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Informist, Monday, Jul. 27, 2026

 

NEW DELHI – The Supreme Court Monday held that the National Consumer Disputes Redressal Commission can proceed on consumer complaints against debt-ridden companies' promoters, directors, and related entities even if there is a moratorium under the Insolvency and Bankruptcy Code, 2016 operating against the company. A plain reading of the Section 14 of the 2016 code makes it clear that the moratorium operates against the corporate debtor alone, said the court. No other category, whether it be any subsidiary company, any managers or directors, personal guarantors can be added to it unless specifically provided, said the court.

 

The apex court said that earlier on various verdicts it had ruled when a consumer complaint was filed against the developers, a moratorium against the corporate debtor does not give protection to the promoters and directors of the corporate debtor and that proceedings can continue against them. The protective sweep of a moratorium must remain in the four walls as carved out by the statute, the court noted. It ought not be expanded in a manner that stultifies remedies envisaged under the Consumer Protection Act, unless expressly provided, it said.

 

The top court allowed pleas by homebuyers seeking the consumer commission to hear its plea against Buoyant Technology Constellations Pvt. Ltd. directors, promoters and associated companies. The homebuyers had alleged that despite substantial payment of the sale consideration coupled with repeated assurances regarding completion of the real estate project, possession of the apartments was not delivered within the stipulated time. During the pendency of the homebuyers' complaint, the Bengaluru bench of the National Company Law Tribunal had admitted insolvency proceedings against Buoyant Technology and declared a moratorium on the latter under the 2016 Code. Citing this moratorium, the consumer commission refused to hear complaints against Buoyant Technology's officials.

 

In the absence of any legal bar against continuation of proceedings with respect to Buoyant Technology's directors, promoters and associated companies, consumer commission was not justified in rejecting appellants' prayer to proceed with the complaint against the rest of the respondents, said the court. The consumer commission's order proceeds on the premise that since the alleged deficiency in service was attributable only to Buoyant Technology, no independent proceedings could continue against the remaining respondents, it said. In doing so, the consumer commission effectively answered the very question which was yet to be adjudicated, it said. The top court asked the consumer commission to hear homebuyers' complaints against Buoyant Technology directors, promoters and associated companies.  End

 

Reported by Surya Tripathi

Edited by Akul Nishant Akhoury

 

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