Family Ties Between Debtor Promoters And SRA Shareholders No Disqualification Under IBC: NCLT Kolkata

The National Company Law Tribunal (NCLT) at Kolkata has ruled that family or marital ties with a corporate debtor's promoters cannot, by themselves, render a resolution applicant ineligible under Section 29A of the Insolvency and Bankruptcy Code.

The tribunal held that the disqualification arises only when the relative in question is independently barred under the Code, emphasising that Section 29A is not triggered solely on account of "blood relationship" or "marital alliance."

A coram of Judicial Member Bidisha Banerjee and Technical Member Siddharth Mishra delivered the order on November 24, 2025, while dismissing an application by Tech Nirman Ispat Pvt. Ltd, the unsuccessful resolution applicant in the CIRP of Jagdamba Industries Ltd.

“It appears that the bar contemplated under Section 29A of the IBC can be attracted by blood relationship only if such relative is potentially ineligible under Section 29A and if the blood relative also falls under disqualification criteria himself (or herself) or through his (or her) connection, and not otherwise, i.e. such blood relative connected to the original disqualification promoter is himself or herself debarred under Section 29A of the Code.,” the tribunal observed.", it said.

Jagdamba Industries was admitted into CIRP in August 2023. The list of prospective resolution applicants was published on January 4, 2024, and both Tech Nirman and Rashmi Metaliks Ltd (RML) submitted their plans, with RML filing its plan in July 2024.

On September 19, 2024, the Committee of Creditors approved RML's plan with 80.96% voting share, and the plan approval application was moved by Resolution Professional Aditya Kumar Tibrewal.

Tech Nirman challenged RML's eligibility under Section 29A, alleging that RML was a “related party” of the corporate debtor because one of its promoter-group members, Priyanka Patwari, is the daughter of a suspended director of Jagdamba Industries.

Tech Nirman said Patwari's indirect shareholding in the debtor made RML ineligible to submit a plan.

The tribunal rejected this, holding that mere blood relationship is not a test for disqualification and that Section 29A applies only when the person in question is related to a director or partner of the debtor in a manner that confers control.

The tribunal found that Patwari's 0.07% shareholding in Jagdamba Industries was far "too insubstantial" to amount to control or bring her within the definition of a related party under the Code, which requires more than 20% of the voting rights for such classification.

Tech Nirman also argued that Jagdamba Industries had fraudulently obtained an MSME certificate on August 25, 2023, shortly after CIRP commenced, to bypass Section 240A of the Code, which permits a “related party” of an MSME to submit a resolution plan.

The tribunal dismissed this contention, noting that Jagdamba Industries had been registered as an MSME since 1993, and the 2023 certificate was merely a re-registration on the Udyam portal.

It recorded the Calcutta High Court's observation in the writ petition filed by Tech Nirman seeking cancellation of that certificate, noting that the cancellation issue was still pending before the MSME authorities.

Finding no grounds for disqualification and noting that repeated adjournments sought by Tech Nirman had delayed the CIRP, the tribunal declined to further stall the process and upheld RML's eligibility to submit a resolution plan.

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