Natural justice and interim restraint in insolvency proceedings bar unilateral release of charge and plan implementation orders.

An insolvency proceeding note under the IBC and NCLT Rules states that orders directing release of charge over the entire 8.87 acres and implementation of the resolution plan were unsustainable because they were passed without hearing the affected party, without reasons, and in disregard of a subsisting interim status quo order over the remaining land. The record indicated that the earlier interim restraint limited development rights to 4.33 acres, yet the later directions covered the full property and title deeds without clarification or reasoned consideration. The impugned orders were therefore treated as vitiated by violation of natural justice, judicial propriety, and non-application of mind.

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Issues: Whether the impugned orders directing release of charge over the entire 8.87 acres and directing implementation of the resolution plan were sustainable when they were passed without giving hearing to the affected party, without recording reasons, and in disregard of the subsisting interim order maintaining status quo over the balance land.

Analysis: The orders under challenge were passed in applications invoking the Tribunal's jurisdiction under the Insolvency and Bankruptcy Code, 2016 and the NCLT Rules, 2016 in relation to approval and implementation of the resolution plan. The record showed that an earlier interim order had restricted development rights to 4.33 acres and directed status quo for the remaining land. Despite that, the impugned order directed release of the charge over the entire extent of land and handover of title deeds, without seeking clarification of the interim order, without affording an opportunity of hearing to the affected party, and without recording any reasoned consideration of the pleadings or the subsisting restraint. The subsequent order directing implementation of the plan also proceeded without due regard to the same interim restraint and suffered from the same procedural defects.

Conclusion: The impugned orders could not be sustained and were liable to be quashed for violation of natural justice, judicial propriety, and failure to consider the binding interim order.

Final Conclusion: The appeals succeeded, the impugned orders were set aside, and the matters stood concluded.

Ratio Decidendi: A tribunal cannot pass an order affecting property or plan implementation in derogation of a subsisting appellate interim order and without hearing affected parties and recording reasons; such an order is vitiated by violation of natural justice and non-application of mind.

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