Person not eligible to be resolution applicant
Section 29A of the Insolvency and Bankruptcy Code, 2016 deals with person not eligible to be resolution applicant. A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person-- (a) is an undischarged insolvent; The Act was enacted on 28 May 2016.
1[29A. Person not eligible to be resolution applicant. --A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person--
(a) is an undischarged insolvent;
(b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949;
(c) 2[at the time of submission of the resolution plan has an account,] or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 1949) 3[or the guidelines of a financial sector regulator issued under any other law for the time being in force,] and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor:
Provided that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of resolution plan;
4[Provided further that nothing in this clause shall apply to a resolution applicant where such applicant is a financial entity and is not a related party to the corporate debtor.
Explanation. I.--For the purposes of this proviso, the expression "related party" shall not include a financial entity, regulated by a financial sector regulator, if it is a financial creditor of the corporate debtor and is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares 12[or completion of such transactions as may be prescribed,] prior to the insolvency commencement date.
Explanation. II.--For the purposes of this clause, where a resolution applicant has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset and such account was acquired pursuant to a prior resolution plan approved under this Code, then, the provisions of this clause shall not apply to such resolution applicant for a period of three years from the date of approval of such resolution plan by the Adjudicating Authority under this Code;]
5[(d) has been convicted for any offence punishable with imprisonment--
(i) for two years or more under any Act specified under the Twelfth Schedule; or
(ii) for seven years or more under any other law for the time being in force:
Provided that this clause shall not apply to a person after the expiry of a period of two years from the date of his release from imprisonment:
Provided further that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I;]
(e) is disqualified to act as a director under the Companies Act, 2013;
6[Provided that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I;]
(f) is prohibited by the Securities and Exchange Board of India from trading in securities or accessing the securities markets;
(g) has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the Adjudicating Authority under this Code;
7[Provided that this clause shall not apply if a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place prior to the acquisition of the corporate debtor by the resolution applicant pursuant to a resolution plan approved under this Code or pursuant to a scheme or plan approved by a financial sector regulator or a court, and such resolution applicant has not otherwise contributed to the preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction;]
(h) has executed 8[a guarantee] in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this Code 3[and such guarantee has been invoked by the creditor and remains unpaid in full or part];
(i) 9[is] subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction outside India; or
(j) has a connected person not eligible under clauses (a) to (i)
10[Explanation. I] -- For the purposes of this clause, the expression connected person means--
(i) any person who is the promoter or in the management or control of the resolution applicant; or
(ii) any person who shall be the promoter or in management or control of the business of the corporate debtor during the implementation of the resolution plan; or
(iii) the holding company, subsidiary company, associate company or related party of a person referred to in clauses (i) and (ii):
11[Provided that nothing in clause (iii) of Explanation I shall apply to a resolution applicant where such applicant is a financial entity and is not a related party of the corporate debtor:
Provided further that the expression related party shall not include a financial entity, regulated by a financial sector regulator, if it is a financial creditor of the corporate debtor and is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares 12[or completion of such transactions as may be prescribed,] prior to the insolvency commencement date;]
13[Explanation. II.--For the purposes of this section, "financial entity" shall mean the following entities which meet such criteria or conditions as the Central Government may, in consultation with the financial sector regulator, notify in this behalf, namely:--
(a) a scheduled bank;
(b) any entity regulated by a foreign central bank or a securities market regulator or other financial sector regulator of a jurisdiction outside India which jurisdiction is compliant with the Financial Action Task Force Standards and is a signatory to the International Organisation of Securities Commissions Multilateral Memorandum of Understanding;
(c) any investment vehicle, registered foreign institutional investor, registered foreign portfolio investor or a foreign venture capital investor, where the terms shall have the meaning assigned to them in regulation 2 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 made under the Foreign Exchange Management Act, 1999 (42 of 1999);
(d) an asset reconstruction company registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);
(e) an Alternate Investment Fund registered with the Securities and Exchange Board of India;
(f) such categories of persons as may be notified by the Central Government.].]
Section 29A, The Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Referred to by 5
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
-
Swiss Ribbons Pvt. Ltd. v. Union of India
Court's Decision & Legal Precedent
The Insolvency and Bankruptcy Code, 2016 withstands Article 14 challenge. Classification of financial versus operational creditors, the committee-of-creditors voting structure, and section 29A ineligibility are not manifestly arbitrary. Economic legislation receives judicial hands-off within constitutional bounds.
