Author: Anirudh Subhaian Padmanabhan, Tamil Nadu National Law University (TNNLU)

The ArcelorMittal v. Satish Kumar Gupta case is an example of Section 29A of the Insolvency and Bankruptcy Code, 2016 (IBC). The main issue was the corporate insolvency resolution process (CIRP) of Essar Steel India Ltd (ESIL) which had a debt exceeding ₹45,000 crore. The two major players are ArcelorMittal India Pvt. Ltd. (AMIPL), a subsidiary of the global steel giant, and Numetal Ltd., a company with links to the Essar Group, submitted resolution plans to acquire ESIL. But neither of them could just walk in and take over. Section 29A, which disqualifies certain applicants from submitting resolution plans (especially those linked to non-performing assets), has recently been added to the Code. 

The primary legal issue concerned eligibility under Section 29A(c) of the IBC. The provision bars anyone who is a promoter or in management or control of a company whose accounts have been classified as non-performing assets (NPAs) for over a year from submitting a resolution plan, unless they clear all dues first. The complication was that both ArcelorMittal and Numetal were tied, directly or indirectly, to companies that had defaulted. ArcelorMittal was linked to Uttam Galva and KSS Petron, while Numetal was connected to the Ruia family, the original promoters of ESIL. 

Both applicants tried to distance themselves from these links just before submitting their bids. So, the Court had to dig into whether these last-minute corporate clean-ups were good enough.

The broader legal questions went beyond just these two companies. The Court had to decide when exactly eligibility should be tested, is it at the time of submitting the resolution plan, or earlier? Could someone wriggle out of ineligibility by quickly selling shares or resigning directorships? And who counts as a “connected person” or someone “acting in concert”? The answers would determine not just who could bid for ESIL, but also whether Section 29A had real bite or could be gamed by smart lawyers and corporate strategists.

The case was between ArcelorMittal India Pvt. Ltd. (AMIPL) who is the appellant and Satish Kumar Gupta, the Resolution Professional (RP) for Essar Steel India Ltd. (ESIL), along with other parties including Numetal Ltd., another competing resolution applicant. At its core, this was a contest between two bidders trying to acquire ESIL, a defaulting company undergoing insolvency proceedings.

Essar Steel was admitted into insolvency under the IBC in August 2017. The debt was over ₹45,000 crore. Naturally, this attracted heavyweight bidders. AMIPL, backed by global steel baron Lakshmi Mittal, submitted its expression of interest on 11 October 2017. A few days later, Numetal, a joint venture that included entities linked to the Ruia family (the original promoters of Essar) also submitted its expression of interest.Around this time, Parliament introduced Section 29A into the IBC, a provision that disqualified certain applicants from bidding, especially those connected to companies with NPA accounts. Both ArcelorMittal and Numetal had their connections. AMIPL had historical ties to Uttam Galva and KSS Petron, both of which had been classified as NPAs. Numetal, meanwhile, had Rewant Ruia (son of Ravi Ruia, the Essar promoter) in the mix through various shareholding arrangements.Both companies tried to clean up their act just before submitting their resolution plans. AMIPL sold off its stake in Uttam Galva and stepped away from KSS Petron. Numetal’s ownership shifted to include offshore players, with Rewant Ruia’s company (AEL) gradually reducing and eventually offloading its stake. But these last-minute moves raised a big legal question: was it too little, too late?The RP initially declared both resolution applicants ineligible under Section 29A. Both companies challenged this, Numetal in the NCLT, and then AMIPL followed with its own intervention. The NCLT, in its April 2018 order, agreed that both were ineligible as of their first plan submissions but left the door open to cure their ineligibility under the proviso to Section 29A(c) by paying off the NPAs.That sent the matter to the Committee of Creditors (CoC), which reaffirmed the disqualifications unless payments were made. Both parties filed appeals to the NCLAT, which split the baby: it said Numetal’s first plan was ineligible but its second plan (after AEL’s exit) was clean. As for AMIPL, the NCLAT said it could qualify only if it actually paid the overdue amounts, not just made a conditional offer. Unhappy with parts of this, both AMIPL and Numetal went to the Supreme Court where this case was held.

These issues mattered not just for this case, but for how the entire insolvency regime functions in India. Section 29A was brought in to keep out promoters and their proxies, people who had contributed to a company’s downfall and now wanted to swoop back in and buy it on the cheap. But in practice, companies started using technicalities and rapid restructuring by selling shares overnight, switching directors, hiding behind layered ownership just to avoid disqualification.

This case was the first big opportunity for the Supreme Court to lay down the law for section 29. The outcome was going to shape how resolution professionals, committees of creditors, and future bidders interpret and apply these disqualification norms. It was also about legal clarity and if there’s a loophole, everyone will find it. If the court closes the gaps, it reinforces the credibility of the IBC as a serious restructuring law, not just a playground for corporate strategy.

The Supreme Court held that eligibility under Section 29A has to be checked at the time the resolution plan is submitted. Not before, not after. 

This matters because both ArcelorMittal and Numetal tried to argue that their restructuring moves like selling off shares or resigning from directorships should count if they happened after the expression of interest. The Court didn’t buy it. It said that what matters is who you are, and what your connections are, at the moment your resolution plan lands on the table.On whether someone can fix their ineligibility by making changes right before submission, the Court was clear: you can’t just walk away from an NPA and call yourself clean. If you were in control of a company that defaulted, and you wanted to bid, then under the law you have to first pay off the overdue debt, that’s what the provision to Section 29A(c) says. ArcelorMittal tried to argue that it had sold its shares in Uttam Galva and KSS Petron, but the Court said that wasn’t enough. It still had to pay off the dues if it wanted to be eligible. The same rule applied to Numetal. Its first plan was rejected because of its links to Rewant Ruia, who was clearly acting in concert with the Essar promoters.The Court also made it very clear that the phrase “acting jointly or in concert” has real bite. You don’t need to be a formal promoter or a shareholder on paper. If you're involved through layers, proxies, or indirect ties and the overall structure shows you’re trying to control or influence the company then you're in. You get disqualified. That meant Numetal’s first plan was dead in the water. But the Court wasn’t looking to shut the door completely. It gave both bidders another shot. If they wanted to submit fresh resolution plans, they could as long as they were fully eligible at the time of that new submission. That meant clearing NPAs, cutting ties, and proving clean hands at the moment the plan was filed.

