MCA may amend IBC to scrap prior CCI approval for insolvency bids

The Ministry of Corporate Affairs is actively working on IBC amendments, likely to be introduced in the upcoming Parliament session.
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The Ministry of Corporate Affairs (MCA) is likely to amend the Insolvency and Bankruptcy Code (IBC) to clarify that prior permission of the Competition Commission of India (CCI) is not required for submitting bids under the corporate insolvency resolution process, government sources indicated. This comes in the backdrop of the Supreme Court rejecting the winning bid of AGI Greenpac for Hindustan National Glass in January due to its failure to get CCI approval before the nod of the plan by the Committee of Creditors (Coc). 

A senior government official stated that the MCA is actively working on IBC amendments, likely to be introduced in the upcoming Parliament session. The IBC framework aims for a market-linked, time-bound resolution of stressed assets, with the CoC playing a pivotal role. These amendments are part of broader efforts to enhance the insolvency ecosystem and expedite resolution timelines.

The amendment

The proposed amendment is expected to target Section 31(4) of the IBC, aiming to alleviate the burden on the CCI. This provision, inserted in 2018, mandates that a resolution plan involving a “combination” (as defined in Section 5 of the Competition Act, 2002) must secure CCI approval prior to its approval by the CoC.

In January this year, while disposing appeals related with resolution plan of the Hindustan National Glass and Industries Ltd (HNGIL), in a split decision, the three judge bench, the Supreme Court said: “The 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 IBC. Consequently, the approval granted by the 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 court emphasised the “mandatory nature” of this proviso, asserting that CCI approval for a resolution plan containing a combination “must be obtained before and consequently, the CoC’s examination and approval should be only after the CCI’s decision.”

The bench underscored that this interpretation upholds legislative intent and safeguards the integrity of the regulatory framework. It also suggested that any inconsistencies requiring dilution or departure from the intended scheme of the IBC or the Competition Act should be rectified by the legislature through appropriate measures, rather than judicial intervention.

Published on May 20, 2025