Dr. Anita Roy vs Aquafil Polymers Company Private Limited & Ors.

INDEVAR PANDEY, MEMBER (T)

The present appeal has been filed by Dr. Anita Roy, the Appellant herein, under Section 421 of the Companies Act, 2013, challenging the interim order dated 15.03.2023 passed by the Ld. National Company Law Tribunal, Ahmedabad Bench (Division Bench), Court-I, in Company Petition No. CP/5(AHM)/2023 under Section 241 of the Companies Act, 2013, titled Hitesh Shah & Anr. vs. Aquafil Polymers Company Private Limited & Ors. By the said impugned order, the Ld. NCLT has permitted Mr. Hiten Shah, (Respondent Nos. 2) and Mr. Poojan Hiten Shah (Respondent No. 3) who are former promoters; Directors; and Minority shareholders of Aquafil Polymers Company Private Limited (Respondent No. 1) to appear and represent Respondent No. 1 Company before all judicial, quasi-judicial and arbitral proceedings pending against the Company.

The Appellant is seriously aggrieved as the said interim relief virtually grants final relief at a preliminary stage, nullifies duly passed Board resolutions, undermines statutory corporate governance, and enables persons accused of serious misrepresentation, suppression of liabilities and misuse of authorisation to continue exercising control over the Company. The appeal, therefore, arises from grave prejudice caused to the Appellant, the Company and its stakeholders by the impugned interim directions.

The brief facts of the case are as given below:

M/s Aquafil Polymers Company Private Limited (Respondent No. 1 Company) was engaged in the business of engineering, procurement, design, supply, installation, construction, EPC and Operations & Maintenance (O&M) in the water and wastewater treatment segment.

The Respondent No. 2 has been the Managing Director of the company since 22.01.1997 and Respondent No. 3 became the Director of the company on 01.10.2012 and ever since they form a part of the Board of Directors and all the operational, managerial, and financial decisions have been taken by them. The Respondent No.2 is the father of the Respondent No.3.

The Appellant Company was unable to service its borrowings, owing to severe funding constraints, as a result of which its loan account was classified as a “Non-Performing Asset (NPA)” by State Bank of India, Ahmedabad. At the time of classification as NPA, the accumulated outstanding debt of the Company stood at Rs. 52 Crores (Rupees Fifty-Two Crores Only).

The Company thereafter entered into negotiations with State Bank of India for settlement of its dues, and pursuant to various correspondences, the Bank, vide its letter dated 28.02.2019, accepted the Company’s offer for settlement of dues upon payment of Rs. 18 Crores (Rupees Eighteen Crores Only) as against the total outstanding of Rs. 52 Crores. The said settlement was to be completed within a period of one year in terms of the conditions detailed in the Bank’s communication dated 17.06.2019, bearing reference no. SAMB/AHM/20120/US/338.

In consideration of the aforesaid settlement between the Bank, the Company and the Promoters, the Bank agreed that upon realization of the entire settlement amount within the agreed timeframe, it would release the assets of the existing promoters which had been mortgaged as collateral security against the debt.

In order to arrange funds for compliance with the One Time Settlement (OTS), the Promoters resolved to reduce their shareholding in the Company and accordingly approached the Appellant for infusion of funds and entered into commercial negotiations.

The Appellant, acting upon disclosures, representations and warranties extended by the Promoters, agreed to invest in the Company, assist in negotiations with the Bank, secure the One Time Settlement and infuse funds both by way of Share Subscription and by arranging further funds required for repayment of bank dues and for business operations. A Share Purchase and Subscription Agreement (SPA) dated 25^th September 2019 was signed between the Subscriber/Appellant; Promoters/ Respondent no.2 and 3 and the Company/ Respondent No. 1 herein.

