Whether the requirement of approval by Competition Commission of India (CCI) prior to the approval of Resolution Plan by the CoC is mandatory or directory under the proviso to Section 31(4) of IBC – Soneko Marketing Pvt. Ltd. Vs. Girish Sriram Juneja & Ors. – NCLAT New Delhi
In this landmark judgment, Hon’ble NCLAT held that:
(i) Looking to the timeline provided in the Code and that of the Competition Act and to hold that prior approval of CCI is required prior to approval of Plan by the CoC, mandatorily will lead to adverse effect on the CIRP. We may, however, observe that even if the requirement of approval by the CCI, prior to approval by the CoC is held to be ‘directory’, that does not mean that provision of Section 31(4) is not to be complied with. The proviso to Section 31(4) is clear as to what was contemplated was approval by the CCI prior to approval of CoC. Hence, in all cases the law has to be complied with. It cannot be held that since provision is there, approval by CCI has to be obtained prior to approval of Plan by the Adjudicating Authority. We have noticed above the judgments of this Tribunal where it has been laid down that approval by CCI, prior to approval by the CoC is ‘directory’ because there is no consequences provided for non-compliance of Section 31(4) proviso.
(ii) Section 31, sub-section (4) proviso has to be read to mean that though the approval by the CCI is ‘mandatory’, the approval by the CCI prior to approval of CoC is ‘directory’.