-
State Bank of India vs Rajesh Agarwal
Court's Decision & Legal Precedent
The principles of natural justice, particularly the rule of audi alteram partem (right to be heard), must be read into the provisions of the RBI Master Directions on Frauds (Clauses 8.9.4 and 8.9.5) notwithstanding the statutory silence on this requirement, because: (1) classification of a borrower's account as fraudulent constitutes an administrative action entailing serious civil consequences (five-year debarment from institutional finance, prohibition on restructuring, criminal prosecution) which directly impact the fundamental right to carry on business under Article 19(1)(g); (2) debarment is analogous to blacklisting, and established jurisprudence requires opportunity of hearing before blacklisting; (3) the civil consequences are grave and no full review or appeal mechanism is available to challenge the fraud classification decision; (4) the six-month time frame in the Master Directions provides sufficient time and practical scope for giving notice, receiving borrower's response, and conducting joint lender forum meetings without paralyzing the administrative process; (5) reading in audi alteram partem is necessary to save the directions from the vice of arbitrariness and ensure compliance with Article 14 of the Constitution which requires fair procedure when administrative action affects substantial rights; (6) statutory silence on a procedural requirement should be interpreted to include such requirement where substantial rights of parties are substantially affected. Therefore, before classifying a borrower's account as fraudulent, lender banks must: furnish a copy of the forensic audit report to the borrower, provide a reasonable opportunity for the borrower to submit written representations and arguments against the audit findings, hold personal hearing if requested, and issue a reasoned order explaining the basis for the fraud classification decision.
On this section: Willful defaulters cannot be resolution applicants; fraudulent borrowers face similar restrictions and consequences
-
State Bank Of India vs Rajesh Agarwal
Court's Decision & Legal Precedent
The principles of natural justice, particularly the rule of audi alteram partem, must be read into Clauses 8.9.4 and 8.9.5 of the RBI Master Directions on Frauds (2016) to save them from the vice of arbitrariness and constitutional invalidity under Article 14 of the Constitution. Since classification of a borrower's account as fraud entails serious civil consequences—including five-year debarment from institutional finance, prohibition on restructuring, and reporting to criminal investigation agencies—which affect the fundamental right to carry on business, lender banks must furnish a copy of the forensic audit report to the borrower, provide a reasonable opportunity to submit a written representation, and issue a reasoned order addressing the borrower's objections before classifying the account as fraudulent. The statutory silence in the Master Directions regarding a hearing opportunity does not imply exclusion of natural justice, and the six-month timeline for completing fraud classification procedures provides adequate scope for incorporating fair hearing procedures without obstructing the legitimate objective of prompt fraud detection and reporting.
On this section: Prevents willful defaulters from being resolution applicants; Court noted similar penal consequences flow to fraudulent borrowers as to willful defaulters, justifying similar procedural protections
-
State Bank Of India vs Reserve Bank Of India
Court's Decision & Legal Precedent
The principles of natural justice, particularly the rule of audi alteram partem, must be necessarily read into the Master Directions on Frauds (specifically Clauses 8.9.4 and 8.9.5) to save the directions from the vice of arbitrariness. Since classification of a borrower's account as fraudulent entails serious civil consequences including debarment from institutional finance for five years (a form of blacklisting), statutory silence in the directions does not imply exclusion of natural justice. Lender banks must furnish borrowers with a copy of forensic audit reports and provide a reasonable opportunity to submit representations before classifying accounts as fraudulent. The banks must issue reasoned orders addressing borrower objections. This requirement is constitutionally mandated under Article 14 of the Indian Constitution and does not obstruct the six-month timeline contemplated for fraud detection and reporting.
