Directions In Quashed NCLT Order Cannot Survive Or Be Enforced Independently: NCLAT Delhi

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT), on 30 September held that once an order of the National Company Law Tribunal (NCLT) is quashed by an appellate forum, the directions contained in the quashed order cannot survive or be enforced independently.

A Bench of Judicial Member Sharad Kumar Sharma and Technical Member Indevar Pandey held:

“…it is known by common judicial prudence that, once the order is quashed by an appellate forum, it does not exist in the eyes of law on the records and hence a part of it cannot still be permitted, to be maintained and enforced…”

On 21 August 2026, the Chandigarh Bench of the NCLT had, passed an interim order appointing an Administrator and directing the jurisdictional SHO to confiscate the company's records, including books of account, bank statements and invoices. It also restrained the respondents from removing, transferring or disposing of the company's funds, assets or properties.

Subsequently, on 2 September 2026, the NCLAT quashed the interim order, observing that the NCLT had issued the serious interim directions without recording the requisite prima facie satisfaction or hearing the parties. It remitted the matter to the NCLT for fresh consideration of the application for interim relief.

The seized documents, however, were not returned. The appellant subsequently approached the NCLT seeking restoration of the records, contending that their continued retention prevented it from effectively responding to the fresh interim proceedings.

The NCLT declined to grant the relief on the ground that the NCLAT's order dated 2 September 2026 had not specifically directed the return of the seized documents. The NCLAT rejected this interpretation, holding that once the original order was quashed, none of its directions could continue to operate independently.

The Appellate Tribunal observed that allowing the directions in the 21 August order to survive would defeat the object of its order quashing the interim directions and would be contrary to judicial discipline.

Further, the Bench clarified that a separate direction for return of the documents was unnecessary, as quashing the original order necessarily wiped out all directions contained in it. Since the documents had been seized solely pursuant to the quashed order, the NCLAT held that they were required to be returned.

Accordingly, the NCLAT quashed the subsequent NCLT order and directed that all documents confiscated pursuant to the 21 August 2026 order be released forthwith.