2026 (2) TMI 1167 - AT - Companies Law

Interlocutory Order Merger: appeal rendered infructuous after a comprehensive final order incorporated and superseded the interim relief.

Whether an appeal against an interim order became infructuous was examined by reference to a subsequent comprehensive common order that finally disposed ... Doctrine of merger of interlocutory and subsequent orders - interim relief versus final adjudication - Scope of jurisdiction under Sections 241-242 of the Companies Act in company petitions - supervisory powers u/s 242 to regulate management and override internal contractual arrangements - forensic audit and appointment of an Independent Administrator as measures of judicial supervision - infructuousness of appeal where subsequent comprehensive orders render earlier relief incapable of practical effect - HELD THAT:- 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 1/10th 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. 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 1/10th of the issue share capital of the company can apply under Section 241. 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. Issues: Whether the present appeal against the interim order dated 15.03.2023 has become infructuous/merged into the subsequent comprehensive common order dated 18.07.2025 passed by the Adjudicating Authority in CP No. 5 of 2023 and connected matters, thereby rendering appellate adjudication of the interim order unnecessary.Analysis: The Tribunal examined the scope and operative directions of the common order dated 18.07.2025 which (i) finally disposed of CP No. 5 of 2023 and connected applications, (ii) appointed an Independent Forensic Auditor to examine compliance with the Share Purchase Agreement and disputed receivables, (iii) removed the Managing Director and appointed an Independent Administrator with authority to oversee operations, bank accounts and the forensic audit, and (iv) continued the interim order dated 15.03.2023 subject to oversight by the Independent Administrator. The Tribunal applied the principle that an interlocutory order may merge into a subsequent final adjudication by the superior forum when the later order creates a comprehensive supervisory framework that addresses and regulates the very matters which formed the substratum of the interlocutory grievance. Given that the common order subjects disputed receivables, representation in proceedings, bank operations and SPA compliance to forensic scrutiny and Tribunal/Administrator oversight, any effective relief that could be granted by this appeal against the standalone interim direction would no longer produce practical consequences.Conclusion: The appeal is dismissed as having become infructuous because the common order dated 18.07.2025 finally disposed of the company petition and incorporated, regulated and superseded the interim order dated 15.03.2023; no effective appellate relief on the challenged interim direction remains available.