Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLAT) 240

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Indevar Pandey, Judicial Member
Dr. Anita Roy – Appellant
Versus
Aquafil Polymers Company Private Limited – Respondent
Company Appeal (Arising against the impugned order dated 15.03.2023 passed by the Ld. National Company Law Tribunal, Ahmedabad Bench (Division Bench), Court-I, in Company Petition No. CP/5(AHM)/2023)|CP/5(AHM)/2023

For Appellant:Mr. Sajeve Deora, Advocate.
For Respondents:Mr. Aashish Mohan, Sr. Adv. with Mr. Vibhor Verdhan, Mr. Pulkit Chawla & Mr. Auritra Mukherjee, Advocates.

Appeal against NCLT interim order permitting directors to represent company becomes infructuous upon subsequent final order under Section 242 creating comprehensive supervisory framework with forensic audit and independent administrator, rendering independent adjudication unnecessary.

Headnote:(A) Companies Act, 2013 - Sections 241, 242, 244, 421 - Oppression and mismanagement petition - Interim order permitting directors to represent company in pending proceedings - Subsequent comprehensive final order appointing forensic auditor, removing managing director, appointing independent administrator, and continuing interim representation order subject to oversight - Appeal against interim order held infructuous as final order creates supervisory framework overriding internal arrangements and rendering independent adjudication unnecessary. (Paras 34, 44, 46, 55-62)

(B) Doctrine of merger - Does not apply to interlocutory orders unless superior court finally adjudicates same issue - Subsequent order continuing supervision without final adjudication on interim relief does not cause merger. (Paras 4-7)

(C) Interim relief - Must record prima facie case, balance of convenience, irreparable injury - Representation in litigation not inherent shareholder right but requires board authorisation - Relief cannot exceed pleadings or recast contractual framework. (Paras 8-15)

Facts of the case:
Majority shareholder challenged NCLT interim order permitting minority shareholder-directors to represent company in all pending judicial, quasi-judicial, arbitral proceedings, alleging it granted final relief prematurely, nullified board resolutions, undermined governance, and enabled control by accused of misrepresentation and suppression of liabilities post share purchase agreement. Directors filed petition alleging oppression, claiming rights under agreement for past disputed receivables.

Findings of Court:
Interim order reasoned and aligned with share purchase agreement clauses assigning past liabilities and receivables benefits to promoters-directors, who remain directors; balance of convenience favoured continuity of representation where authority and responsibility align. Subsequent final order supersedes, rendering appeal infructuous.

Issues: Whether interim order misapplied Section 241 to director rights, exceeded prayers, lacked mandatory findings for interim relief, violated contractual framework; whether appeal survives post final order disposing main petition with comprehensive directions.

Ratio Decidendi: Appeal against interim order becomes infructuous when subsequent final order under Section 242 establishes supervisory regime including forensic audit, independent administration, and oversight of proceedings, absorbing and regulating interim directions; no effective relief possible independently. (Paras 60-63)

Result: Appeal dismissed as infructuous. No order as to costs.

Table of Content
1. appeal challenges nclt interim order permitting former promoters' representation. (Para 1 , 2 , 3)
2. no merger of interim order; subsequent order renders appeal infructuous. (Para 4 , 5 , 6 , 7 , 14 , 32 , 48 , 49 , 50 , 59)
3. section 241 remedies for shareholders, not directors. (Para 8 , 9 , 45 , 46)
4. interim relief must record prima facie case; limited to prayers. (Para 10 , 11 , 12 , 13 , 15 , 21 , 43 , 44)
5. suppression of facts disentitles equitable relief. (Para 16 , 17 , 18)
6. disputed liabilities and receivables under spa clause 6. (Para 19 , 20 , 24 , 25 , 26 , 27 , 28)
7. spa allocates past liabilities and disputed receivables to promoters. (Para 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42)
8. nclt section 242 order supersedes interim directions via supervisory framework. (Para 47 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 60 , 61 , 62 , 63)
9. appeal dismissed as infructuous. (Para 64)

JUDGMENT

(19th February, 2026)

INDEVAR PANDEY, MEMBER (T)

The present appeal has been filed by Dr. Anita Roy, the Appellant herein, under Section 421 of the Companies Act, 2013, challenging the interim order dated 15.03.2023 passed by the Ld. National Company Law Tribunal, Ahmedabad Bench (Division Bench), Court-I, in Company Petition No. CP/5(AHM)/2023 under Section 241 of the Companies Act, 2013, titled Hitesh Shah & Anr. vs. Aquafil Polymers Company Private Limited & Ors. By the said impugned order, the Ld. NCLT has permitted Mr. Hiten Shah, (Respondent Nos. 2) and Mr. Poojan Hiten Shah (Respondent No. 3) who are former promoters; Directors; and Minority shareholders of Aquafil Polymers Company Private Limited (Respondent No. 1) to appear and represent Respondent No. 1 Company before all judicial, quasi-judicial and arbitral proceedings pending against the Company.

2. The Appellant is seriously aggrieved as the said interim relief virtually grants final relief at a preliminary stage, nullifies duly passed Board resolutions, undermines statutory corporate governance, and enables persons accused of serious misrepresentation, suppression of liabilities and misuse of authorisation to continue exercising control over the Company. The appeal, therefore, arises from grave prejudice caused to the Appellant, the Company and its stakeholders by the impugned interim directions.

Brief facts of the case

3. The brief facts of the case are as given below:

i. M/s Aquafil Polymers Company Private Limited (Respondent No. 1 Company) was engaged in the business of engineering, procurement, design, supply, installation, construction, EPC and Operations & Maintenance (O&M) in the water and wastewater treatment segment.

ii. The Respondent No. 2 has been the Managing Director of the company since 22.01.1997 and Respondent No. 3 became the Director of the company on 01.10.2012 and ever since they form a part of the Board of Directors and all the operational, managerial, and financial decisions have been taken by them. The Respondent No.2 is the father of the Respondent No.3.

iii. The Appellant Company was unable to service its borrowings, owing to severe funding constraints, as a result of which its loan account was classified as a “Non-Performing Asset (NPA)” by State Bank of India, Ahmedabad. At the time of classification as NPA, the accumulated outstanding debt of the Company stood at Rs. 52 Crores (Rupees Fifty- Two Crores Only).

iv. The Company thereafter entered into negotiations with State Bank of India for settlement of its dues, and pursuant to various correspondences, the Bank, vide its letter dated 28.02.2019, accepted the Company’s offer for settlement of dues upon payment of Rs. 18 Crores (Rupees Eighteen Crores Only) as against the total outstanding of Rs. 52 Crores. The said settlement was to be completed within a period of one year in terms of the conditions detailed in the Bank’s communication dated 17.06.2019, bearing reference no. SAMB/AHM/20120/US/338.

v. In consideration of the aforesaid settlement between the Bank, the Company and the

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2026 Supreme(Online)(NCLAT) 240

Appeal against NCLT interim order permitting directors to represent company becomes infructuous upon subsequent final order under Section 242 creating comprehensive supervisory framework with forensic audit and independent administrator, rendering independent adjudication unnecessary.

Cases Referred (9)