Inherent powers can support pre-admission interim protection to preserve mortgaged property and prevent abuse of process.

The Adjudicating Authority may invoke inherent power under Rule 11 of the NCLT Rules, 2016 to pass interim protection before admission of a section 7 application, where necessary to prevent abuse of process and preserve the subject property. Such relief can be granted even against a secured creditor proceeding under the SARFAESI framework, and the fact that the creditor was not initially impleaded does not by itself remove jurisdiction if notice is issued to safeguard its interest. The Tribunal declined to decide the competing title and ownership claims over the mortgaged property, leaving those issues for determination in the main proceedings, and upheld continuation of the status quo order.

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Issues: Whether the Adjudicating Authority had jurisdiction to continue a status quo order and grant interim protection before admission of the section 7 application, including against a secured creditor proceeding under the SARFAESI framework.

Analysis: The Tribunal held that the Adjudicating Authority could, in exercise of its inherent power under Rule 11 of the National Company Law Tribunal Rules, 2016, pass appropriate interim orders even before admission of an application under section 7 of the Insolvency and Bankruptcy Code, 2016, to prevent abuse of process and protect the subject property pending adjudication. It further held that issuance of notice to the secured creditor in the same order safeguarded its interest, and the mere fact that the secured creditor was not initially a party did not denude the Adjudicating Authority of jurisdiction to pass an ex parte interim order. On the facts, the Tribunal declined to record any final view on the competing claims over title and ownership of the mortgaged immovable property, leaving those questions to be decided by the Adjudicating Authority in the main proceedings.

Conclusion: The continuation of the interim status quo order was upheld and the challenge by the appellants was rejected.

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