De facto control and prior NPA association through connected persons trigger Section 29A ineligibility despite corporate restructuring.

The Corporate Debtor (CD), Amzen Transportation Industries Ltd., entered CIRP on May 4, 2022.

The Appellant, Cosmic CRF Limited, submitted a resolution plan but was initially flagged for ineligibility under Section 29A due to its Managing Director, Aditya Vikram Birla’s connection with Cosmic Ferro Alloy Ltd. (CFAL), a company that had previously undergone insolvency with substantial haircuts to creditors.

Although the Committee of Creditors (CoC) later declared Cosmic eligible based on a Senior Advocate's opinion.

The NCLT dismissed a challenge by a lead member of a rival consortium (Myotic) for lack of locus.

On appeal, the NCLAT on July 25, 2025, held that while Myotic lacked locus, Cosmic was indeed ineligible under Section 29A and ordered fresh 'Form-G'.

The Supreme Court subsequently permitted the Appellant to approach the NCLAT to point out factual errors in that judgment.

The present application seeks a recall of the ineligibility finding.

The Tribunal applied Section 29A of the Insolvency and Bankruptcy Code, 2016, which bars "undesirable persons" from regaining control of corporate assets.

It relied on the Supreme Court’s interpretation in ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta, establishing that Section 29A is a "see-through provision" requiring a de facto (substantive) rather than a de jure (formal) test of control.

The Tribunal also applied the principle from Phoenix ARC Pvt. Ltd. v. Spade Financial Services Ltd., holding that commercial contrivances to shed "related party" labels cannot bypass statutory disqualifications.

Furthermore, Section 5(24A) regarding "related parties" and Regulation 36A(8) of the CIRP Regulations regarding the RP’s duty of due diligence were central to the decision.

The Tribunal found that Aditya Vikram Birla exercised significant control over CFAL at the time it was classified as an NPA (2016) and throughout its CIRP.

Although CFAL was resolved via a resolution plan in 2018, the Tribunal noted that the "first proviso" to Section 29A(c) requires the person to pay all overdue amounts to regain eligibility; here, the debt was "extinguished" via a haircut to creditors, not paid by the promoters.

Substantively, Cosmic CRF (the Appellant) was incorporated shortly after CFAL's resolution and acquired CFAL’s primary business unit via a Business Transfer Agreement, while its promoters remained in the management of the resolved CFAL as "marketing executives".

The Tribunal determined this was a "backdoor entry" attempt.

It further criticized the CoC for blindly following a Senior Advocate’s opinion without recording its own reasoned findings on the sub-sections of 29A, despite multiple expert reports (AHSK and PSA) flagging ineligibility.

It held that the "clean slate" theory does not override Section 29A disqualifications if the promoter has not personally cured the NPA default.

The Tribunal directed the RP to continue the CIRP of Amzen Transportation Industries Ltd. from the stage of the four already received EOIs.

Additionally, the IBBI was directed to conduct an independent inquiry into the conduct of the stakeholders and the CIRP process of CFAL/Amzen.

All related interim applications were disposed of.