Insolvency and Bankruptcy Code 2016 Section 29a: Ineligibility to be a Resolution Applicant (2026)
What Section 29A of the Insolvency and Bankruptcy Code, 2016 does: it lists the people who cannot submit a resolution plan to take over a company in insolvency, mainly to keep defaulting promoters from quietly buying back the business cheaply. Last verified October 2026.
Explainer · Insolvency Law · IBC
Section 29A of the Insolvency and Bankruptcy Code, 2016 is the gatekeeper for who may rescue a company in insolvency. When a company goes through the resolution process, outsiders submit plans to take it over. Section 29A lists the people who are barred from doing that. The main target is the defaulting promoter. The law did not want the very person who ran the company into the ground to buy it back cheaply through the insolvency process while creditors took a loss. This explainer sets out who is ineligible, how the connected person rule works, the leading case law, and a practical note. Last verified October 2026.
- What it is: Section 29A lists the persons who cannot submit a resolution plan in an insolvency.
- Main target: defaulting promoters, wilful defaulters and persons with accounts that have been NPAs for a year or more.
- Connected persons: relatives and group entities of a barred person are also kept out.
- Cure: a person barred only on the NPA ground can bid if the overdue amount is cleared before the plan is submitted.
01Why Section 29A was added
Section 29A was not in the Code when it began. It was added by an amendment in 2018, after a worry grew in the early cases: promoters whose default caused the insolvency were coming back as resolution applicants and offering to buy the company at a steep discount. That let the people responsible for the loss profit from it, while lenders took a haircut.
Section 29A closed that door. It sets out a list of persons who cannot submit a resolution plan, either on their own or through others connected to them.
The core idea in one line
People responsible for a company's default, and those connected to them, generally cannot bid to take the company back through its own insolvency.
02Who is ineligible
Section 29A lists several categories of person who cannot be a resolution applicant. The main ones are:
- an undischarged insolvent;
- a wilful defaulter, as classified by the Reserve Bank of India guidelines;
- a person whose account, or an account of a company it promotes or controls, has been classified as a non-performing asset (NPA) for one year or more, unless the overdue amount is cleared before the plan is submitted;
- a person convicted of an offence carrying imprisonment of two years or more, subject to the periods set in the section;
- a person disqualified to act as a director;
- a person barred by the Securities and Exchange Board of India from trading or accessing the securities market;
- a person who was a promoter or in management of a company where a preferential, undervalued, extortionate or fraudulent transaction was found;
- a person who has given a guarantee to a creditor of this corporate debtor and the guarantee has been invoked and not paid.
The list also catches a person connected to any of the above.
03Connected persons
The barred persons cannot get around the rule by using a relative or a group company to bid. Section 29A also makes a "connected person" ineligible. This covers a person who will manage or control the corporate debtor after the plan, the holding, subsidiary, associate or related party of such a person, and certain relatives.
This wide reach is the heart of Section 29A. Many disputes are not about whether the lead bidder is clean, but about whether someone standing behind the bidder falls within the connected person net.
04The cure: paying the overdue amount
The NPA ground is not always permanent. A person caught only because an account became an NPA can still bid if the overdue amount, together with interest and related charges, is paid before the resolution plan is submitted. This gives a genuine applicant a chance to clean up and compete.
The proviso to Section 29A(c) sets this out, and the ArcelorMittal case shows how it is applied. The payment has to be real and unconditional, not a mere promise to pay later.
05Key case law
Two Supreme Court rulings matter most:
- ArcelorMittal India v. Satish Kumar Gupta (2018): the Court explained Section 29A(c) and the connected person rule. It held both leading bidders in the Essar Steel process ineligible because of links to accounts that were NPAs, and allowed them a short window to clear the overdue amounts if they wished to be eligible.
- Swiss Ribbons v. Union of India (2019): the Court upheld the validity of Section 29A, holding that keeping defaulting promoters out of the bidding is a reasonable classification linked to the aim of the Code.
Courts read Section 29A purposively. The question is always whether a person, directly or through a connection, falls within the mischief the section targets.
06Practical note
For a resolution applicant, Section 29A is the first checkpoint. Before spending on a plan, a bidder runs an eligibility check across itself and every connected person, looks for NPA accounts, invoked guarantees and disqualifications, and clears any overdue amount in time. A plan from an ineligible applicant will be rejected, however attractive its terms. The resolution professional and the committee of creditors are expected to examine eligibility, and the content of the plan itself is explained in the resolution plan under the IBC.
For creditors, Section 29A protects the value of the process, but it can also narrow the field of bidders, so eligibility is checked early rather than at the last stage. The body that votes on plans is explained in the committee of creditors.
07Where Claw fits
Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.
Whether a particular bidder or connected person is caught by Section 29A often turns on how the NCLT, the NCLAT and the Supreme Court have read the connected person and NPA grounds. Claw lets you search more than 30 crore judgments and orders on Section 29A, with results in under 5 seconds, and lets you follow a live insolvency matter by company or applicant name across 9,102 courts, benches and forums, including the NCLT and the NCLAT. Reported authority runs from Supreme Court rulings of 1950 and High Court rulings of 1990 to the latest orders. Claw does not use the documents you upload to train its AI models.
Create a FREE Claw account to see how Section 29A has been applied and to track a pending NCLT or NCLAT matter, and use case search across Indian courts to find orders in similar cases.
08Sources and further reading
- India Code (IBC, 2016 bare text): indiacode.nic.in
- Insolvency and Bankruptcy Board of India (Code, regulations and circulars): ibbi.gov.in
- Claw: clawlaw.in
This explainer is general information, not legal advice. The Code and its interpretation change through amendments and rulings, so check the current text and take advice from counsel before you act.
09Frequently asked questions
What is Section 29A of the IBC?
It lists the persons who are ineligible to be a resolution applicant and submit a resolution plan. These include undischarged insolvents, wilful defaulters, persons with accounts that have been non-performing assets for a year or more, certain convicts and disqualified directors, and persons connected to them.
Why was Section 29A introduced?
To stop defaulting promoters from buying back their own company cheaply through the insolvency process. It was added by the 2018 amendment after early cases raised this concern.
Who is a connected person under Section 29A?
A person who will manage or control the company after the plan, the holding, subsidiary, associate or related party of such a person, and certain relatives. The rule stops a barred person from bidding through someone else.
Can a person with an NPA account ever bid?
Yes. Under the proviso to Section 29A(c), a person barred only because an account became an NPA can still bid if the overdue amount, with interest and charges, is paid in full and unconditionally before the resolution plan is submitted.
Is Section 29A valid?
Yes. In Swiss Ribbons v. Union of India (2019), the Supreme Court upheld Section 29A, holding that keeping defaulting promoters out of the bidding is a reasonable classification connected to the aim of the Code.
Did the new criminal codes change Section 29A?
No. The new criminal and evidence codes replaced the old IPC, CrPC and Evidence Act. They do not renumber or change the Insolvency and Bankruptcy Code, so Section 29A is unaffected.