On this section: Cited regarding disqualification of willful defaulters from being resolution applicants; similar penal consequences apply to fraudulent borrowers
-
State Bank Of India vs Rajesh Agarwal
Court's Decision & Legal Precedent
The principles of natural justice, particularly the rule of audi alteram partem, must be necessarily read into the provisions of Clauses 8.9.4 and 8.9.5 of the Master Directions on Frauds to save them from the vice of arbitrariness. Since the classification of a borrower's account as fraudulent entails serious civil consequences—including five-year debarment from institutional finance, criminal reporting, and reputational damage akin to blacklisting—which directly impair the borrower's fundamental right to carry on business under Article 19(1)(g), lender banks must provide borrowers with (i) prior notice of the allegations and forensic audit findings; (ii) reasonable opportunity to submit representations explaining the findings; and (iii) reasoned orders addressing the borrower's objections, before classifying the account as fraudulent. The procedural timeframes contemplated under the Master Directions on Frauds (six months for the entire process) provide sufficient scope for affording such a hearing without obstructing prompt action, and thus the necessity for speedy fraud detection and reporting cannot justify the exclusion of the audi alteram partem principle. The reading in of natural justice principles is mandated by the presumption that statutory authorities intend to act in accordance with the principles of natural justice unless expressly or by necessary implication excluded, and is essential to ensure the Master Directions do not violate the requirement of non-arbitrariness enshrined in Article 14 of the Constitution.
On this section: Prevents willful defaulters from being resolution applicants; same consequence applies to fraudulent borrowers
-
Raman Prakash Mangla vs Anuj Jain
Court's Decision & Legal Precedent
The Adjudicating Authority has limited jurisdiction in approving a resolution plan, circumscribed by Sections 30(2) and 31 of the Insolvency and Bankruptcy Code, 2016. The Authority cannot interfere with the commercial aspects of the decision taken by the Committee of Creditors. If the Adjudicating Authority finds shortcomings in the resolution plan vis-à-vis the specified parameters of keeping the corporate debtor as a going concern, maximizing the value of its assets, and taking care of interests of all stakeholders, it must send the plan back to the Committee of Creditors for reconsideration, not modify the plan itself. Payment to dissenting financial creditors must be in monetary terms, not in kind or through transfer of equity or land. Once homebuyers as a class vote in favor of a resolution plan through their authorized representative, individual homebuyers cannot challenge the plan as dissenting creditors or aggrieved persons. The INR 750 crores deposited by the holding company pursuant to Supreme Court orders in Chitra Sharma is the property of the holding company, not the corporate debtor, and cannot be appropriated by the corporate debtor or the resolution applicant.
On this section: Ineligibility of certain persons to submit resolution plans
-
State Bank of India vs Reserve Bank of India
Court's Decision & Legal Precedent
The principles of natural justice, particularly the rule of audi alteram partem, must be read into the provisions of the Reserve Bank of India Master Directions on Frauds (specifically Clauses 8.9.4 and 8.9.5) despite the absence of express provision granting opportunity of hearing, because: (i) classification of a borrower's account as fraud entails serious civil consequences including debarment from institutional finance for five years which is akin to blacklisting; (ii) such debarment affects the fundamental right to carry on business under Article 19(1)(g) and the right to reputation under Article 21; (iii) the statutory silence in the Master Directions should be interpreted to include natural justice principles where substantial rights are affected; (iv) the six-month timeline contemplated provides sufficient scope for opportunity of hearing without paralyzing the administrative process; (v) mere participation in forensic audit process does not satisfy audi alteram partem requirements; (vi) borrowers must be served notice, provided copy of forensic audit reports, given opportunity to submit representations, and receive reasoned orders on their objections before classification as fraud to save the Master Directions from the vice of arbitrariness and violation of Article 14 of the Constitution.
On this section: Bars willful defaulters from being resolution applicants; similar penal consequences apply to fraudulent borrowers under Master Directions Clause 8.12.1
-
Rajesh Gupta vs Nbcc (india) LTD
Court's Decision & Legal Precedent
The Adjudicating Authority's jurisdiction in approving a resolution plan is limited to verifying compliance with the mandatory requirements specified in Section 30(2) of the Insolvency and Bankruptcy Code, 2016. The Authority cannot modify the commercial terms of a resolution plan approved by the Committee of Creditors by the requisite majority (66% or more of voting share). If the Authority finds that the resolution plan does not meet the specified parameters (keeping corporate debtor as going concern, maximizing asset value, protecting stakeholder interests), it must remit the plan back to the Committee of Creditors for reconsideration rather than modifying it itself. The commercial wisdom of the Committee of Creditors is non-justiciable and cannot be interfered with by the Adjudicating Authority or Appellate Authority on equitable or quantitative grounds. Dissenting financial creditors must receive payment in monetary terms (cash) equivalent to their liquidation value, not in kind through equity or land transfers. The INR 750 crores deposited by the holding company JAL pursuant to Supreme Court orders in the Chitra Sharma case remains the property of JAL and cannot be treated as an asset of the corporate debtor JIL for purposes of the resolution plan. Homebuyers as a class are bound by the decision of their authorized representative in the Committee of Creditors under Section 25A(3A), and individual homebuyers cannot maintain separate challenges to the resolution plan. The Insolvency and Bankruptcy Code prevails over the Real Estate (Regulation and Development) Act, 2016 in case of conflict, though both statutes must be interpreted harmoniously. Concession Agreements with statutory authorities are not statutory contracts and their material terms cannot be modified without the consent of the other contracting party. Security interests not avoided under Section 43 of the Code cannot be unilaterally extinguished through a resolution plan.
