AGI Greenpac seeks review of SC order quashing acquisition of bankrupt HNGIL | Company Business News

Sanitary ware and glass container maker AGI Greenpac has sought a review of the Supreme Court’s January ruling that quashed the approval of AGI’s resolution plan for the bankrupt Hindusthan National Glass & Industries Ltd (HNGIL), citing failure to obtain prior permission from the Competition Commission of India (CCI).

In addition to the review petition that it filed on Tuesday, AGI Greenpac has also filed an application with the National Company Law Tribunal (NCLT), Kolkata bench, seeking to restrain the committee of creditors (CoC) and the resolution professional of HNGIL from taking any further action until the apex court has decided on the review plea.

Background

Kolkata-based HNGIL, India’s largest container glass manufacturer, was admitted into insolvency in October 2021 by the Kolkata bench of the NCLT. During the corporate insolvency resolution process (CIRP), two bidders—AGI Greenpac, with a market cap of ₹5,000 crore, and Bermuda-based Independent Sugar Corporation (ISC)—vied for the acquisition of HNGIL. Both had bid approximately ₹2,200 crore to acquire HNGIL.

Both the resolution plans required approval from the Competition Commission of India.

AGI requested a relaxation from the RP, allowing it to obtain the CCI approval after the assent of the committee of creditors, which the RP granted. AGI filed a notice with the CCI on 27 September 2022, but due to the high market share of the combined entity, the CCI deemed the notice invalid and directed AGI to re-file it.

HGNIL has a 60% market share of the glass packaging industry in India, catering to a wide range of industries, including pharmaceutical and wellness, cosmetics, food & beverage, and alco-beverages. Gurugram-based AGI is the second-largest company in the country’s glass packaging and manufacturing industry.

The merger between AGI Greenpac and HNGIL, which could result in a potential market share of 80-85% in the F&B segment and 45-50% in the alcoholic beverage segment, is raising a significant issue for adjudication, the Supreme Court said on 29 January.

This is because the combination of these two major players in the sector is likely to lead to an adverse effect on competition in the glass packaging industry as a whole, and specifically within the sub-segments of F&B and alcoholic beverages.

On 22 October 2022, the CoC approved the AGI resolution plan, despite AGI not having a prior CCI approval. After the CoC approval, AGI re-filed the notice with the CCI. The CCI issued a show-cause notice to AGI due to potential anti-competitive concerns, but granted conditional approval for the combination on 15 March 2023 after AGI submitted a divestment plan.

Independent Sugar Corporation challenged AGI’s resolution plan’s approval before the NCLT, arguing that CCI approval was required before the CoC approval. The NCLT rejected ISC’s application, prompting it to appeal to the NCLAT, which dismissed it. The NCLAT ruled that CCI approval before CoC approval was directory and that CCI had discretion in the approval process.

Independent Sugar Corporation then appealed to the Supreme Court, which consolidated both appeals for hearing.

The Supreme Court ruled on 29 January that AGI’s bid to acquire the insolvent HNGIL without prior approval from CCI is unsustainable and must be set aside. The Court quashed CoC’s approval of AGI’s resolution plan of 28 October 2022 as it lacked the mandatory CCI approval. The apex court also nullified any actions taken based on this plan and restored stakeholders to their positions before the CoC’s approval.

The dispute centred on whether CCI approval was required before CoC approval. Both the NCLT and NCLAT had ruled that CCI approval, though mandatory, did not need to precede CoC approval. However, the Supreme Court disagreed, ruling that AGI’s resolution plan violated Section 6 of the Competition Act, as it was approved by the CoC before obtaining CCI approval. The top court directed fresh bids for HNGIL’s acquisition to be considered.

Litigation elsewhere

The ongoing legal battle also involves the Calcutta High Court, which is hearing multiple intervention applications related to the criminal proceedings against the resolution professional, Girish Sriram Juneja, and others. Allegations of misconduct, financial improprieties, and negligence in the handling of HNGIL’s insolvency process are being raised by the HNG Industries Thozhilalar Nala Sangam, a trade union representing the workers of HNGIL.

The Calcutta High Court has granted interim relief to the petitioners in the criminal case, allowing them to appear virtually before the investigating officer.

With stakeholders divided over the approval of AGI Greenpac’s resolution plan and further legal challenges expected, the timeline for HNGIL’s resolution remains uncertain.