On the basis of an independent valuation of the Company and negotiations between the parties, it was agreed that the Appellant would subscribe to 75% of the share capital of the Company for a total consideration of Rs.1,94,31,510.00 (Rupees One Crore, Ninety-Four Lakhs, Thirty-One Thousand, Five Hundred Ten Only).

The Share Subscription was to be initiated upon completion of the procedural steps listed under the clause titled “Share Subscription” and/or share purchase provisions under the Agreement.

In the interim period, the Appellant undertook to make necessary arrangements and repayments to ensure strict compliance with the timelines stipulated under the approved One Time Settlement by State Bank of India, and it was specifically agreed that adherence to the OTS repayment schedule would constitute the essence of the Agreement.

As on the date of execution of the Agreement, the shares of the Company were not listed on any stock exchange. The Agreement recorded that the Company was a going concern and had filed all statutory compliances and paid taxes as due.

It was agreed in the agreement that the Promoters would be entitled to receive disputed receivable amounts arising from pending arbitrations, arbitral awards or litigations in favour of the Company, subject to first paying outstanding unsecured creditors as per the books of account as on 31.03.2019, and such amounts received by the Promoters would be set off against short-term borrowings from them, including loans aggregating to Rs. 4.22 Crores.

Acting in furtherance of the agreement, the Appellant paid the One Time Settlement amount with State Bank of India, and on December 2020, the bank account of Respondent No. 1 Company stood settled, leading to release of assets and withdrawal of recovery proceedings against the Company and its promoters.

Thereafter, in January 2021, when the Appellant approached the bank for issuance of No Dues Certificate and updation of the Company’s financial status to enable participation in fresh projects, she discovered that several statutory, financial and commercial liabilities had been concealed from her at the time of investment.

In March 2021, while attempting to operationalise the Share Purchase Agreement, the Appellant discovered that the collateral documents, which were claimed to be worth more than Rs. 40 crores, had already been released to Respondent Nos. 2 and 3, and upon verification of title and valuation documents, the actual value of the properties was found to be drastically lower, with serious doubts regarding ownership and even existence of certain properties.

During the period from December 2021 to August 2022, the Appellant uncovered a series of undisclosed liabilities and adverse claims against Respondent No. 1 Company, including unpaid Karnataka VAT dues, claims and bounced cheques issued to Jain Infraprojects Private Limited, questionable forfeiture of performance bank guarantees relating to Bundi and Umaria projects, and an arbitration claim of approximately Rs. 3.2 crores filed by Hitachi India Limited.

On 14.07.2022, the Appellant received an official letter from the Office of the Guwahati Metropolitan Development Authority highlighting serious discrepancies in construction work and fraudulent billing in a project executed by Respondent No. 1 Company, a fact which had never been disclosed to the Board or reflected in the Company’s records.

Faced with these issues the Appellant convened a Board Meeting on 03.12.2022, which Respondent Nos. 2 and 3 did not attend. In the aforesaid meeting, the Board passed a resolution revoking all previous authorisations granted for representing the Company and established a fresh authorisation framework to protect the Company’s interests.

On 15.12.2022 the Respondent No. 2 issued an email on seeking to convene a Board Meeting on 22.12.2022, in which the date of Annual General Meeting was fixed. The Chairman of the meeting Mr. Hitesh Shah refused to confirm the minutes of the board meeting held on 22.12.2022 as it suffered from technical lapse.

On 10.01.2023, a Circular Resolution was passed by the Board authorising Appellant, as majority shareholder and Director, to represent Respondent No. 1 Company before all judicial, quasi-judicial and arbitral forums.

On 15.01.2023, after discovering continued unauthorised actions by Respondent No. 2 in his capacity as Managing Director, a notice under Section 115 of the Companies Act, 2013 was issued calling for an Extraordinary General Meeting to initiate steps for removal of Respondent Nos. 2 and 3 from executive positions and to realign governance in accordance with law.

The Respondent Nos. 2 and 3 filed a petition under Sections 241–242 of the Companies Act, 2013 before the Ld. NCLT, Ahmedabad, alleging oppression and mismanagement on 16-01-2023.

