Supreme Court clarifies that section 29a(c) disqualification operates in praesenti; resolved NPAs cannot be resurrected to defeat eligibility

The Hon’ble Supreme Court, in its judgment dated May 14, 2026, in Cosmic CRF Limited v. Myotic Trading Private Limited & Ors., addressed the critical issue of whether a resolution applicant can be held ineligible under Section 29A(c) and Section 29A(j) of the Insolvency and Bankruptcy Code, 2016 (IBC) on the basis of a resolved NPA of a previously associated company where the connected person no longer holds any management, control, or shareholding.

The appeals before the Hon’ble Supreme Court arose from the orders dated July 25, 2025 and March 12, 2026 passed by the Hon’ble NCLAT, whereby the Appellant was held ineligible under Section 29A of the IBC in the Corporate Insolvency Resolution Process (CIRP) of M/s Amzen Transportation Industries Pvt. Ltd. (Corporate Debtor). The Appellant, Cosmic CRF Limited, had submitted its resolution plan on June 28, 2024 and was declared eligible under Section 29A by the Committee of Creditors (CoC) by unanimous vote (100%) on March 6, 2025. However, the NCLAT held the Appellant ineligible on the ground that the Appellant’s Managing Director, Aditya Vikram Birla, was formerly a shareholder (holding 0.09%) in Cosmic Ferro Alloys Ltd. (CFAL), whose account had been classified as NPA on December 9, 2016 and which subsequently underwent CIRP. The NCLAT further noted that Aditya Vikram Birla’s father, Ravi Birla, was the promoter of CFAL. A resolution plan submitted by a third-party Consortium of United Tradeco FZC and QVC Exports Pvt. Ltd. in respect of CFAL was approved by the NCLT on October 11, 2018, pursuant to which the entire shareholding, control, and management of CFAL vested with the new consortium.

The NCLAT, relying on the first proviso to Section 29A(c), held that the Appellant must first pay off the outstanding dues of CFAL to become eligible, notwithstanding that CFAL’s resolution plan had been approved six years prior to the Appellant’s plan submission. The NCLAT further held the Appellant ineligible under Section 29A(j) on the basis that its connected person (Aditya Vikram Birla) was ineligible under Section 29A(c).

The Hon’ble Supreme Court, while allowing the appeals and setting aside the impugned orders, held as follows:

1. In Praesenti Determination: Reaffirming the ratio in ArcelorMittal India (P) Ltd. v. Satish Kumar Gupta [(2019) 2 SCC 1], the Court held that Section 29A(c) begins with the words “at the time of submission of resolution plan” and the expression “has” therein is in praesenti. The disqualification attaches only if the resolution applicant or its connected person has an NPA as on the date of submission of the resolution plan. The relevant date in the present case was June 28, 2024.

2. Extinguishment of Dues upon Plan Approval: Once a resolution plan stands approved, all parties are bound by its terms and there are no outstanding dues or claims remaining in terms of Section 31 of the IBC. Since all remaining dues stand extinguished and the company operates on a clean slate, there is no question of such unpaid dues being “resurrected” for the purposes of gauging eligibility under Section 29A. CFAL stood fully resolved on October 11, 2018 — six years prior to the submission of the Appellant’s resolution plan. 

3. Inapplicability of First Proviso to Section 29A(c): The NCLAT’s reliance on the first proviso to Section 29A(c) — which requires payment of all overdue amounts to become eligible — was held to be a misinterpretation of ArcelorMittal. In that case, the resolution applicant held an NPA where amounts were overdue on the plan submission date; in the present case, no NPA existed in praesenti.

4. No Management or Control: Aditya Vikram Birla was never a director or promoter of CFAL and held only a miniscule shareholding of 0.09%, which stood extinguished upon approval of CFAL’s resolution plan on October 11, 2018. Post-approval, the entire management, control, and shareholding vested with the QVC Consortium. Neither Aditya Vikram Birla nor any connected person of the Appellant had any connection with CFAL as on June 28, 2024. 

5. Mere Familial Relationship Insufficient: Relying on Swiss Ribbons (P) Ltd. v. Union of India [(2019) 4 SCC 17] and Eva Agro Feeds (P) Ltd. v. Punjab National Bank [(2023) 10 SCC 189], the Court held that a mere familial relationship does not render a person ineligible unless there is actual involvement in the business activity of the resolution applicant. The fact that Ravi Birla (father of Aditya Vikram Birla) was the promoter of CFAL did not, by itself, attract disqualification under Section 29A(j). 

6. Section 29A(j) — Consequential Eligibility: Since Aditya Vikram Birla was held eligible under Section 29A(c), no disqualification under Section 29A(j) could arise, as Section 29A(j) is not a disqualification per se but merely provides that a resolution applicant becomes ineligible if its connected person is ineligible under Sections 29A(a) to (i).

Conclusion

This judgment has provided essential clarity on the temporal dimension of Section 29A(c) disqualifications, affirming that the IBC does not contemplate a regime of perpetual disqualification based on resolved NPAs. The Hon’ble Supreme Court set aside both impugned NCLAT orders, set aside all consequential actions including the publication of fresh Form-G, declared the Appellant eligible to participate in the CIRP of the Corporate Debtor, and directed that its resolution plan proceedings as considered by the CoC shall be further processed in accordance with law.