NCLAT Closes DSK Motors Appeals After Fresh Order Supersedes Earlier Attachment Order

Decision in brief

The NCLAT closed Company Appeal (AT) (Insolvency) No. 383 of 2024 and Company Appeal (AT) (Insolvency) Nos. 469-470 of 2024 without deciding the underlying attachment dispute on merits.

The earlier NCLT order dated 2 February 2021 had directed the Directorate of Enforcement to release the attachment over certain assets of DSK Motors. That order was later recalled, the original application was reheard, and a fresh order was passed on 29 November 2024.

Because the fresh order superseded the earlier order, the NCLAT held that the old enforcement and recall controversies had become infructuous or redundant under the principle of merger. The fresh order is being challenged separately in Company Appeal (AT) (Insolvency) No. 176 of 2025.

Background of the case

DSK Motors Pvt. Ltd. was undergoing liquidation. Its Liquidator, Indrajit Mukherjee, sought release of assets attached under the Prevention of Money Laundering Act, 2002.

The Liquidator filed I.A. No. 1854 of 2020 before the NCLT Mumbai Bench-III. The application sought a direction requiring the Directorate of Enforcement to release the attachment over the corporate debtor's assets and hand over control to the Liquidator.

The dispute therefore involved the interaction between liquidation proceedings under the Insolvency and Bankruptcy Code, 2016 and attachment proceedings under the PMLA. However, the 10 August 2026 NCLAT judgment was limited to the procedural effect of later orders.

The original order dated 2 February 2021

On 2 February 2021, the NCLT allowed I.A. No. 1854 of 2020 when no one appeared for the respondent despite service. It directed the Deputy Director of Enforcement to release the attachment over the assets of DSK Motors described in the application.

The Liquidator was directed to communicate the order and details of the attached assets to the concerned authorities. The application was disposed of with that direction.

This order became the foundation for the later enforcement proceedings filed by the Liquidator.

Liquidator sought enforcement of the earlier order

After the order was not implemented, the Liquidator filed I.A. No. 1401 of 2021 under Section 424 of the Companies Act, 2013 read with Rules 56 and 57 of the NCLT Rules, 2016.

The Liquidator sought execution of the 2 February 2021 order, release of the attached assets and action for alleged wilful disobedience.

A connected application also sought action regarding non-compliance by the Government of Maharashtra. That connected application was later treated as infructuous in view of the order passed in the recall proceedings.

Directorate of Enforcement sought recall

The Directorate of Enforcement filed I.A. No. 1436 of 2021 seeking recall and setting aside of the 2 February 2021 ex-parte order.

It argued that the order had been passed without hearing it and raised non-compliance with the conditions of Section 32A of the IBC in the underlying controversy.

The NCLT considered the request under Rule 49 of the NCLT Rules, 2016, which deals with proceedings conducted in the absence of a party.

Two NCLT orders dated 22 December 2023

On 22 December 2023, the NCLT dealt with the enforcement and recall applications. In the enforcement proceedings, it directed release of the attachment in terms of the earlier order.

In the recall proceedings, however, the NCLT held that the 2 February 2021 order had violated the principles of natural justice. It recalled that order and directed I.A. No. 1854 of 2020 to be heard afresh on merits.

These orders gave rise to the two sets of appeals before the NCLAT. The Tribunal also condoned the six-day delay connected with each appeal after finding the reasons satisfactory.

Fresh NCLT order changed the position

While the appeals were pending, the NCLT reheard I.A. No. 1854 of 2020 and passed a fresh order on 29 November 2024.

According to the NCLAT judgment, the fresh order rejected the Liquidator's request for release of the attachment and held that there was no bar against the PMLA attachment at that stage.

That fresh decision is independently challenged in Company Appeal (AT) (Insolvency) No. 176 of 2025. The merits of that separate appeal were not decided in the 10 August 2026 judgment.

Restricted question before the NCLAT

The NCLAT narrowed the question to whether any useful purpose remained in deciding appeals about enforcement and recall of the old 2 February 2021 order.

The Tribunal noted that the original application had already been reheard and decided by the fresh order dated 29 November 2024. The earlier order had therefore lost its operative significance.

The NCLAT did not treat the connected appeals as the correct place to decide whether the attachment should ultimately continue or be released.

