LI Network
Published on: December 11, 2023 at 10:00 IST
The National Company Law Appellate Tribunal (NCLAT) has issued a stay on the penalty imposed by the Competition Commission of India (CCI) on the state-owned power producer NTPC.
The penalty, amounting to Rs 40 lakh, was levied for the non-disclosure of NTPC’s acquisition of a 35.47% equity share capital in Ratnagiri Gas & Power Private Ltd (RGPPL).
The CCI’s order, issued on August 22, 2023, was contested by NTPC before the NCLAT, which serves as an appellate authority over CCI decisions.
A two-member bench at NCLAT has scheduled the matter for the next hearing on February 27, 2024. In the interim, the tribunal has stayed the operation of the CCI’s order. NCLAT instructed the CCI to file a response to NTPC’s appeal within four weeks, with any rejoinder from NTPC to be submitted within four weeks thereafter.
NTPC’s non-disclosure pertained to its acquisition of a 35.47% equity share capital in RGPPL, increasing its stake from 25.51% to 60.98%. CCI, in a notice issued on October 27, 2022, deemed the transaction notifiable under combination regulation.
Despite NTPC’s argument that the acquisition was part of a resolution plan to settle RGPPL’s outstanding debt, CCI held that failure to notify the transaction violated Competition Act provisions. Consequently, a penalty of Rs 40 lakh was imposed.
NTPC, maintaining that the acquisition was focused on debt settlement rather than equity control, highlighted that it did not acquire additional rights and retained joint control with GAIL and Maharashtra State Electricity Distribution Company Ltd in RGPPL.
Rejecting NTPC’s arguments, CCI concluded that the failure to notify the transaction before consummation constituted a violation of Competition Act provisions, leading to the imposed penalty. NTPC subsequently appealed this decision before the NCLAT.
