Hindustan National Glass and Industries Limited had once been the dominant name in India's container-glass industry. By the time the insolvency proceedings concluded, it had shed that status along with most else. The resolution plan that emerged pointed toward AGI Greenpac as the acquirer — a transaction that would concentrate a substantial share of India's container-glass market in a single pair of hands.

That concentration was precisely what the Competition Commission of India exists to evaluate. The question the Supreme Court was asked was simpler: did the Committee of Creditors have the authority to vote before the competition authority had finished its review?

The answer, by majority, was no.

The Problem the Statute Foresaw

Section 31(4) of the Insolvency and Bankruptcy Code does not leave much room for creative reading. It states that a resolution applicant shall obtain the approval of the Competition Commission of India, where required, "prior to the approval of such resolution plan by the Committee of Creditors." The word the Supreme Court was asked to interpret was "prior" — specifically, whether it was a mandatory pre-condition or a procedural direction that could be satisfied later without vitiating a vote already cast.

The NCLT and NCLAT had both found no infirmity in the sequence actually followed. The CoC had voted, approving the AGI Greenpac plan. CCI clearance came afterward, conditional on structural remedies — divestitures and behavioural commitments designed to reduce the concentration effect. On the tribunals' analysis, this was close enough: the statute's purpose was to ensure competition review happened, and it had happened.

The Supreme Court's majority disagreed, and the reasoning goes deeper than textual literalism.

The Structural Problem With Voting First

The majority's concern was not primarily about words. It was about the nature of the decision the CoC is making and the information it needs to make it properly.

A Committee of Creditors exercises what the IBC calls "commercial wisdom." That formulation has accumulated considerable weight in the case law — courts have been reluctant to second-guess commercial decisions that creditors, as financially sophisticated parties with their money at stake, are best placed to make. But commercial wisdom is only as reliable as the information it is applied to.

When a CoC votes on a resolution plan before competition clearance is obtained, it is voting on a plan that may not survive in the form presented. CCI clearance, when it comes, may require structural remedies — asset sales, joint venture restrictions, governance conditions — that alter the economics of the transaction. The plan the creditors evaluated and the plan that ultimately gets implemented may be materially different documents. The commercial wisdom exercised at the vote may bear no relationship to the transaction that actually closes.

This is not a technical defect that can be ratified after the fact. The creditors voted on information that was, at the moment of the vote, incomplete in a legally significant way. The mandatory sequence in Section 31(4) exists precisely to prevent that.

A Dissent Worth Noting

Justice Dhulia agreed with the majority on principle but parted ways on remedy. His concern was practical: the parties had proceeded in good faith, the CIRP timelines had been met, the resolution plan had received regulatory attention even if in the wrong order, and the creditors of an already-distressed company stood to lose further value from prolonged uncertainty.

His preferred outcome would have applied the ruling prospectively — confirming the correct sequence for future cases while leaving AGI Greenpac undisturbed. The majority declined that route. The correct sequence was not merely aspirational; it was a statutory pre-condition, and a plan that had not satisfied it could not simply be grandfathered on grounds of inconvenience.

The remedy: the approvals were set aside. The CoC was directed to reconsider AGI Greenpac's plan alongside the competing bid from Independent Sugar Corporation on a level record — with competition-law positions fixed first, so that creditors would know exactly what they were voting on.

What the Ruling Means for the CIRP Process

The practical consequence is a structural shift in how insolvency timelines must be planned. Competition filings cannot be treated as a parallel-track activity to be completed around the time the CoC is deliberating. They must be completed before the CoC deliberates. Where a proposed transaction is likely to attract CCI review — particularly in concentrated sectors — the resolution professional and resolution applicants need to account for that review period at the outset of the process, not as a closing condition.

This has an uncomfortable implication for CIRP timelines, which are already under pressure. CCI merger review can take months; conditional clearances requiring structural remedies can take considerably longer. The Supreme Court's ruling does not resolve that tension — it simply holds that the sequence is mandatory and the consequences of inverting it are real.

The Takeaway

For resolution applicants whose transactions require competition clearance, the filing must begin early — not when the CoC vote is being scheduled, but as soon as the plan has enough definite shape to be filed. The cost of a late filing is not a procedural irregularity that can be corrected. It is a vote that may be set aside and an opportunity that may be reopened to competing bidders.

For competing bidders who lose a CIRP contest, plans approved without prior CCI clearance are now vulnerable to challenge in a way that NCLT and NCLAT had previously declined to recognise. The correct sequence is not a technicality — it is the condition that makes the CoC's commercial wisdom meaningful at all.