Status quo must be maintained to preserve assets pending adjudication of oppression and mismanagement claims.

Appellant No. 1 claims a 40% shareholding in Respondent No. 1 (the holding company of Respondent No. 2), which owns land in Mumbai valued at approximately Rs. 1000 crores.

Appellants allege that after reviving a distressed slum redevelopment project between 2016-2019, the Respondents fraudulently removed their shareholding via a revised MGT-7 form and illegally inducted/removed directors without notice.

The Appellants filed a petition for oppression and mismanagement under Sections 241-242 of the Companies Act, 2013.

The NCLT declined interim relief on 29.07.2021.

On appeal, the NCLAT set aside the NCLT order but limited interim protection to a one-month restraint on "perceptive steps" and remanded the contempt proceedings to the NCLT.

During the pendency of the present SC appeal, the project land was conveyed to Respondent No. 11, which subsequently entered Corporate Insolvency Resolution Process (CIRP).

1. Whether the interim protection granted by the NCLAT was sufficient to preserve the subject matter of the dispute pending final adjudication of the oppression and mismanagement petition.

2. Whether the status quo should be maintained regarding the project land and corporate management to prevent the Respondents from turning the entities into shell companies.

The Court applied the principles governing interim relief in proceedings related to oppression and mismanagement under Sections 241, 242, 244, and 59 of the Companies Act, 2013.

It relied on the doctrine of preservation of the status quo to ensure that the subject matter of the litigation (the "lis") is not frustrated or rendered Oios during the pendency of Trial.

The Court also integrated procedures under the Insolvency and Bankruptcy Code, 2016, noting the appointment of an Interim Resolution Professional (IRP) for the third-party developer.

The Court observed that the project land constitutes the principal asset of the dispute and that the substantive petition remains pending before the NCLT.

It reasoned that the NCLAT’s limited one-month protection was inadequate given the allegations of asset-stripping and the complex intervening developments, such as the conveyance of land and subsequent insolvency of the transferee.

The Court analyzed its own prior interlocutory orders—which had frozen construction except for essential structural safety works—and determined that these protections must remain in place to prevent "irreversible changes" to the land.

By modifying the NCLAT's order, the Supreme Court linked the necessity of the interim injunction to the preservation of corporate assets until the NCLT can determine the merits of the fraud and mismanagement claims.

The Court held that the parties must maintain status quo as per the Supreme Court’s previous interim directions, specifically restraining any steps that would alter the nature of the property or create third-party interests until the final disposal of the Company Petition.

The NCLT, Mumbai Bench, is directed to decide Company Petition No. 159(MB) of 2021 expeditiously, preferably within two months of the parties' appearance on 19.03.2026.

The contempt petitions were disposed of without an expression on merits, leaving factual determinations to the NCLT.