On 15.03.2023, the Ld. NCLT pronounced the impugned interim order permitting Respondent Nos. 2 and 3 to represent Respondent No. 1 Company in all pending judicial, quasi-judicial and arbitral proceedings.

Subsequently on 13.04.2023, the Registrar of Companies, Gujarat, Dadra & Nagar Haveli issued a communication directing maintenance of status quo and restraining the Company from taking decisions allegedly against the interest of Respondent Nos. 2 and 3.

Being aggrieved by the impugned order dated 15.03.2023, Dr. Anita Roy/Appellant has preferred the present appeal.

Ld. Counsel for the Appellant submits that the present appeal specifically challenges the interim order dated 15.03.2023 passed in CP No. 5 of 2023. During the pendency of the appeal, the Ld. NCLT passed a “common order” dated 18.07.2025 in CP/5(AHM)/2023. The Respondents have contended that the interim order has merged into the subsequent order. Ld. Counsel submits that such contention is legally untenable.

Ld. Counsel submits that the doctrine of merger applies only when a superior court finally adjudicates upon the same issue. In the present case, the order dated 18.07.2025 does not adjudicate or affirm the interim order under challenge. It merely continues supervision and keeps the petition pending. Therefore, no merger arises.

He relies upon the judgment of the Hon’ble Supreme Court in ‘Kunhayammed & Ors. v. State of Kerala & Anr.’ [(2000) 6 SCC 359], particularly Paragraph 44, which clarifies that merger applies only when a superior court finally adjudicates; interlocutory orders do not merge.

Ld. Counsel further submits that the subsequent order itself makes it clear that further directions would be issued once the Tribunal reaches a fuller understanding of the facts. The order directs a forensic audit and continues status quo “until further orders,” thereby clearly indicating that there has been no final adjudication. Since the Petition remains pending, the interim order survives and is amenable to appellate scrutiny.

On the merits of the case, Ld. Counsel submits that Section 241 of the Companies Act provides remedies to members qua shareholders and not to directors in their capacity as directors. In the present case, the Petitioners approached the Ld. NCLT seeking relief in their capacity as directors. The impugned order itself proceeds on the reasoning “because they are still directors,” thereby clearly misapplying Section 241.

Ld. Counsel relies upon ‘Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd.’ [(1981) 3 SCC 333], Paragraphs 48–53, which clearly holds that Section 241 jurisdiction is confined to shareholder rights and does not extend to director powers. Ld. Counsel submits that the right to represent the Company in litigation is not an inherent right of a shareholder but flows only from Board authorisation. Therefore, the impugned order is based on an erroneous jurisdictional premise.

Ld. Counsel submits that representation in litigation constitutes the legal voice of the Company. Once such representation is imposed by judicial order, its consequences are binding and irreversible. There is no scope for later disowning such representation.

Ld. Counsel relies upon ‘Shah Babulal Khimji v. Jayaben D. Kania’ [(1981) 4 SCC 8], Paragraphs 113–115, to submit that orders having final civil consequences require higher judicial scrutiny.

Ld. Counsel further submits that the impugned order does not record any satisfaction regarding prima facie case, balance of convenience, or irreparable injury. Reliance is placed on ‘Shiv Kumar Chadha v. MCD’ [(1993) 3 SCC 161], Paragraphs 31–32, which mandates such findings for grant of interim relief.

