### Third Parties with Affected Substantive Rights Are Necessary Parties Entitled to Impleadment and Hearing

The Corporate Debtor (CD), Isinox Ltd., was first admitted to CIRP on 17.03.2023 under Section 7 of the IBC.

While an appeal against this order was pending and a stay was in operation, a second CIRP application under Section 9 was admitted on 18.07.2024, triggering a new moratorium.

Indian Bank (Applicant in I.A. 6364/2025) sold a secured asset of the CD to Vehicles Recyclers India Pvt. Ltd. (Applicant in I.A. 6174/2025) during the subsistence of the second moratorium.

The first CIRP was eventually set aside on 16.12.2024.

The IRP in the second CIRP sought to stay the auction sale, prompting the Bank and the Purchaser to seek impleadment in the current appeal to protect their interests and challenge the legality of the second CIRP.

Whether third parties (a secured creditor and a successful auction purchaser) whose rights are affected by a moratorium and the potential set-aside of an auction sale are "necessary or proper parties" for impleadment in an appeal challenging the admission of a CD to CIRP.

Whether the court should deny the right of being heard when substantive civil rights are exposed to forensic scrutiny within insolvency proceedings.

The court applied the established civil procedure principle regarding the impleadment of "necessary and proper parties," holding that any person whose civil rights are in peril of being affected by a judicial proceeding has an inherent right to be heard.

It further emphasized the constitutional maxim that justice must be seen to be done, requiring that no judicial forum should deny a hearing to a party whose substantive rights are under scrutiny.

The court also noted the limited role of an IRP in a suspended director's appeal regarding third-party impleadment.

The Tribunal reasoned that the Indian Bank and the purchaser are directly impacted because the sale occurred while a moratorium was technically in force due to the impugned order.

The court observed that the purchaser is currently in a "no man’s land," facing potential "collateral damage" if the IRP targets the property sold.

Although the Appellant argued the Bank acted in bad faith and that a second CIRP is permissible, the Tribunal clarified that at this stage, it was only concerned with the "need to be heard" rather than the "merits" of the Bank's claims.

Since the outcome of the appeal could invalidate the transaction or impose obligations on the Bank, their presence is necessary to secure their interests and assist the court in addressing the perceived illegality of the simultaneous CIRP proceedings.

The Court held that to deny them a hearing would violate principles of natural justice given that their substantive rights over the secured asset are at stake.

The Appellant was directed to file an amended memo of parties and serve appeal papers within three days, with a schedule set for filing objections and rejoinders by April 2026.