MUMBAI: Bulge-bracket bidders for bankrupt companies are working overtime to ensure that they don’t fall afoul of the amended provisions of the bankruptcy law with Seema Jajodia, sister of Sajjan Jindal of the JSW Group and wife of Sandeep Jajodia, the promoter of Monnet Ispat, taking the extreme step of transferring her shares in the company as a gift. Jajodia has also requested that she be excluded from the promoter group of Monnet Ispat in a recent filing to the stock exchanges.Explaining the reason for her action, Jajodia said she was not involved in the formation, management and control of the company from inception and that her classification of promoter was ‘incidental’ to her miniscule holding in the company.What is left unsaid is that she is the sister of Sajjan Jindal, whose company, JSW, is a bidder for Monnet Ispat and a clarification and request for exclusion from the promoter group will pave the way for JSW to be on the right side of the law and possibly win the bid for the bankrupt company without any legal hassles.Section 29 C of the Insolvency and Bankruptcy Code has been clarified and expanded to now extend to persons who are in the management or in control, or are promoters of a corporate debtor whose account is classified as an NPA for more than a year. The code also bars bidders if ‘connected people’ like close kith and kin have defaulted on loans. Bidders will also be barred if they or their affiliate, associate companies have been convicted of any offence and been punished with a fine or a prison term of two years.Mirroring the same legal hurdle and in the same predicament are other bidders such as LN Mittal’s Arcelor Mittal. Arcelor is one of the promoters of Uttam Galva, which has been referred to the bankruptcy courts. Also, Mittal’s brothers, Pramod and Vinod Mittal, had defaulted on loans when they were running Ispat Int’l, a steel company subsequently taken over by Sajjan Jindal’s JSW Steel.62731379 Can they, and more importantly, the Ruia brothers wriggle out of what is an ironclad clause which puts them in a category of defaulters? The jury is still out. Arcelor Mittal is a promoter of Uttam Galva, along with the Miglani family, by virtue of their 29% in the firm. Uttam Galva defaulted on its loans and thus the resolution applicant process has to be tested, legal circles say.Another hurdle facing ArcelorMittal is the ‘connected people’ clause which covers close kith and kin like brothers and the resolution application can be rejected, say legal experts.If a brother is a defaulter under RBI guidelines for more than 12 months, then the participation of the applicants can be challenged.ET reached out to ArcelorMittal. “There is no legal basis to these claims. Arcelor-Mittal is a minority shareholder of Uttam Galva with no control, no management influence and no board representation. ArcelorMittal has no relationship with said individuals,” a spokesperson for company said.”We are sure and confident we will be able to participate, should we decide to move forward with the opportunity,” the spokesperson added. ArcelorMittal also says that their promoters were never on the board of Uttam Galva. But legal circles argue that this needs to be tested. After all, holding a significant stake in Uttam Galva they could influence decisions of the Indian company.MR Umarji, former executive director of Reserve Bank of India and one of the key people to draft the Insolvency and Bankruptcy Code said, without going into the specifics of any company: “When it comes to approving a decision of a company in an Annual General Meeting, a person holding over 26% shareholding will have a say because 75% has to accept it. Once you hold more than 26%, you have a casting vote which can tilt any decision this way or that way.”