Ld. Counsel submits that the interim relief sought was narrowly confined to continuation of arbitration against JITF with existing powers of the Petitioners. However, the impugned order conferred sweeping litigation authority without any qualifying cut-off date. He invites our attention to the prayers made in the application for interim relief in particular para 9A and 9F which are extracted below:

Ld. Counsel submits that the order refers generally to “pending litigations” without reference to the contractual framework under Clause 6 of the SPA. This has the inevitable effect of altering the contractual reference point and retrospectively legitimising non-disclosure at the time of execution of the SPA. In this regard, he invites our attention to Para 11 and 12 of the impugned order dated 15.03.2023 which contain the findings and the interim orders of the Tribunal. The same are extracted below:

Ld. Counsel submits that the Tribunal could not have recast the contractual framework between the parties as interim relief. Reliance is placed upon ‘Bachhaj Nahar v. Nilima Mandal & Ors.’ [AIR 2009 SC 1103], Paragraphs 10–12, which holds that relief cannot travel beyond pleadings. He submits that in this case the prayers of Respondent No. 2 & 3 were limited to their participation in arbitration proceedings in JITF matter as Officers of the Respondent No.1 Company in the interest of the company.

Ld. Counsel submits that the Petitioners suppressed material facts and filed a false Articles of Association in CP No. 5 of 2023. The Ld. NCLT itself recorded in its order dated 18.07.2025 (Paragraph 30, Pages 64–67) that the Petitioners did not come with clean hands and sought personal gains through the judicial system.

Ld. Counsel submits that suppression of material facts and fraud disentitle a party to equitable relief. He relies upon the following cases decided by Hon’ble Supreme Court:

 Dalip Singh v. State of U.P. (2010) 2 SCC 114, Paragraphs 1–5;

 S.P. Chengalvaraya Naidu v. Jagannath (1994) 1 SCC 1, Paragraph 5;

 K.D. Sharma v. Steel Authority of India Ltd. (2008) 12 SCC, Paragraphs 34–36;

 A.V. Papayya Sastry v. Govt. of A.P. (2007) 4 SCC 221, Paragraphs 19–26;

Ld. Counsel submits that the impugned order effectively enables the Respondents to benefit from their own wrongdoing, which is impermissible in law.

Ld. Counsel submits that the Petitioners are in continuing breach of Clause 6 of the SPA, having suppressed litigations and liabilities and withheld information from the Board. Clause 6.5 mandates promoters to keep the Company informed to safeguard its interests.

Ld. Counsel submits that even in the JITF matter, the Respondents did not disclose the Company as a party in arbitration nor disclose receivables in the SPA. Since Clause 6 applies only to disclosed litigations and receivables, the Respondents cannot rely upon it after having concealed material disputes.

Ld. Counsel submits that the Petitioners never sought fresh Board authorisation after it was rescinded in the Board Meeting dated 03.12.2022. The Tribunal displaced a functioning corporate organ without recording incapacity or affording opportunity for internal authorisation. In this regard he relies upon ‘Nibro Ltd. v. National Insurance Co.’ [(1991) 1 Comp LJ 336 (Del)], which holds that a company acts only through Board authorisation.

Ld. Counsel submits that while the Appellant acknowledges the Tribunal’s endeavour to protect the Company pending adjudication, the continuation of interim arrangements on an erroneous legal premise makes appellate correction necessary to preserve neutrality and prevent interim directions from acquiring the character of substantive rights.

In light of the above, Ld. Counsel for the Appellant respectfully prays that this Hon’ble Tribunal may be pleased to:

Clarify that interim orders dated 15.03.2023 and 18.07.2025 neither amend nor override the Share Purchase Agreement dated 25.09.2019, nor authorise Respondents to represent or bind the Company in litigations undisclosed in the SPA;

Direct that any representation or action by Respondents in litigations not disclosed in the Share Purchase Agreement shall require prior shareholder approval and shall not bind the Company without such approval.