On this section: Ineligibility of certain persons (including promoters with preferential transactions) to submit resolution plans
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
-
… credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the NCLT under the <sup>10</sup> " CIRP " or " resolution process " <sup>11</sup> " RP " <sup>12</sup> " CoC " IBC. A second amendment was made to various provisions of IBC, including Section 29A, under the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, effective from 6 June 2018. A proviso was added to sub-Section (g) of Section 29A. Section 29A of the IBC in its present form reads as follows: " 29A. Persons not eligible to be resolution applicant: A person shall not be eligible …
-
… extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the NCLT under the <sup>10</sup> " CIRP " or " resolution process " <sup>11</sup> " RP " <sup>12</sup> " CoC " IBC. A second amendment was made to various provisions of IBC, including Section 29A, under the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, effective from 6 June 2018. A proviso was added to sub-Section (g) of Section 29A. Section 29A of the IBC in its present form reads as follows: " 29A. Persons not eligible to be resolution applicant: A person shall not be eligible to …
-
… credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the NCLT under the <sup>10</sup> " CIRP " or " resolution process " <sup>11</sup> " RP " <sup>12</sup> " CoC " IBC. A second amendment was made to various provisions of IBC, including Section 29A, under the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, effective from 6 June 2018. A proviso was added to sub-Section (g) of Section 29A. Section 29A of the IBC in its present form reads as follows: " 29A. Persons not eligible to be resolution applicant: A person shall not be eligible …
Made under this section, and citing it
3 instruments name this provision in its title or its text without being made under it.
- The Insolvency and Bankruptcy Code (Amendment) Act, 2020Statute 2020
- Insolvency and Bankruptcy (Insolvency and Bankruptcy Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 dated 15.11.2019Rule 2019
- The Insolvency and Bankruptcy Code (Amendment) Act, 2018Statute 2018
Questions about Section 29A
What have the courts held on Section 29A of the Insolvency and Bankruptcy Code?
Swiss Ribbons Pvt. Ltd. v. Union of India (25 Jan 2019) is the leading judgment on this section among those set out below: The Insolvency and Bankruptcy Code, 2016 withstands Article 14 challenge. Another 7 judgments on this section are set out below, all of them from the Supreme Court. They run from 2019 to 2023.
How do I find court cases under Section 29A of the Insolvency and Bankruptcy Code?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Insolvency and Bankruptcy Code 29A, section 29A Insolvency and Bankruptcy Code, section 29A of the Insolvency and Bankruptcy Code. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 8 reported judgments on this section are set out on this page, beginning with Swiss Ribbons Pvt. Ltd. v. Union of India (25 Jan 2019).
What should I read with Section 29A of the Insolvency and Bankruptcy Code, and has it changed?
Its own text turns on section 3 (Definitions), so none of them can safely be read on its own. 5 other provisions in this corpus refer back to it. 3 instruments name it without being made under it, most recently The Insolvency and Bankruptcy Code (Amendment) Act, 2020 (2020), then Insolvency and Bankruptcy (Insolvency and Bankruptcy Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 dated 15.11.2019 (2019).
When was Section 29A of the Insolvency and Bankruptcy Code enacted?
Section 29A of the Insolvency and Bankruptcy Code, cited as Insolvency and Bankruptcy Code 29A, was enacted on 28 May 2016 as Act 31 of 2016. It is in force as at the date shown on this page.
Other sections of this Act
- 240. Power to make regulations2349 words
- 5. Definitions2326 words
- 3. Definitions1381 words
- 239. Power to make rules963 words
- 196. Powers and functions of Board942 words
- 54K. Consideration and approval of resolution plan915 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.