Risk Management in Banking and Insurance · Management of Non-Performing Assets (NPAs)

Section 29A IBC: Who Is Ineligible as Resolution Applicant

Updated 11 October 2026

Section 29A of the IBC, 2016 bars certain persons, and anyone acting jointly or in concert with them, from submitting a resolution plan. It covers undischarged insolvents, wilful defaulters, NPA holders, convicted persons, disqualified directors and others. To solve a question, test the person against clauses (a) to (j), then check provisos and exceptions.

Understand Section 29A: Persons Ineligible as Resolution Applicant

A resolution plan under the Code decides the future of a company in insolvency. Section 29A decides who may propose that plan. It stops people who have misused credit, or who are legally disqualified, from getting back control of the company, often at a discount, through the resolution process.

The bar applies to the person and to any other person acting jointly or in concert with that person. So a disqualified promoter cannot bid through a friendly entity. Clause (j) closes the gap further: a resolution applicant is ineligible if it has a connected person who is ineligible under clauses (a) to (i).

The grounds are listed in clauses (a) to (j). They include being an undischarged insolvent, a wilful defaulter under RBI guidelines, holding an NPA account for the stipulated period, conviction for specified offences, disqualification as a director under the Companies Act, 2013, a SEBI prohibition, involvement in avoidance transactions, an invoked and unpaid guarantee, a similar disability abroad, and having an ineligible connected person.

The NPA ground in clause (c) is the one most examined. The applicant, or a corporate debtor under its management or control or of which it is a promoter, must have an account classified as NPA at the time of submitting the plan, and at least one year must have lapsed from classification to the commencement of the CIRP of the corporate debtor. The ground can be cured by paying all overdue amounts with interest and charges before submitting the plan.

The section also has exceptions, for example for financial entities that are not related parties of the corporate debtor, and for NPA accounts acquired under a prior approved resolution plan. Always check these before concluding that someone is ineligible.

Key rules to remember

Core rule: Ineligible if the person, or any person acting jointly or in concert with them, falls under clauses (a) to (j); The bar extends to persons acting jointly or in concert, not only the applicant.
NPA test, clause (c): NPA at time of submitting plan + at least 1 year from classification to CIRP commencement = ineligible; Cured if all overdue amounts with interest and charges are paid before submitting the plan.
Conviction test, clause (d): Imprisonment of 2 years or more under an Act in the Twelfth Schedule, or 7 years or more under any other law; Does not apply after 2 years from the date of release from imprisonment.
Connected person, Explanation I: (i) promoter or in management or control of the applicant; (ii) person who will be promoter or in management or control of the business during plan implementation; (iii) holding, subsidiary, associate company or related party of (i) or (ii); Clause (j) makes the applicant ineligible if any connected person is ineligible under (a) to (i).
Other grounds in brief: (a) undischarged insolvent; (b) wilful defaulter per RBI guidelines; (e) disqualified director; (f) SEBI-prohibited; (g) avoidance transaction order; (h) invoked, unpaid guarantee; (i) foreign disability; The provisos to clause (d) and clause (e) both say that the clause does not apply in relation to a connected person referred to in clause (iii) of Explanation I.
Financial entity exception: Clause (c) does not apply to a resolution applicant that is a financial entity and is not a related party of the corporate debtor; Explanation I(iii) likewise does not apply to such an applicant; The applicant must be a 'financial entity' as defined in Explanation II and meet the criteria or conditions notified by the Central Government. A financial creditor related only through debt-to-equity conversion, or completion of prescribed transactions, before the insolvency commencement date is not treated as a related party.
Prior resolution plan exception, clause (c): NPA account acquired under a prior approved resolution plan: clause (c) does not apply for 3 years from the date the Adjudicating Authority approved that plan; This is Explanation II to clause (c). After the three years end, clause (c) can apply to that account again.

How to solve Section 29A: Persons Ineligible as Resolution Applicant questions

Use the same screening order for every fact-based question on section 29A.

1List every person involved: the applicant, those acting jointly or in concert, promoters, managers and related entities.
2Match each person to clauses (a) to (i) one by one, noting the fact that triggers each clause.
3For clause (c), check three things: NPA at the time of submitting the plan, the one-year gap from classification to CIRP commencement, and whether overdue amounts were paid before submission.
4For clause (d), compare the sentence with the 2-year or 7-year threshold and check the 2-year post-release period.
5Apply clause (j): identify connected persons under Explanation I and see whether any is ineligible under (a) to (i).
6Check the provisos and exceptions: financial entity, related party carve-out, prior resolution plan accounts, and clause (g) acquisition proviso.
7State a clear conclusion (eligible or ineligible) with the clause number and the reason.

Quickest way: Clause-hunt shortcut

When to use it: Use this for MCQs and short case scenarios where time is limited.

Underline the trigger word in the facts: wilful defaulter, NPA, convicted, director disqualified, SEBI, guarantee, abroad, related party.
Map it to its clause letter immediately.
For NPA facts, ask only: was it NPA at submission, was it over one year before CIRP, and was it paid up?
Scan for the exception: financial entity, prior resolution plan, or two years after release.
Pick the option that matches both the clause and the exception.