Ld. Counsel for Respondent No. 2 and Respondent No. 3 most respectfully submit that save and except what is expressly admitted or is a matter of record, all averments, allegations and submissions made by the Appellant in the present Appeal are false, misconceived, baseless and are therefore denied. Ld. Counsel submits that the present Appeal is directed against a limited interim order passed by the Ld. NCLT, Ahmedabad, which has merely permitted Respondent Nos. 2 and 3 to appear and represent Respondent No. 1 Company in pending judicial, quasi-judicial and arbitral proceedings. It is submitted that the said order neither adjudicates the final issues raised in the petition under Sections 241–242 of the Companies Act, 2013 nor causes any prejudice to the Appellant. On the contrary, the impugned order expressly records that the Share Purchase Agreement dated 25.09.2019 remains unchallenged and that the Appellant is not liable for past liabilities of the Company, thereby protecting her interests.

Ld. Counsel submits that the Appeal has been filed with oblique motives and is an attempt to derail ongoing arbitral proceedings between Respondent No. 1 Company and JITF Water Infrastructure Ltd. It is submitted that the Appellant had earlier sought to intervene before the Ld. Sole Arbitrator and prayed for stoppage of proceedings and conciliation, which application was decided vide order dated 11.01.2023. Having failed before the arbitral forum, the Appellant has now chosen to challenge the interim protection granted by the Ld. NCLT. Such conduct clearly demonstrates mala fide intent. It is further submitted that during pendency of proceedings, the Appellant has taken unilateral actions including transfer of shares in favour of JITF Water Infrastructure Ltd., thereby attempting to arm-twist the Respondents and influence parallel proceedings.

Ld. Counsel further submits that the impugned interim order was passed after due consideration of pleadings, documents and detailed submissions of all parties. The Ld. NCLT specifically recorded that under Clauses 6.2 to 6.6 of the Share Purchase Agreement, Respondent Nos. 2 and 3 are responsible for past liabilities up to 31.03.2019 and are entitled to disputed receivables, while the new management is not responsible for such liabilities. The Ld. NCLT further held that criminal liability, being strict in nature, cannot be fastened upon Respondent No. 2 in respect of past acts. Despite such clear findings safeguarding the Appellant’s position, the present Appeal has been filed on wholly misconceived grounds.

Ld. Counsel categorically denies allegations that Respondent Nos. 2 and 3 concealed liabilities allegedly amounting to Rs. 30 crores or suppressed information relating to Karnataka VAT, Jain Infra Projects, R&B Department of Gujarat, Standard Chartered Bank, ICICI Bank, Nagarjuna Construction Company, Hitachi India Limited, Wintech Engineering or collateral valuations. It is submitted that these are disputed factual matters requiring evidence and final adjudication and cannot form the basis for setting aside an interim order that merely preserves continuity of representation. The Appellant is attempting to convert contested factual disputes into grounds for appellate interference at an interlocutory stage.

Ld. Counsel further denies allegations relating to financial statements for FY 2021–22, alleged coercion in signing, refusal to appoint internal auditors, or misuse of authorizations. The Board Resolution dated 03.12.2022 and Circular Resolution dated 10.01.2023, which the Appellant relies upon to claim exclusive authorization, are themselves under challenge in the pending company petition and cannot be treated as conclusively valid at this stage. It is submitted that Respondent Nos. 2 and 3 were directors of the Company and had historically represented the Company in all judicial and arbitral proceedings even prior to execution of the SPA, which position has been acknowledged in the impugned order.

Ld. Counsel submits that the Appellant’s objection regarding existence of an arbitration clause in the SPA is legally untenable. The statutory remedy under Sections 241–242 of the Companies Act, 2013 operates independently of contractual arbitration mechanisms. Allegations of oppression and mismanagement are statutory in character and fall squarely within the jurisdiction of the Ld. NCLT. The existence of Clause 16 in the SPA does not oust such jurisdiction. Therefore, the contention that the Ld. NCLT ought to have referred parties to arbitration is wholly misconceived.

Ld. Counsel submits that the interim relief granted by the Ld. NCLT does not amount to grant of final relief. The order does not determine rights conclusively, nor does it prejudice corporate governance. It merely ensures that the Company continues to be represented by its directors in pending proceedings so that no vacuum is created to the detriment of the Company. The apprehension expressed by the Appellant that such representation would have irreversible consequences is speculative and unfounded. The main petition remains pending, and all issues relating to authorization, management and alleged misconduct will be decided after full trial.

