Related Party Status Must Be Determined On When Insolvency Proceedings Commence, Not By Historical Facts: NCLT Ahmedabad

The NCLT (National Company Law Tribunal) Ahmedabad has ruled that "related party status must be determined in praesenti, not by historical associations unless clear mala fide divestment." This significant decision clarifies how "related party" status should be assessed under the IBC (Insolvency and Bankruptcy Code). The NCLT emphasized that the relationship must exist at the time of the transaction in question ("in praesenti"). Historical connections are not sufficient unless there's clear evidence of a malicious divestment of assets to evade related party scrutiny, ensuring fairness and preventing arbitrary classification.