Common mistakes in Section 29A: Persons Ineligible as Resolution Applicant

Treating any NPA account as disqualifying.
Students remember 'NPA' and forget the conditions in clause (c).
Fix: Check the one-year lapse before CIRP commencement and whether all overdue amounts with interest and charges were paid before submitting the plan.
Counting the one year from the date of submitting the plan.
The two time points are confused.
Fix: The year runs from the date of NPA classification to the date of commencement of the CIRP of the corporate debtor.
Ignoring persons acting jointly or in concert and connected persons.
Students test only the applicant.
Fix: Test every related person and apply clause (j) with the Explanation I definition.
Applying the 2-year or 7-year conviction thresholds the wrong way round.
The two limbs sound alike.
Fix: 2 years or more applies for offences under Twelfth Schedule Acts; 7 years or more applies for any other law.
Forgetting that a convicted person becomes eligible again after a period.
The proviso to clause (d) is overlooked.
Fix: Clause (d) does not apply after two years from the date of release from imprisonment.
Missing the financial entity exception.
Students treat banks and ARCs like any other bidder.
Fix: A financial entity that is not a related party of the corporate debtor escapes clause (c). Confirm it falls within the definition in Explanation II.

Worked examples

Example 1

Meridian Steels Ltd has entered CIRP. Mr. Kulkarni, a promoter of Apex Forge Pvt Ltd, wants to bid. Apex Forge's loan was classified as NPA 18 months before the CIRP of Meridian Steels began, and it is still NPA and unpaid when he submits the plan. Is he eligible?

Show the solution

Identify the clause: an account of a company of which he is a promoter is NPA, so clause (c) is relevant.
The account is NPA at the time of submission of the plan.
At least one year (18 months) lapsed from classification to commencement of CIRP of the corporate debtor.
Check the cure: overdue amounts have not been paid before submission, so the proviso does not help.
Check exceptions: he is not a financial entity, and there is no prior resolution plan account.

Answer: Mr. Kulkarni is ineligible under section 29A(c). He would become eligible only if he paid all overdue amounts with interest and charges relating to the NPA account before submitting the plan.

Example 2

Sunrise Textiles Ltd bids for Delta Mills Ltd. Sunrise Holdings Ltd, the holding company of Sunrise Textiles, is also its promoter and controls it. Sunrise Holdings is a wilful defaulter under RBI guidelines. Sunrise Textiles itself has no default. Can Sunrise Textiles submit a plan?

Show the solution

Test Sunrise Textiles under clauses (a) to (i): no ground applies to the company itself.
Apply clause (j): is there a connected person who is ineligible?
Under Explanation I(i), a connected person is any person who is the promoter or in the management or control of the resolution applicant. Sunrise Holdings is the promoter and controls Sunrise Textiles, so it is a connected person under Explanation I(i).
Sunrise Holdings is a wilful defaulter, so it is ineligible under clause (b).
Check exceptions: the provisos to clauses (d) and (e), which switch those clauses off for a connected person under Explanation I(iii), do not cover clause (b). Sunrise Textiles is also not a financial entity, so the financial entity proviso does not help.

Answer: Sunrise Textiles is ineligible under clause (j) because its connected person, Sunrise Holdings, is ineligible under clause (b). The applicant's own clean record does not save it.

Exam tips

Write the clause letter in every answer; examiners reward the exact ground.
In NPA questions, always show the three checks: NPA at submission, one-year gap, payment of overdues.
Draw a short list of the persons in the case scenario and test each before concluding.
Remember that section 29A is about eligibility to submit a plan, not about approval of the plan.
Mention the exception or proviso you checked, even when it does not apply.

Practice questions from Management of Non-Performing Assets (NPAs)

Section 29A: Persons Ineligible as Resolution Applicant: frequently asked questions

Why was section 29A introduced in the IBC?

Section 29A was inserted by Act 8 of 2018 with effect from 23 November 2017. It keeps out persons who are ineligible, such as wilful defaulters and those with long-standing NPAs, from taking back a company through a resolution plan. Clauses (c) and (d) were later amended with effect from 6 June 2018. The aim is to protect the integrity of the resolution process.

Is a wilful defaulter always ineligible under section 29A?

Clause (b) bars a wilful defaulter in accordance with the RBI guidelines issued under the Banking Regulation Act, 1949. The bar also extends to persons acting jointly or in concert. The text gives no cure for clause (b) similar to the payment proviso under clause (c).

Can a person with an NPA account become eligible?

Yes. Under the first proviso to clause (c), the person is eligible if they pay all overdue amounts with interest and charges relating to the NPA accounts before submitting the resolution plan. The one-year condition also matters, since clause (c) bars only when at least a year has passed from classification to CIRP commencement.

What is a connected person under section 29A?

It means a person who is the promoter or in the management or control of the applicant, a person who will be so for the business during plan implementation, and the holding, subsidiary or associate company or related party of such persons. If any connected person is ineligible under clauses (a) to (i), the applicant is ineligible under clause (j).