Ld. Counsel further submits that the Appellant’s prayer seeking directions against the Registrar of Companies is beyond the scope of Section 421 of the Companies Act, 2013 and is not maintainable in the present Appeal. The Appeal is premature, as it challenges an interim protective order while the substantive petition remains pending adjudication.

Ld. Counsel submits that CP No. 5 of 2023 the main petition in which the impugned order has been passed has already been finally disposed of vide the order of Ld. NCLT on 18.07.2025. He submitted a certified copy of the same for perusal of the bench. He further submitted that in the operative portion of the aforesaid order in para 40 (XVIII) the Ld. Tribunal has finally disposed of the impugned order. He therefore submits that the present appeal has become infructuous in view of final disposal of the CP No. 5 of 2023.

Even otherwise the Ld. Counsel submits that the impugned order is reasoned, balanced and within jurisdiction. It protects the rights of all parties and does not suffer from perversity or illegality warranting interference under appellate jurisdiction. The present Appeal is therefore liable to be dismissed with costs.

We have heard the parties in detail and gone through the voluminous records and written submissions. The Respondent No. 2 and 3 who were the Petitioners in CP No. 5 (AHM) of 2023 are the only contesting respondents.

The present Appeal challenges the interim order dated 15.03.2023 passed in CP No. 5 (AHM) of 2023, whereby the Petitioners were permitted to represent Respondent No. 1 Company in all judicial, quasi-judicial and arbitral proceedings. The main grievance of the Appellant is that such permission allegedly interferes with and dilutes the contractual framework of the Share Purchase Agreement dated 25.09.2019, particularly Clause 6 dealing with management of the Company prior to completion and the handling of “Disputed Receivables.” The Petitioners in CP No. 5 (AHM) of 2023 who are arrayed as Respondent No. 2 and 3 in this appeal on the contrary argue that the impugned order is a reasoned one and is based on the Share Purchase Agreement (SPA) between the parties.

The basis dispute between the parties has arisen from the clauses relating to Share Purchase Agreement relating to management of the company in Clause 6, particularly relating to past liability and recovery of “Disputed Receivables” for the period prior to 31.03.2019. The relevant extracts of the SPA including Clause (j) in recital; definition of Receivables; Disputed Receivables; and relevant portion of Para 6 are extracted below:

The Term Promoters in the Share Purchase Agreement refers to Respondent No.2 & 3 and the Term Subscriber refer to the Appellant. The Term company refers to Aquafil Polymers Co. Pvt. Ltd./ Respondent No.1.

It can be seen from the definition of the Disputed Receivable that the same refers to amount claimed by the company in the pending arbitration proceedings/ arbitral awards/ litigations and the receipts from such realization would be received by the Promoters. The Clause (j) of the recital further clarifies that promoters will receive the Disputed Receivable for the period prior to 31.03.2019 and for which a list of such proceedings is also attached to the SPA.

Clause 6.2 of the SPA makes the promoters to liable to pay of the past liability of un-secured creditors reflecting on the accounts of the company dated 31.03.2019. Promoters are entitled to pay the same from the amount received under Disputed Receivables.

Clause 6.3 of the SPA gives the promoters legal right to receive and recover all the Disputed Receivables or incomes arising from law suits, arbitration proceedings, arbitral award, litigations or any other recovery proceedings. Clause 6.4 further provided that such amounts, if credited to the Company’s accounts, were to be paid to the existing promoters, who alone would have operational control over specified bank accounts.

Clause 6.5 clarified that any liability arising from disputes where promoters were arraigned due to past activities would be borne by the promoters, though they were required to keep the Company informed. Clause 6.6 made it clear that benefits and liabilities arising out of past disputes would rest exclusively with the promoters and that the new management would be fully indemnified.

