Order 1 Rule 10(2) and 8A CPC bar strangers from insolvency appeals after resolution plan approval

NCLAT dismissed multiple interlocutory applications seeking impleadment and intervention in pending insolvency appeals. Applying Order 1 Rule 10(2) CPC and SC precedents, the Tribunal held that only parties with a direct, present and subsisting interest in the subject matter can be impleaded as necessary or proper parties; collateral or extinguished interests are insufficient. In view of the approved resolution plans, all claims and rights of erstwhile shareholders and operational creditors stood extinguished, with NIL or full payouts as provided, leaving no locus to re-agitate issues or reopen concluded matters. An application under Order 1 Rule 8A CPC for intervention to address questions of law was also rejected, NCLAT holding that the provision is enabling, not a right, and cannot be invoked by complete strangers to the proceedings.

---

---

1. ISSUES PRESENTED AND CONSIDERED

(1) Requirements for impleadment of a third party in appeals before the Appellate Tribunal arising from an order of the Adjudicating Authority under the Insolvency and Bankruptcy Code.

(2) Whether a pre-CIRP shareholder of a corporate debtor in another CIRP (claiming extinguished equity rights and earlier rejected appeal against the resolution plan) has locus to be impleaded as respondent in the present insolvency appeals.

(3) Whether an association of erstwhile operational creditors and an assignee of their actionable claims have locus to be impleaded as respondents in the present insolvency appeal after approval and implementation of the resolution plan.

(4) Whether a shareholder of the foreign holding company of the successful resolution applicant, who acquired a minimal shareholding after completion of CIRP and passing of the impugned order, has locus to be impleaded in the appeal.

(5) Scope of Order I Rule 8A CPC before this Tribunal and whether a shareholder of a financial creditor can, by invoking this provision, intervene to address questions of law and seek substantive relief in the pending appeal.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (1): Requirements for impleadment of a third party in the present appeals

Legal framework

(a) The Tribunal referred to Section 424 of the Companies Act, 2013, holding that while it is not bound by the Code of Civil Procedure, it is guided by principles of natural justice and may regulate its own procedure, having specified powers akin to those of a civil court.

(b) It held that although Section 424(2) does not expressly incorporate CPC provisions on impleadment, the Tribunal can be guided by the principles underlying Order I Rule 10 CPC in dealing with applications for addition of parties.

(c) The Tribunal examined precedents of the Supreme Court on Order I Rule 10(2) CPC, including Razia Begum, Udit Narain Singh, Ramesh Hirachand Kundanmal, Anil Kumar Singh, Kasturi, and Mumbai International Airport, and also considered the Delhi High Court's reasoning in applying CPC principles to tribunals.

Interpretation and reasoning

(d) The Tribunal distilled the settled principles as follows:

- A third party must show a direct interest, as distinguished from a mere commercial or indirect interest, in the subject-matter of the litigation.

- A "necessary party" is one without whom no effective order can be made; a "proper party" is one whose presence is required for a complete and final decision, though an effective order may be possible in their absence.

- The intervenor must have a cause of action against or a legal right relatable to the subject-matter of the existing action; mere desire to support or oppose or to advance arguments is insufficient.

- The Tribunal cannot allow adjudication of collateral matters or expansion of the lis; if addition of a party would alter the nature of the proceedings or introduce a new cause of action, impleadment must be refused, even if the party might otherwise be "proper".

- The primary test is whether the order sought in the appeal may directly affect the intervenor's legal rights and whether his presence is necessary so that he is bound by the outcome.

Conclusions

(e) The Tribunal held that it will follow the above Supreme Court principles under Order I Rule 10(2) CPC while considering third-party impleadment, and that only persons with a direct, present and legally protectable interest in the subject-matter of the impugned order may be added; those seeking to re-agitate concluded issues or raise collateral disputes will not be impleaded.

Issue (2): Impleadment of pre-CIRP shareholder of OSPIL (SREI Multiple Asset Investment Trust - IA No. 705 of 2022 & IA No. 254 of 2023)

Legal framework

(a) The Tribunal noted that the resolution plan of the relevant corporate debtor (OSPIL) had been approved by the Adjudicating Authority and that the applicant's own appeal challenging such approval had been dismissed by this Tribunal on 18.01.2022, which order attained finality.

