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of <h1>Related party eligibility in insolvency when a non-binding term sheet failed and no share allotment occurred, appeal dismissed after plan approval</h1> Related-party eligibility in a resolution process was examined in light of a non-binding term sheet that never matured into a concluded contract and where ... Related party - non-binding term sheet - objection regarding eligibility of SRA - ineligibility to submit Resolution Plan - finality of earlier Adjudicating Authority order - viability and feasibility of resolution plan - whether SRA is ineligible being related party to the Corporate Debtor. - HELD THAT:- As noticed, it is clear that term sheet is non-binding term sheet which was subject to contract. The contract which is definite documentation never took place and the allotment of share was proposed at closing, no share ever allotted to the investors. The ingredients of Section 5(24)(h) were, thus, not present in the facts of the present case but hold SRA as related party. When the issue was raised of ineligibility of the SRA by Appellant by filing an application which has been rejected by the Adjudicating Authority, the Appellant cannot be allowed to raise the said issue again and again. The Adjudicating Authority vide order dated 15.09.2025 having found SRA not ineligible the said issue has become final. We, thus, do not find any substance in the submission advanced by the Appellant in this Appeal. We do not find any error in the order dated 16.10.2025 passed by the Adjudicating Authority approving the Resolution Plan. There is no merit in the Appeal. The Appeal is dismissed. Issues: Whether the Successful Resolution Applicant (SRA) is ineligible as a 'related party' of the Corporate Debtor within the meaning of Section 5(24)(h) of the Insolvency and Bankruptcy Code, 2016, and therefore barred from submitting a Resolution Plan.Analysis: The Tribunal examined the non-binding term sheet dated 09.06.2022 and the surrounding facts. The term sheet was expressly subject to contract and contained condition precedents; no definitive investment agreement was executed, no shares were allotted, and the Rs. 10,00,000 deposited by the investor was refunded to the State Bank of India before the Section 7 petition. The Adjudicating Authority in IA No.5201 of 2024 had earlier considered the same material and held that, in absence of a definitive agreement and given refund of the deposit, the ingredients of Section 5(24)(h) (advice, directions or instructions by the investor to the company's directors/managers) were not established. That earlier finding was not challenged and has attained finality. The Tribunal found no error in the Adjudicating Authority's subsequent approval of the Resolution Plan in IA No.30 of 2024.Conclusion: The SRA is not a 'related party' within the meaning of Section 5(24)(h) of the Insolvency and Bankruptcy Code, 2016; the appeal is dismissed and the Adjudicating Authority's approval of the Resolution Plan is upheld (decision in favour of Respondent).
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