It comes out very clearly from the aforesaid clauses of SPA that for the period prior to 31.03.2019 all the dues received would go to the promoters at the same time any claims which have to be paid for past liabilities would be the liability of the promoters. In other words, the benefits and liabilities of past disputes and claims shall rest with the promoters only and new management shall be indemnified by the promoters completely and unconditionally.

It has been the submission of the appellant that he relies completely on the SPA. We have seen from the extracted Para 11 & 12 of the impugned order extracted in para 14 above, that the Ld. NCLT has passed its interim orders strictly in accordance with SPA. The contention of the appellant is that Ld. NCLT has allowed the Petitioners (Respondent No. 2 and 3) relief much beyond what they have prayed for in para 9A and 9F of their prayer for interim orders.

We note that apart from specific prayers for interim relief in CP No. 5 of 2023 in paras 9A and 9F, the Petitioners (Respondent No.2 & 3 herein) in para 9L had also sought omnibus prayer that such other and further orders as Ld. Tribunal deems fit and proper in the interest of justice. In the balance of convenience Ld. NCLT has gone by the principle that the authority and responsibility should go together. If the promoters are liable for claims on account of Disputes Receivables before 31.03.2019 and also benefit from receipts arising out of Disputes Receivables. At the same time the new management is indemnified on account of past liabilities, it would be proper that the promoters, who are also the Directors of the company, represent the company in such proceedings. On this ground, we find that the interim order is a reasoned one and does not suffer from any infirmity.

Another contention of the appellant is that the original company petition is not maintainable as it has been filed by the Directors of the company and not in their capacity as members of the company and accordingly, they do not have locus to maintain the CP No. 5 of 2023.

We are of the view that the issue relating to maintainability had to be agitated before the Ld. NCLT which was the right forum. The appellant is before us only with regard to interim order passed by Ld. NCLT in the CP No. 5 of 2023. This appeal is not against the final orders of the Ld. NCLT in which case such plea could be taken by the appellant. Be that it may be, it is also an admitted fact that the Respondent No. 2 & 3 hold 25% of the share capital of the company and in accordance with Section 244 (1) (a) of the Companies Act, 2013 any member or members holding more than 1/10^th of the issue share capital of the company can apply under Section 241.

We further note that the Company Petition under Sections 241–242 continued to be heard along with IA No. 8 of 2023, IA No. 9 of 2023, Comp. Application No. 3 of 2023 and Comp. Application No. 13 of 2023. On 18.07.2025, the Adjudicating Authority passed a comprehensive Common Order in CP No. 5 (AHM) of 2023 along with all connected petitions, applications and interlocutory applications. This common order restructures the management and control of the Company; orders forensic audit of the company; and gives other directions in exercise of statutory powers under Section 242.

The submission of the appellant in this context is that the aforesaid order dated 18.07.2025 in CP No. 5 (AHM)/ 2023 is a subsequent interim order in which the original order dated 15.03.2023 has merged and this Appellate Tribunal should adjudicate the appeal on merits.

We now have a look at the order passed by Ld. NCLT on 18.07.2025. The first para of the order is extracted below:

(emphasis supplied)

We note from the para 1 of the order, that it’s a comprehensive order disposing the main petition and all company applications and interlocutory applications pending in the company petition. We are of the view that this order is the final order in the aforesaid Company Petition. This position will be further clear in subsequent paragraphs.

The operative part of the order is given in para 40. The relevant portions of which are extracted below:

By this order, Ld. Tribunal appointed an Independent Forensic Auditor to conduct a detailed audit of the Company’s affairs from the date of execution of the SPA till the date of the order. Importantly, the scope of the audit expressly includes examination of compliance with the Share Purchase Agreement dated 25.09.2019, financial transactions, related-party dealings, undisclosed liabilities, ongoing litigations and any misuse or diversion of funds. This necessarily includes scrutiny of the treatment, receipt, accounting and application of disputed receivables arising from arbitration proceedings. Thus, the very issue which forms the foundation of the present Appeal, namely, the contractual handling of disputed receivables, is now subject to forensic examination under judicial supervision.

