Resolution Applicant ineligible under Section 29A due to de facto continued control over NPA assets.

The Corporate Debtor (Amzen Transportation) entered CIRP on 04.05.2022.

Cosmic CRF Limited ("Cosmic") submitted a resolution plan but was initially flagged as ineligible by the Resolution Professional (RP) and CoC due to connections with Cosmic Ferro Alloys Limited (CFAL), an entity that was declared an NPA in 2016 and subsequently resolved under IBC with significant haircuts to creditors.

The CoC eventually declared Cosmic eligible on 06.03.2025 based on a Senior Advocate's opinion.

In a prior judgment dated 25.07.2025, the NCLAT held Cosmic ineligible.

Cosmic moved the Supreme Court, which permitted it to approach the NCLAT to point out factual errors in that judgment.

The current application seeks a recall of the ineligibility finding, primarily arguing that CFAL’s "NPA" status was extinguished by its own resolution plan, thus purging any disqualification for Cosmic’s promoters.

The Tribunal applied Section 29A of the IBC, which bars "undesirable persons" from regaining control of corporate assets.

Specifically, Section 29A(c) disqualifies persons who managed or controlled an NPA account for over a year unless they pay all overdue amounts.

It relied on ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta, which established the "see-through provision" to identify de facto control and held that ineligibility attaches at the time of plan submission.

It also applied the "substance over form" principle from Phoenix ARC Pvt. Ltd. v. Spade Financial Services Ltd., noting that commercial contrivances to shed "related party" labels do not cure substantive disqualifications.

The Tribunal found that Aditya Vikram Birla (Managing Director of Cosmic) was a de facto promoter of CFAL at the time it was classified as an NPA, holding significant direct and indirect control despite a small direct shareholding of 0.09%.

The Tribunal rejected the "clean slate" argument, stating that the regularisation of CFAL’s account occurred via a third-party resolution plan involving a public haircut, not through the promoters paying off the debt as required by the first proviso to Section 29A(c).

The Tribunal noted a "backdoor entry" attempt: Cosmic was incorporated shortly after CFAL’s resolution and immediately acquired CFAL’s primary business unit via a slump sale, while the promoters remained in CFAL's operations as executives.

Applying a purposive interpretation, the Tribunal "tore the corporate veil" to find that the same individuals who contributed to CFAL's default were attempting to acquire the Corporate Debtor.

It held that erstwhile promoters cannot bypass the bar under Section 29A(c) simply because the NPA entity was resolved through the IBC, as the statutory requirement for "payment of all overdue amounts" by the person seeking eligibility was not met.

The Tribunal directed the RP and CoC to proceed with the CIRP of Amzen Transportation using the existing four EOIs.

Additionally, it directed the IBBI to conduct an independent inquiry into the conduct of the stakeholders regarding the determination of eligibility in this case.