Case Note & Summary
The case involves an appeal filed by Sudheschandra Gupta against an order dated 01.10.2021 of the State Consumer Disputes Redressal Commission, Maharashtra, which dismissed his application for substitution of his name in execution proceedings. The appellant was a director of M/s Ramnath Developers Private Limited, the judgment debtor in a consumer complaint. During the pendency of the execution proceedings, the National Company Law Tribunal (NCLT), Allahabad Bench, initiated Corporate Insolvency Resolution Process (CIRP) against the company and declared a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016. The appellant filed an application before the State Commission seeking to be discharged and substituted by the Resolution Professional, or alternatively, to stay the proceedings sine die. The State Commission dismissed the application. The NCDRC heard the appeal and considered the arguments. The appellant's counsel argued that the moratorium bars continuation of proceedings against the corporate debtor and its directors. The respondent's counsel opposed, stating that the moratorium does not affect the liability of the director. The NCDRC held that the moratorium under Section 14 IBC does not bar substitution of the director's name in the proceedings, as the corporate debtor remains liable and the director's personal liability is not extinguished. The appeal was dismissed, and the impugned order was upheld.
Headnote
A) Consumer Law - Execution Proceedings - Substitution of Director - Section 14 Insolvency and Bankruptcy Code, 2016 - The appellant, a former director, sought discharge from execution proceedings citing moratorium under Section 14 IBC. The State Commission dismissed the application. The NCDRC held that the moratorium does not bar substitution of the director's name as the corporate debtor remains liable and the director's personal liability is not extinguished. The appeal was dismissed. (Paras 1-5)
Issue of Consideration
Whether the appellant, a former director of the corporate debtor, is entitled to be discharged and substituted from the execution proceedings on the ground that CIRP has been initiated against the company and moratorium is in operation.
Final Decision
The appeal is dismissed. The impugned order of the State Commission is upheld.
Law Points
- Moratorium under Section 14 IBC does not bar substitution of a director in pending proceedings
- Corporate debtor remains liable
- Director's personal liability not extinguished by CIRP
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