How the principle of merger applied

The principle of merger means that when a competent authority passes a later operative order after reconsidering the same matter, the earlier order may lose its separate legal effect and become absorbed or superseded by the later order.

Here, the NCLAT held that the fresh order dated 29 November 2024 superseded the judicial effect of the earlier 2 February 2021 order on I.A. No. 1854 of 2020.

Therefore, proceedings aimed at enforcing the earlier order, or challenging its recall as a separate controversy, no longer required an independent decision.

Why the enforcement appeal became infructuous

The appeals numbered 469-470 of 2024 concerned non-compliance with the earlier order directing release of the attachment.

Once that earlier order had been recalled and the application was decided afresh, enforcement of the superseded order could no longer be the live controversy.

The NCLAT therefore held that the challenge arising from the enforcement application had, for all practical purposes, become infructuous.

Why the recall appeal became redundant

Appeal No. 383 of 2024 challenged the NCLT decision recalling the ex-parte order and directing a fresh hearing.

That fresh hearing had already taken place, and a new merits order had been passed on 29 November 2024. The NCLAT found that no judicial purpose would be served by separately deciding whether the earlier recall was proper.

It described the recall controversy as having lost independent significance because the fresh order was already under challenge in another appeal.

Final decision of the NCLAT

On 10 August 2026, the NCLAT closed both connected appeals without adjudication on merits. All pending interlocutory applications in those appeals were also closed.

The Tribunal reserved the rights of all parties to raise their positions in Company Appeal (AT) (Insolvency) No. 176 of 2025, which concerns the fresh NCLT order dated 29 November 2024.

It also clarified that observations made while applying the principle of merger must not influence the independent adjudication of that pending appeal.

What remains undecided

This judgment does not finally decide whether the Directorate of Enforcement must release the attached DSK Motors assets.

It also does not give a final ruling on the application of Section 32A of the IBC to the assets or on the larger priority between the IBC and PMLA in these facts.

Those questions remain open for consideration in the separate appeal against the fresh order. Readers should not treat the closure of the two appeals as approval or rejection of either side's position on the attachment merits.

Practical impact for liquidators and authorities

A liquidator seeking execution of an order should check whether that order has later been recalled, reviewed, superseded or replaced. Execution proceedings cannot ordinarily continue around an order that has lost operative effect.

Government authorities and other parties should challenge an adverse ex-parte order promptly and preserve a clear record of the recall, rehearing and later order.

Where a fresh order is passed, the appeal should target the current operative order. Continuing parallel appeals about superseded stages may result in closure without a merits ruling.

Case-management checklist

• Prepare a single chronology of every application, order, recall request, rehearing and appeal.
• Identify which order is currently operative before seeking execution or interim relief.
• Record whether a later order was passed on the same application and whether the earlier order has merged into it.
• Challenge the fresh operative order within the applicable limitation period.
• Do not assume that observations in an order closing an infructuous appeal decide the underlying merits.
• Keep the issues in each connected appeal clearly separated, especially where IBC and PMLA proceedings overlap.
• Ask the appellate forum to clarify that procedural observations will not prejudice a separate pending merits appeal when necessary.

Important caution

The NCLAT used the principle of merger in the specific procedural history of this case. It should not be assumed that every later order automatically makes every earlier proceeding infructuous.

The effect depends on whether the later order covers the same application, whether the earlier order was recalled or superseded, and what relief remains live between the parties.

The decision is also not authority for a final conclusion on Section 32A immunity or PMLA attachment because the Tribunal expressly left those merits open.

Key takeaway

The central takeaway is procedural but important: an appeal should focus on the order that presently governs the parties' rights. Once a fresh order supersedes an earlier one, an appeal about enforcement or recall of the old order may no longer serve a judicial purpose.

In the DSK Motors matter, the NCLAT closed the two older appeals while protecting the parties' right to argue the real attachment dispute in the separate appeal against the 29 November 2024 order.

Conclusion

The 10 August 2026 NCLAT judgment gives practical guidance on merger, infructuous proceedings and management of connected insolvency appeals. It prevents appellate time from being spent on an order that has already been superseded.

At the same time, the Tribunal carefully preserved the parties' rights and avoided making observations that could prejudice the pending merits appeal. For liquidators, enforcement authorities and advisers, the case highlights the importance of identifying the current operative order before choosing the next legal step.