ArcelorMittal India Private Limited v. Satish Kumar Gupta

Civil Appeal Nos. 9402–9405 of 2018
Supreme Court of India
Date of Judgement: 4 October 2018
Bench: Justice R.F. Nariman and Justice Indu Malhotra

The decision of the Supreme Court in ArcelorMittal India Private Limited v. Satish Kumar Gupta is a landmark judgement interpreting Section 29A of the Insolvency and Bankruptcy Code, 2016 (IBC). The case arose out of the corporate insolvency resolution process of Essar Steel India Limited (ESIL), one of India’s largest steel manufacturers, with outstanding debts exceeding ₹45,000 crore.

The judgement addressed a critical concern that emerged soon after the introduction of Section 29A: whether persons connected to defaulting companies could escape disqualification through last-minute corporate restructuring. The Supreme Court was required to clarify when eligibility under Section 29A is to be tested, how the expressions “acting jointly or in concert” and “connected persons” should be understood, and whether the disqualification provision could be diluted by technical compliance.

This case became the first authoritative interpretation of Section 29A and played a central role in shaping India’s insolvency jurisprudence.

Background and Context of ArcelorMittal India Private Limited v. Satish Kumar Gupta

Essar Steel India Limited was admitted into corporate insolvency resolution proceedings in August 2017 after a petition under Section 7 of the IBC was admitted by the National Company Law Tribunal, Ahmedabad Bench. Following admission, Satish Kumar Gupta was appointed as the Interim Resolution Professional and later continued as the Resolution Professional.

The Resolution Professional invited expressions of interest from prospective resolution applicants. Two major bidders emerged:

1. ArcelorMittal India Private Limited (AMIPL), a subsidiary of the global steel conglomerate ArcelorMittal.
2. Numetal Limited, a company incorporated shortly before submission of its expression of interest, with shareholding links to the Ruia family, the original promoters of Essar Steel.

During the resolution process, Parliament introduced Section 29A into the IBC through the Insolvency and Bankruptcy Code (Amendment) Act, 2018, with retrospective effect from 23 November 2017. The provision aimed to bar certain categories of persons, particularly defaulting promoters and their proxies, from submitting resolution plans.

Statutory Framework: Section 29A(c) of the IBC

Section 29A(c) disqualifies a person from submitting a resolution plan if such person, or any other person acting jointly or in concert with such person, is a promoter or in management or control of a company whose account has been classified as a non-performing asset (NPA) for at least one year prior to the commencement of the corporate insolvency resolution process.

The proviso to Section 29A(c) allows such a person to become eligible if all overdue amounts, along with interest and charges relating to the NPA account, are paid before submission of the resolution plan.

The interpretation of this provision formed the core of the dispute before the Supreme Court.

Facts of ArcelorMittal India Private Limited v. Satish Kumar Gupta Case

ArcelorMittal India Private Limited submitted its expression of interest on 11 October 2017. Numetal Limited submitted its expression of interest shortly thereafter. At the time of submission of resolution plans, Section 29A had already been introduced into the IBC.

The Resolution Professional found both AMIPL and Numetal to be ineligible under Section 29A(c).

Ineligibility of ArcelorMittal

AMIPL disclosed ArcelorMittal Netherlands as a connected person. ArcelorMittal Netherlands was a promoter of Uttam Galva Steels Limited, whose account had been classified as an NPA. Although ArcelorMittal Netherlands had sold its shareholding in Uttam Galva and applied for declassification as a promoter, stock exchange approvals had not been obtained. As a result, it continued to be classified as a promoter on the date AMIPL submitted its resolution plan.

Additionally, AMIPL had earlier connections with KSS Petron, another company whose account had been classified as an NPA.

Ineligibility of Numetal

Numetal was incorporated only seven days prior to submitting its expression of interest. Its eligibility depended entirely on its shareholders. One of its shareholders, Aurora Enterprises Limited, was wholly owned by Rewant Ruia, the son of Ravi Ruia, a promoter of Essar Steel. Since Essar Steel’s account had been classified as an NPA, the Resolution Professional held that Rewant Ruia was acting in concert with the promoter group, rendering Numetal ineligible under Section 29A.

Proceedings Before NCLT and NCLAT

Both AMIPL and Numetal challenged the Resolution Professional’s findings before the NCLT. The NCLT upheld the decision, noting that the Resolution Professional had acted after consulting legal advisors.

