NCLAT stays CCI penalty on NTPC for non-disclosure on acquisition of Ratnagiri Gas & Power shares

The National Company Law Appellate Tribunal (NCLAT) has stayed a CCI order that imposed a penalty on state-owned power producer NTPC for not disclosing the acquisition of 35.47 per cent equity share capital in Ratnagiri Gas & Power Private Ltd.

The Competition Commission of India on August 22, 2023, imposed a penalty of Rs 40 lakh on NTPC for non-disclosure of its acquisition of 35.47 per cent of the equity share capital in Ratnagiri Gas & Power Private Ltd (RGPPL).

This was challenged by NTPC before the NCLAT, which is an appellate authority over the orders passed by the Competition Commission of India (CCI).

A two-member bench directed to list the matter on February 27, 2024, for the next hearing on NTPC’s appeal and stayed the operation of order passed by the Competition Commission of India (CCI).

“Till next date of hearing the operation of the impugned order dated 22.08.2023 passed by the CCI shall remained stayed,” said NCLAT passed earlier this week.

NCLAT directed CCI to file a reply over NTPC appeal within four weeks and rejoinder, if any by the power producer, to be filed within four weeks thereafter.

NTPC had acquired 35.47 per cent of the equity share capital of RGPPL without notification to the CCI, increasing its stake from 25.51 per cent to 60.98 per cent.

Later, CCI on October 27, 2022, issued a notice or failure to notify the transaction under combination regulation. CCI was of the opinion that the transaction in question was a notifiable transaction.

However, NTPC had submitted that the acquisition of an additional 35.47 per cent stake in RGPPL was a part of the resolution plan for the settlement of the outstanding debt of RGPPL. Moreover, the final goal of the said transaction was not to acquire equity shares or control, but to settle RGPPL’s debt.

NTPC also did not acquire any additional rights and enjoys joint control in RGPPL along with GAIL and Maharashtra State Electricity Distribution Company Ltd even on consummation of the transaction, said PSU.

However, rejecting this, CCI held that by failure to notify the transaction before its consummation has resulted in violation of provisions of Section 6(2) of the Competition Act and therefore, is liable to a penalty under Section 43A of the Competition Act and imposed a fine of Rs 40 lakh.

This was subsequently challenged by NTPC before NCLAT.