(b) The Tribunal relied on the Supreme Court judgment in Ghanshyam Mishra and Sons (P) Ltd. v. Edelweiss ARC, holding that upon approval of a resolution plan under Section 31 IBC, all claims not provided in the plan stand extinguished and no stakeholder may initiate or continue proceedings in respect of such extinguished claims.

Interpretation and reasoning

(c) The applicant's claim of locus was premised on its being a 69.80% pre-CIRP shareholder of OSPIL and its assertion that if the impugned order (directing payment of RTU charges to OSPIL as CIRP cost) is upheld, the amounts would have to be paid to erstwhile shareholders, including the applicant.

(d) The Tribunal examined the approved resolution plan for OSPIL and the Adjudicating Authority's order, which provided that the resolution applicant and its nominees would hold 100% of the shares of the corporate debtor post-approval, thereby extinguishing the shareholding of all pre-CIRP shareholders.

(e) It noted that the applicant had earlier challenged the plan in an appeal specifically contending discrimination (NIL payment to it as shareholder vis-à-vis treatment of another shareholder as financial creditor). This Tribunal had, in that appeal, upheld the plan, held the applicant entitled to NIL payment on its equity and rejected its challenge; the decision became final.

(f) Applying Ghanshyam Mishra, the Tribunal held that, since the resolution plan for OSPIL had been approved and implemented, and the applicant's rights were dealt with therein (with NIL payment), all its pre-CIRP shareholder rights and claims stood extinguished and could not be revived via impleadment in an appeal against a later order.

(g) The Tribunal found that the applicant was attempting to reopen and re-litigate issues concerning the CIRP and resolution plans of Essar Steel and OSPIL, which have already attained finality, and to expand the scope of the present appeals beyond the impugned order regarding CIRP costs.

(h) The Tribunal held that the applicant has no direct, present legal interest in the subject-matter of these appeals (challenge to the order directing payment of RTU charges as CIRP cost) and does not satisfy the conditions for being a necessary or proper party under the principles drawn from Order I Rule 10(2) CPC.

Conclusions

(i) The applicant, being an extinguished pre-CIRP shareholder whose claims were finally settled with NIL entitlement under the approved resolution plan, has no subsisting right or direct interest in the subject matter of the appeals.

(j) The applications for impleadment (IA No. 705 of 2022 and IA No. 254 of 2023) were rejected.

Issue (3): Impleadment of association of erstwhile operational creditors and assignee (IA No. 217 of 2025)

Legal framework

(a) The applicants relied on their status as: (i) an association whose constituents were operational creditors of Essar Steel, and (ii) an assignee of actionable claims of certain operational creditors and shareholders.

(b) The Tribunal again applied Ghanshyam Mishra, holding that upon approval and implementation of a resolution plan, all pre-CIRP claims of stakeholders, including operational creditors, stand extinguished except to the extent provided under the plan.

Interpretation and reasoning

(c) The applicants asserted that the resolution plan of Essar Steel was void ab initio and obtained by fraud, that their members continue (or "arguably" continue) to be operational creditors, and that they have locus as persons aggrieved who would be affected by any payment of RTU charges and its downstream distribution.

(d) The Tribunal noted that the resolution plan of Essar Steel had been approved by the Adjudicating Authority, upheld by this Tribunal and finally affirmed by the Supreme Court; review petitions had also been dismissed. Accordingly, all rights of erstwhile operational creditors stood concluded.

(e) It held that the applicants' attempt to impeach the validity of the Supreme Court's judgment and to reopen the CIRP and resolution plans of Essar Steel and OSPIL is far beyond the scope of these appeals, which concern only the correctness of the order regarding RTU charges as CIRP cost.

(f) The Tribunal found that the applicants' alleged injury was entirely derivative of extinguished pre-CIRP claims; hence, they lack any direct, subsisting legal interest in the subject matter of these appeals under the tests for necessary/proper parties.

(g) It also noted that the pleadings sought to introduce wide-ranging allegations, including fraud and jurisdictional challenges to prior orders, which would amount to adjudication of collateral matters and expansion of the lis, contrary to the principles under Order I Rule 10(2) CPC.