Further, Ld. Tribunal removed the existing Managing Director and appointed an Independent Administrator to function as Director on the Board. The Administrator has authority to manage day-to-day operations, secure and preserve assets and records, oversee the forensic audit, ensure statutory compliance, and supervise bank operations. The Company’s bank accounts are to be operated only with the approval of the Administrator, except for arbitration-related transactions. This directly impacts the operational aspects of Clause 6.4 concerning operation of accounts for disputed receivables.

Additionally, Ld. Tribunal restored the shareholding pattern as on 01.07.2023, set aside certain Board resolutions; directed appointment of independent valuers; ordered exploration of a buyout; mandated maintenance of status quo in shareholding and directorial structure; and required fortnightly reporting to the Tribunal.

Most importantly in Para 40 (XVIII) of the operative directions, regarding the interim order dated 15.03.2023 Ld. Tribunal permitted the petitioners to represent Respondent No. 1 in all judicial, quasi-judicial, or arbitral proceedings, until further orders, but subject to express oversight by the Independent Administrator.

The legal consequence of these directions is significant. The interim order dated 15.03.2023 no longer operates in isolation, based merely on interpretation of Clause 6 of the SPA. Representation in arbitration proceedings is now subject to supervision by the Independent Administrator and ultimately by the Tribunal. The receipt, accounting and application of disputed receivables are under forensic audit. Bank operations require oversight. Compliance with the SPA itself is under scrutiny.

When statutory powers under Section 242 are invoked to regulate the affairs of a company, such directions override and control internal management arrangements and contractual understandings to the extent necessary to bring an end to oppression or mismanagement. The order dated 18.07.2025 has created a comprehensive supervisory framework within which all issues, including disputed receivables, are to be examined and regulated.

In this regard, we further take note of last three paragraphs 48 to 50 of the common order which are extracted below:

We note from the above, that CP No. 5 of 2023 was only listed for compliance thereafter and Registrar of Companies was also informed about the order. In effect it clearly means that the CP No. 5 of 2023 has been finally disposed of by the Ld. NCLT.

In appellate jurisdiction, the relevant consideration is whether any effective relief can now be granted. Even if we were to examine the correctness of the interim order dated 15.03.2023 independently, such examination would not alter the present position. The management of the Company is under the control of an Independent Administrator. The SPA compliance is under forensic audit. Arbitration proceedings are under oversight. Disputed receivables are subject to scrutiny. Status quo directions are in force.

An appeal becomes infructuous when subsequent judicial developments render adjudication of the earlier interim order unnecessary or incapable of producing practical relief. In the present case, the comprehensive order dated 18.07.2025 has overtaken and absorbed the interim order dated 15.03.2023. The interim direction survives only as part of, and subject to, the larger supervisory regime.

Therefore, the substratum of the present Appeal no longer survives independently. Any grievance concerning interpretation of Clause 6.3 to 6.6 of the SPA, or the handling of disputed receivables, must now be addressed within the framework of the Common Order dated 18.07.2025 or upon submission of the forensic audit report.

We further note that no appeal has been filed by the appellant against the aforesaid common order dated 18.07.2025 passed by Ld. NCLT. The order has therefore become absolute. We have also been informed that both the parties are extending full cooperation to the Administrator.

Accordingly, we hold that the present Appeal has become infructuous in view of the comprehensive directions issued under Section 242 in CP No. 5 (AHM) of 2023 along with IA No. 8 of 2023, IA No. 9 of 2023, Comp. Application No. 3 of 2023 and Comp. Application No. 13 of 2023. The Appeal is dismissed as having become infructuous. There shall be no order as to costs.