NCLAT gives NTPC breather on CCI penalty

New Delhi: The National Company Law Appellate Tribunal (NCLAT) has stayed a CCI order imposing Rs 40 lakh penalty on government-owned power giant NTPC for not disclosing its acquisition of a 35.47 per cent stake in Ratnagiri Gas & Power Private Ltd.

According to the NCLAT order, the penalty has been stayed as NTPC has submitted "Term Deposit Advice of Rs 10 lakh drawn on State Bank of India, which comes to 25 per cent of the total penalty amount".

The case is now likely to come up for hearing on February 27, 2024.

NTPC had challenged the CCI order in NCLAT, which is an appellate authority over rulings of the Competition Commission of India (CCI).

NCLAT has in its order issued this week directed CCI to file a reply over the NTPC appeal within four weeks. NTPC has also been allowed to file a rejoinder within four weeks after that.

NTPC had acquired equity shares of RGPPL in 2020 from its lenders. As a result of this acquisition, its share capital in RGPPL increased from 25.98 per cent to a majority stake of 60.98 per cent.

CCI sent a notice to NTPC to show cause since as per the Competition Act, enterprises have to take its permission before they acquire a controlling stake in another enterprise involved in the same line of business.

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 argued that it 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. However, this plea was rejected by CCI.