AGI Greenpac Seeks Review Of Apex Court's HNG Verdict, Says It Unfairly Favours INSCO's Lower Bid

In the aftermath of the apex court’s rejection of AGI Greenpac’s resolution plan for the revival of Hindustan National Glass, AGI has filed a petition seeking a review of the top court's verdict on the premise that it contains patent errors coupled with serious procedural lapses.

Earlier this year, the top court had set aside AGI’s resolution plan on the ground that the company did not have prior approval from the Competition Commission of India before getting its plan approved by HNG’s committee of creditors. The court ruled that non-compliance with this mandatory condition rendered the plan unsustainable.

In its petition, AGI has contended that it has been punished for no fault of its own as it was merely following the existent law during HNG’s insolvency process, which has only now changed by virtue of the top court’s judgment.

NDTV Profit has reviewed a copy of AGI's petition.

AGI has said that the verdict should have been prospective in nature as it not only has the effect of penalising AGI’s plan for HNG’s revival, but a number of other past and existing cases.

The petition lists out 10 such cases including NBCC India’s plan for Jaypee Infratech, Punjab State Power Corporation’s plan for GVK Power, NARCL’s plan for SREI Infrastructure, and IIHL’s plan for Reliance Capital.

In addition, AGI has contended that the verdict results in the committee of creditors being presented with a fait accompli as it has no other option but to approve Independent Sugar Corporation’s resolution plan.

AGI says that its plan value was significantly higher than INSCO’s plan—by almost Rs 300 crore. “The judgment is in-effect sealing the fate of HNG- which would be forced to accept a lower bid of INSCO,” the petition states.

It has further submitted that the verdict sets a dangerous precedent where regulatory approvals take precedence over market driven insolvency resolutions, contrary to the very purpose of the IBC.

AGI has categorically stated that the top court has overlooked a material fact in the case, as much as it has ignored the fact that the committee of creditors had given its stamp of approval to AGI’s plan even after the CCI approval was obtained.

Further, the petition notes that the top court has erroneously found that there is no conflict in the timelines between the Competition Act and the IBC as there is a 30-day timeline for the CoC to grant its approval to a resolution plan, however, the CCI has a 210-day timeline.

Moreover, the petition also points out that the judgment has made an error in concluding that CCI does not take long in approving combinations. A host of instances have been annexed in the petition that shows that CCI has taken more than 120 days to grant approvals, coupled with the fact that the actual time consumed in approval of a combination could be way more than the statutory timeline of 210 days as there is provision for stopping the clock during the time parties are required to cure defects in their forms and applications.

Hindustan National Glass, or HNG, is one of India's oldest names in the container glass market. HNG was admitted into insolvency in October 2021, and its resolution has since then been marred by various controversies.

At the heart of the matter is the issue of interpretation of a particular provision, section 31(4), of the IBC.

Section 31(4) says that in cases of combination, the Competition Commission of India 'shall' approve the acquirer's resolution plan before it can be put to vote by the committee of creditors, or CoC.

A combination, under the Competition Act, refers to the acquisition of control, shares, voting rights, or assets in an enterprise engaged in a competing business, or when mergers and amalgamations between or among enterprises exceed certain thresholds set out in the Act.

Post its admittance into the corporate insolvency resolution process, two primary bidders surfaced for HNG’s acquisition. Independent Sugar Corp., or INSCO, and AGI Greenpac Ltd.

Both potential acquirers submitted their respective bids in April 2022.

INSCO got the competition regulator’s nod in September 2022. However, it was AGI’s plan that received a go-ahead from the CoC in October 2022. It is crucial to note that AGI did not have the competition regulator’s nod at this point in time.

Both, the NCLT and NCLAT, had ruled that while CCI approval is ‘mandatory,’ it doesn't necessarily have to precede CoC approval. Both tribunals said that this condition is only ‘directory’ in nature.

This prompted INSCO to move the apex court for a final and decisive verdict in the matter.