Interim preservation of property: status quo to be maintained and no new third party interests until the Company Petition is decided.

Interim preservation of the project land and attendant development rights must continue pending final adjudication of the Company Petition; parties are required to maintain status quo and refrain from altering the nature of the property or creating further third party interests, to prevent rendering the substantive remedy ineffectual. The existing interim arrangement and earlier protective permissions are to remain in force, the impugned appellate order is treated as modified to that effect, and the statutory adjudicatory forum is directed to proceed expeditiously with determination of the petition.

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Issues: Whether the interim arrangement preserving the subject matter of the dispute should continue and the scope of interim protection to be maintained pending adjudication of the Company Petition under Sections 241, 242, 244 and 59 of the Companies Act, 2013.

Analysis: The Court confined its consideration to interlocutory relief necessary to preserve the project land and attendant development rights until the NCLT finally adjudicates the pending Company Petition. Having reviewed the sequence of interim orders passed by appellate and this Court, the Court noted ongoing proceedings before the NCLT and subsequent developments including initiation of insolvency proceedings against a transferee and limited protective works permitted earlier. The Court determined that the paramount interest is to prevent alteration of the nature of the property or creation of further third-party interests which could render the substantive remedy ineffectual, and that the existing interim arrangement should continue while the statutory forum decides the merits. The Court therefore modified the impugned NCLAT order to direct maintenance of status quo as per earlier orders and directed the NCLT to proceed expeditiously with the Company Petition.

Conclusion: The interim arrangement preserving the subject matter shall continue; parties shall maintain status quo in terms of this Court's earlier orders and shall not take steps altering the property or creating further third-party interests; the impugned NCLAT order dated 11.10.2022 is modified accordingly and will operate until disposal of the Company Petition.

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