Conclusions

(h) As erstwhile operational creditors and assignee of extinguished claims post-approval of the resolution plan, the applicants have no direct legal interest in the present appeals and cannot be impleaded.

(i) IA No. 217 of 2025 was rejected.

Issue (4): Impleadment of shareholder of foreign holding company (IA No. 6019 of 2023)

Legal framework

(a) The applicant's claim rested solely on his status as an investor holding 85 equity shares in a foreign entity (the ultimate parent of the successful resolution applicant), acquired in June 2022, i.e., long after completion of CIRP and passing of the impugned order.

Interpretation and reasoning

(b) The Tribunal observed that the foreign parent company was not a party to the CIRP or to the proceedings before the Adjudicating Authority or this Tribunal, and the applicant held no shares in the concerned Indian corporate debtors.

(c) The impugned order was passed in November 2020; the appeals have been pending since 2020, while the applicant's shareholding in the foreign parent commenced only in June 2022, making his alleged interest entirely subsequent and remote.

(d) The applicant's allegations related to alleged fraud in CIRPs and valuation issues, but such contentions were held to be collateral to and beyond the scope of the present appeals.

(e) Applying the tests under Order I Rule 10(2) CPC principles, the Tribunal held that mere status as a small shareholder of a foreign holding company of the appellant, acquired after material events, does not create a direct or legally protectable interest in the subject-matter of the appeals.

(f) The Tribunal characterised the application as an abuse of process and an attempt by a complete stranger to the underlying insolvency proceedings to intervene without any legal basis.

Conclusions

(g) The applicant has no locus or direct interest in the subject-matter of the appeals; IA No. 6019 of 2023 was rejected.

Issue (5): Scope of Order I Rule 8A CPC and intervention by shareholder of a financial creditor (IA No. 6020 of 2023)

Legal framework

(a) The applicant, a shareholder of a financial creditor (SIFL), sought to intervene under Order I Rule 8A CPC to raise two questions of law and to seek recall of interim orders and dismissal of one of the appeals, contending that the appellant is not a "person aggrieved."

(b) The Tribunal reproduced Order I Rule 8A CPC and examined its legislative history and "Notes on Clauses" of the 1976 amendment introducing the provision.

Interpretation and reasoning

(c) On the effect of the resolution plans, the Tribunal held that SIFL, as a financial creditor in the CIRPs of Essar Steel and OSPIL, received its payout under the approved resolution plans; hence, in view of Ghanshyam Mishra, no independent right of any pre-CIRP shareholder of SIFL survives to initiate or support proceedings on that basis.

(d) Analysing Rule 8A, the Tribunal held:

- The provision is enabling and empowers the court, in public interest, to permit a person or body of persons to present an opinion on a question of law directly and substantially in issue; it does not create a right in any person to insist on being heard or to thrust arguments upon the court.

- Its nature is akin to the court's power to appoint or hear an amicus curiae, for assistance on questions of law already arising in the case, at the court's discretion.

- It cannot be used to confer standing on persons who otherwise have no direct or subsisting legal interest in the subject-matter or to enable them to pursue collateral objectives or independent causes of action.

(e) The Tribunal noted that the applicant had no subsisting legal interest in the appeals (as an ex-shareholder of a financial creditor whose claim was fully satisfied under the resolution plans), and that his attempt was to challenge maintainability of the appeals and seek substantive orders, going beyond mere assistance on a question of law.

(f) The Tribunal also referred to its own earlier decision recognising that Order I Rule 8A is only an enabling provision for the court's use, not a source of enforceable participatory rights for third parties.

Conclusions

(g) A pre-CIRP shareholder of a financial creditor whose claim stands satisfied under an approved resolution plan has no subsisting right or direct interest to intervene in an insolvency appeal.

(h) Order I Rule 8A CPC does not confer an independent right of audience on such a person; it only enables the court, in its discretion, to seek an opinion on a question of law from a suitable person or body.

(i) The applicant was held to have no locus under Order I Rule 8A to participate or to seek substantive relief; IA No. 6020 of 2023 was rejected.

Overall disposition

All impleadment and intervention applications (IA Nos. 705 of 2022, 254 of 2023, 217 of 2025, 6019 of 2023 and 6020 of 2023) were rejected, and the main appeals were directed to be listed for final hearing.

---