Appeals were filed before the National Company Law Appellate Tribunal (NCLAT). The NCLAT partly modified the findings, holding that Numetal’s first resolution plan was ineligible but its subsequent plan, following changes in shareholding, could be considered eligible. AMIPL was permitted to become eligible only upon actual payment of the overdue amounts of the related NPAs.

Aggrieved by the NCLAT’s decision, both parties approached the Supreme Court.

Issues Before the Supreme Court

The Supreme Court in ArcelorMittal India Private Limited v. Satish Kumar Gupta was required to consider the following key issues:

1. At what stage should eligibility under Section 29A(c) be tested?
2. Whether last-minute divestment of shareholding or resignation from directorships could cure ineligibility under Section 29A.
3. How the expressions “acting jointly or in concert” and “connected persons” should be interpreted.
4. Whether payment of NPAs is mandatory to remove disqualification under Section 29A(c).
5. Whether time spent in litigation should be excluded from the statutory time limit for completion of the insolvency resolution process.

ArcelorMittal India Private Limited v. Satish Kumar Gupta Judgement of the Supreme Court

The Supreme Court in ArcelorMittal India Private Limited v. Satish Kumar Gupta delivered a unanimous judgement, authored by Justice R.F. Nariman.

Timing of Eligibility

The Court held that eligibility under Section 29A must be examined at the time of submission of the resolution plan, not at the stage of expression of interest. The moment a resolution plan is submitted is when the Committee of Creditors begins serious consideration, and therefore, that is the relevant date for determining eligibility.

Acting Jointly or in Concert

The Court interpreted the phrase “acting jointly or in concert” broadly and purposively. Relying on concepts from the SEBI Takeover Regulations, the Court held that formal shareholding is not decisive. What matters is substantive control, common objective, and coordinated action. Indirect influence through layered corporate structures or proxies cannot be ignored.

Requirement to Pay NPAs

The Court made it clear that merely severing ties with an NPA account is insufficient. If a person was a promoter or in control of an NPA company, the only way to remove disqualification under Section 29A(c) is by paying all overdue amounts with interest and charges before submitting the resolution plan.

In the case of AMIPL, the sale of shareholding in Uttam Galva and distancing from KSS Petron did not remove ineligibility unless the outstanding dues were cleared. Similarly, Numetal’s restructuring efforts could not cure its ineligibility for its initial resolution plan.

Commercial Hardship Argument Rejected

The Court rejected the argument that requiring payment of NPAs before submission of a resolution plan would deter bidders and frustrate the insolvency process. It held that Section 29A reflects a conscious legislative policy choice and commercial inconvenience cannot override statutory intent.

Time Limit Under Section 12

The Court reaffirmed that the 270-day time limit under Section 12 of the IBC is mandatory. However, it clarified that time spent in litigation before the NCLT or NCLAT must be excluded while computing this period.

Article 142 Relief

Despite holding both AMIPL and Numetal ineligible, the Court exercised its extraordinary powers under Article 142 of the Constitution. At the request of the Committee of Creditors, the Court granted both bidders two weeks to clear the NPAs of their related corporate debtors. Upon payment, they were permitted to re-submit their earlier resolution plans, which the Committee of Creditors was directed to consider within eight weeks.

Legal Reasoning in ArcelorMittal India Private Limited v. Satish Kumar Gupta

The Court emphasised that Section 29A is a substantive eligibility provision, not a procedural formality. The objective of the IBC is not merely recovery of debt, but resolution by credible and responsible applicants. Allowing defaulting promoters or their proxies to regain control would defeat this objective.

The judgement consistently applied the principle that substance must prevail over form. Corporate restructuring undertaken solely to escape disqualification cannot be permitted to undermine legislative intent.

Conclusion

ArcelorMittal India Private Limited v. Satish Kumar Gupta stands as a foundational decision in Indian insolvency law. The Supreme Court provided authoritative clarity on Section 29A, firmly establishing that eligibility is to be assessed at the time of submission of the resolution plan and that disqualification cannot be avoided through cosmetic restructuring.

By balancing strict statutory interpretation with limited equitable relief under Article 142, the Court reinforced both the integrity and practicality of the insolvency process. The judgement continues to guide resolution professionals, creditors, and courts in ensuring that the objectives of the IBC are fulfilled in both letter and spirit.

Note: This article was originally written by Preeti Birla on 5 November 2022. It was subsequently updated by the LawBhoomi team on 29 January 2026.