The majority opinion, delivered by Justice R.F. Nariman, focused heavily on the purpose behind Section 29A of the IBC, to keep out people who were responsible for a company’s financial mess from returning through the backdoor. The Court said Section 29A(c) must be read strictly and purposefully. If someone was a promoter or in control of a company whose loans were classified as NPAs for over a year, and they hadn't cleared those dues, they were out. This rule applied even if they exited the company just before submitting a plan. Timing mattered. The Court said eligibility had to be judged at the moment the resolution plan was submitted, because that’s when the CoC started serious consideration. Selling shares or distancing yourself a few days before doesn’t erase your past control or involvement. In the case of ArcelorMittal, it had to pay off the debts of Uttam Galva and KSS Petron before its plan could be considered valid; simply resigning or selling off shares wasn’t enough.There were no dissenting opinions in this case. It was a unanimous decision. Both Justices Nariman and Indu Malhotra agreed on the interpretation of Section 29A and the outcome for both resolution applicants. The judgment was also careful not to slam the door entirely, it allowed both ArcelorMittal and Numetal to fix their ineligibility (by paying up or restructuring cleanly) and come back with fresh resolution plans. But that second chance was conditional: they had to be fully eligible on the new submission date, not just on paper, but in substance.The Court backed its reasoning with a solid reading of the Insolvency and Bankruptcy Code, 2016, especially Section 29A and its provisos. It also pulled in definitions from the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 particularly the idea of “persons acting in concert” to show that indirect control, common objectives, and joint actions can’t be ignored just because they aren’t on paper. The Court didn’t rely heavily on prior case law, because this was the first big test of Section 29A. Instead, it focused on the intent of the IBC amendments, and made it clear that substance trumps form when it comes to eligibility.

The Supreme Court’s decision in ArcelorMittal wasn’t just a dry interpretation of Section 29A of the IBC, it set the tone for how seriously the law would treat backdoor entries into the insolvency process. If someone’s trying to game the system or sneak back in through proxies, the law won’t turn a blind eye. This ruling gave resolution professionals and committees of creditors a clear standard: look at the substance, not just the form.On the social and political front, the case sent a broader message that default promoters couldn’t use the IBC as a way to get back control of their companies on the cheap. That is a huge credibility win for the IBC itself. Before this judgment, there was public criticism that rich promoters were gaming the law with shell companies and legal loopholes. This ruling shut that down, at least in theory. Politically, it aligned with the government’s message that the IBC was about accountability not just debt recovery, but keeping out the very people who caused the mess. It also signalled to international investors that India was taking insolvency seriously and not just running a rigged process where old owners could sneak back in.

The Court’s decision in ArcelorMittal was solid where it mattered. It understood that Section 29A wasn’t just a checklist, it was a firewall. If the goal of the IBC is to bring in serious, responsible buyers and keep out those who helped wreck companies in the first place, then the Court had no choice but to interpret the law strictly. It resisted the urge to get technical and instead went for substance. That was the right call. The judgment made it harder for former promoters to hide behind proxies or last-minute paperwork tricks, which had become a pattern in early CIRP cases. That said, the Court still gave applicants a second chance to submit a new plan, pay their dues, and come back clean. That kept the process practical, which was necessary in a case as big as Essar.The biggest strength of the Court’s reasoning was its refusal to fall for formalism. It looked at who was really behind the bid, not just the face on the form. That approach makes the law harder to cheat. Another strength was clarity: it set a clean-cut rule that eligibility is judged at the time of plan submission. No ambiguity. But there are some weak spots too. The Court could’ve been more precise about what “control” really means. Is holding shares enough? What about indirect board influence? Future cases had to keep figuring that out. Also, by allowing both parties to come back with new bids, the Court may have softened the blow some would say it gave a way out to players who should’ve been benched entirely.An alternative outcome could’ve been the Court taking a more case-by-case approach allowing plans if it could be shown that the person had genuinely cut ties and no longer had control. That might have allowed for more flexibility, especially in complex corporate structures. But the downside is obvious: it opens the door to endless litigation and grey areas. In a system still building trust, clarity probably mattered more. Another possible route would’ve been to give more power to the CoC to decide eligibility but that also risks turning a legal question into a negotiation. In the end, the Court took the cleaner road, even if it was a little rigid.

This case drew a hard line around Section 29A and what it was meant to do. The Court made it clear that insolvency isn’t a recycling program for defaulting promoters. You can’t clean your record last-minute and expect a free pass. The judgment set the standard: eligibility is tested when the resolution plan is filed, not when it’s convenient. If you're connected to an NPA, the only way back in is to pay up and prove you’ve really walked away from the mess. That rule brought clarity and force to a part of the Code that was getting blurry.

What stands out about ArcelorMittal is that it didn’t try to overreach. The Court didn’t rewrite the Code or hand out blanket punishments. It stuck to the text, leaned on purpose, and gave the process a backbone without breaking it. That balance IN between being strict but not reckless is probably what made this a landmark case. Going forward, anyone bidding under the IBC knows where the lines are. And they’re not easy to move.