
The relationship between insolvency
resolution and merger control under Section 31(4) of the IBC has moved through
three distinct phases in less than a decade. The NCLAT’s directory
jurisprudence, consolidated across Arcelor Mittal, Vishal Vijay Kalantri and
Makalu Trading, prioritised the Code’s commitment to time-bound resolution,
permitting CCI approval to be obtained at any point up to the Adjudicating
Authority’s sanction and treating the proviso’s sequencing language as
aspirational rather than binding. The Supreme Court’s decision in Independent
Sugar Corporation Ltd. v. Girish Sriram Juneja repudiated that approach on both
textual and policy grounds, restoring the primacy of ex-ante antitrust review
by holding that CCI approval must precede the CoC’s vote as a jurisdictional
precondition to that vote’s validity, a holding that, whatever its costs in
process certainty, took seriously Parliament’s deliberate 2018 departure from
the Code’s general treatment of regulatory approvals. The Insolvency and Bankruptcy
Code (Amendment) Act, 2026 has now legislated a third position: CCI approval
remains mandatory, but the point at which it must be secured has been moved
back to a stage after the CoC's vote and before the Adjudicating Authority’s
sanction, restoring much of the practical sequencing the Supreme Court had
rejected while retaining, at least in form, a final regulatory backstop before
any resolution plan involving a combination can take legal effect.
Whether this settlement proves durable will
depend less on the precise wording of the amended proviso than on whether the
institutional gap the entire saga has exposed, the absence of any structured
coordination between the IBBI and the CCI, is finally addressed. Sequencing
rules can allocate the burden of accommodating two incompatible timelines, but
they cannot, by themselves, dissolve the underlying incompatibility between a
resolution process built for speed and a competition regime built for
deliberation. Until that institutional gap is closed, the pendulum traced in
this paper, from directory to mandatory, to a legislated middle ground, is
unlikely to have found its final resting point.
[2] The Competition Act 2002.
[3] Insolvency and Bankruptcy Code 2016, s 31(4) proviso, inserted by the
Insolvency and Bankruptcy Code (Amendment) Act 2018, s 15.
[5] Independent Sugar Corporation Ltd v Girish Sriram Juneja, Civil Appeal No 6071 of 2023, (2025) INSC 124 (SC).
[6] Insolvency and
Bankruptcy Code (Amendment) Act 2026 (Act No 6 of 2026), received Presidential
assent on 6 April 2026; ss touching Section 31 in force from 26 May 2026. See
ibclaw.in, ‘President Assents to Insolvency and Bankruptcy Code (Amendment) Act
2026’ (7 April 2026); LKS Attorneys, 'Insolvency and Bankruptcy Code
(Amendment) Act, 2026’ (13 April 2026).
[7] Government of India,
Ministry of Corporate Affairs, Report of the Insolvency Law Committee (March
2018) paras 8.1-8.7.
[9] Vishal Vijay Kalantri v Shailen Shah, Company Appeal (AT) (Insolvency) No 466 of 2020, (2020) SCC OnLine
NCLAT 1013.
[12] Anwesha Nanda and Suprava Sahu, ‘A Hollow Victory? IBC vs CCI: How
the SC Ruling May Complicate Resolution’ (IBC Laws, 2 April 2025).
[13] ‘Supreme Court Ruling Shakes Up Insolvency and Competition Approvals
in India’ (Kluwer Competition Law Blog).
[14] Insolvency and
Bankruptcy (Amendment) Bill 2025, Bill No 107 of 2025, introduced in the Lok
Sabha on 12 August 2025.
[17] LKS Attorneys, ‘Insolvency and Bankruptcy Code (Amendment) Act, 2026’
(13 April 2026); see also Lexology, ‘Insolvency and Bankruptcy Code (Amendment)
Act, 2026’ (13 April 2026).
[20] ‘Legislating Around The Court: The IBC Amendment Act, 2026 And The
Erosion Of Ex-Ante Antitrust Scrutiny In Insolvency Resolution’ (IJLLR).
How to Cite This Article
MADHUR ANAND, AMITABH KUMAR SAXENA, RADHIKA BADERIA, Reconciling Insolvency Resolution with Merger Control: The Evolution of CCI Approval Requirements under Section 31(4) of the IBC, 2016 - From the NCLAT’s Directory Approach to Independent Sugar Corporation and the IBC (Amendment) Act, 2026., White Black Legal – International Law Journal, ISSN: 2581-8503, Vol. Volume 4, Issue VOLUME 4 ISSUE 2, October 2026, pp. 413-432. Available at: https://www.whiteblacklegal.co.in/details/reconciling-insolvency-resolution-with-merger-control-the-evolution-of-cci-approval-requirements-under-section-314-of-the-ibc-2016-from-the-nclats-directory-approach-to-independent-sugar-corporation-and-the-ibc-amendment-act-2026
Author & Publication Record
Authors: MADHUR ANAND, AMITABH KUMAR SAXENA & RADHIKA BADERIA
Registration ID: 107151 | Published Paper ID: WBL7151, WBL7152 & WBL7153
Year: Oct- 2026 | Volume: 4 | Issue: 2
Approved ISSN: 2581-8503 | Country: Delhi, India
Page No.: 413-432
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