The U.P. Glass Manufacturers Syndicate vs. Girish Sriram Juneja, IRP of Hindustan National Glass & Industries Limited
IVN. P. (IB) No. 16/KB/2022 in C.P. (IB) No. 369/KB/2020
Facts:
1.CIRP was initiated against Hindusthan National Glass & Industries Limited (“Corporate Debtor”) vide order dated 21/10/2021.
2.Applicant is challenging the Resolution Plans by Nirma Chemical Works Private Limited (“Respondent No. 3”) and AGI Greenpac Limited (“Respondent No. 4”).
Issue: Whether outsider to the CIRP of the Corporate Debtor has no locus to file IA?
Arguments:
For Applicant:
1.Counsel submitted that the acquisition of the Corporate Debtor by the Respondent No. 3 or Respondent No. 4 are likely to attract section 5 of the Competition Act, 2022 in particular section 5(a)(i)(A) or section 5(b)(i)(A) of the Competition Act, 2002
2.Respondent No. 3 is the largest producer of Soda Ash in the country and has a market share of approximately 38% and the Corporate Debtor is the largest glass manufacturer in India with an estimated market value of 40% as per the reports by IHS Market, Hence, if the Resolution plan submitted by the Respondent No. 3 is approved, it would result in an adverse effect on competition in the market.
3.Counsel emphasised on the term “any person” in section 53B of Competition Act, 2002 and submitted that any infringement or violation of the provisions of section 5 of the Competition Act, 2002 may be reported to the Competition Commission of India by any person which would include the Applicant as well
4.By virtue of section 63 and section 238 of the Code, this Adjudicating Authority has exclusive jurisdiction in the matters connected to the CIRP. Member of the Applicant are MSME Glass manufacturers whose interests would be materially affected if the Resolution Plans submitted by the Respondents are allowed.
5.No Resolution Plan which constitutes a combination under section 5 of the Competition Act, 2002 can be entertained or considered unless the approval of the Competition Commission of India is obtained, which is mandatory. The learned Counsel placed reliance on the judgment of the Hon’ble NCLAT in Bank of Maharashtra v. Videocon Industries
For Respondent:
1.Application has been filed in public interest and as representative of the Small-Scale and Medium-Scale Glass Manufacturers, the Applicant is neither a Financial Creditor nor an Operational Creditor and is not related to the Corporate Debtor hence it has no right to object to the method and manner in which the Resolution Plans are being considered by the Committee of Creditors.
2.The applicant has no locus to prefer the present application under Section 30(2) and Section 30(3) of the Code as the applicant is not the Resolution Professional or a member of the Committee of Creditor. Applicant has no locus to prefer a Public Interest Litigation under Section 60(5) of the IBC. The Adjudicating Authority has no jurisdiction to entertain the present application which has been admittedly filed in Public Interest.
3.COC is at the stage of deliberations and discussions with the prospective Resolution Applicants and the Resolution Applicant will approach the Competition Commission of India, if so required. Intervention Petition is non-maintainable and deserves to be dismissed in liminie in view of the judgment of Arcelor-Mittal India (supra.) (paragraph 84) and that the Applicant is an alien to the CIRP process.
4.Adjudicating Authority cannot adjudicate whether there is a combination under section 5 of the Competition act 2002 or not and it is solely within the domain the Competition Commission of India
5.Petition is based on surmises and conjectures and should not be entertained. The Applicant has admitted that it is not privy to what has transpired in the meetings of the Committee of Creditors and the allegations upon Respondent No. 5 are based on mere apprehensions
Decision: An outsider to the CIRP of the Corporate Debtor has no locus to file IA
Rationale:
1.It relied on the case of Bank of Maharashtra and Ors. v. Videocon Industries Ltd. and Ors. MANU/NL/0010/2022, wherein the Hon’ble NCLAT had observed that “Statutory compliances does not fall under the commercial wisdom of the CoC. Hence, the statutory compliances as mandated by proviso to Section 31(4), have to be ensured before the Resolution Plan is approved by CoC.”
2.It held that it is clear that before approval of the Resolution Plan, all the compliances have to be met by the Resolution Applicants. At this stage the Resolution Plans are under consideration of the Committee of Creditors and no decision has been arrived at with respect to the approval of the Resolution Plans.
Order copy:
