Case Note & Summary
The dispute arose from a consumer complaint filed by homebuyers (appellants) against Mantri Technology Constellations Pvt. Ltd. (Respondent No. 1) and others (Respondents 2-7) before the National Consumer Disputes Redressal Commission (NCDRC), alleging deficiency in service and unfair trade practices in relation to a residential project 'Mantri Manyata Energia'. The appellants had booked apartments in 2016, with possession promised by 31.12.2018, but delivery was not made. During the pendency of the consumer complaint, the National Company Law Tribunal (NCLT) initiated Corporate Insolvency Resolution Process (CIRP) against Respondent No. 1, leading to a moratorium under Section 14 of the Insolvency and Bankruptcy Code (IBC). The appellants then filed interlocutory applications (I.A. Nos. 14200/2024 and 15656/2024) praying that the complaint be continued against the remaining respondents (2-7), who were not protected by the moratorium. The NCDRC rejected these applications, holding that the liability could not be independently examined and that the deficiency was primarily attributable to the corporate debtor, and adjourned the complaint sine die. The issue before the Supreme Court was whether the NCDRC was justified in refusing to continue proceedings against the non-debtor respondents. The Court examined the scope of Section 14 IBC, relying on precedents including P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd., (2021) 6 SC 258, and Ansal Crown Heights Flat Buyers Association v. Ansal Crown Infrabuild Pvt. Ltd., (2024) 5 SCC 745, to reiterate that the moratorium is statutory and operates only against the corporate debtor. It does not extend to promoters, directors, or landowners. The Court observed that the NCDRC had erroneously concluded that the deficiency pertained only to Respondent No. 1, thereby prejudging the issue of liability against other respondents at the interlocutory stage. The Court held that the NCDRC was required to proceed with the complaint against Respondents 2-7 and determine liability after hearing. The appeals were allowed, the impugned order set aside, and the consumer complaint directed to proceed against the non-debtor respondents. The Court declined to grant final reliefs, leaving that to the NCDRC.
Headnote
A) Insolvency and Bankruptcy Code - Moratorium - Section 14 IBC - Applicability to non-corporate debtor respondents - The moratorium under Section 14 IBC is confined to the corporate debtor; it cannot be extended to subsidiaries, directors, promoters, or personal guarantors without express statutory provision. Held that NCDRC's rejection of continuation of consumer complaint against Respondents 2-7 was erroneous; liability is yet to be determined and proceedings against non-debtor respondents must continue (Paras 5-13).
Issue of Consideration
Whether the National Consumer Disputes Redressal Commission was justified in rejecting the applications for continuation of consumer complaint against Respondent Nos. 2 to 7 on the ground of moratorium imposed against Respondent No. 1 under Section 14 of the Insolvency and Bankruptcy Code, 2016.
Final Decision
Appeals allowed. Impugned NCDRC order set aside. Consumer complaint directed to proceed against Respondent Nos. 2-7. Court declined to grant final reliefs, leaving determination of liability to NCDRC.
Law Points
- Legal points not extracted
- Scope of moratorium under Section 14 IBC
- moratorium applies only to corporate debtor
- cannot be extended to promoters
- directors
- or other respondents unless expressly provided
- NCDRC cannot foreclose inquiry into liability of non-debtor respondents at interlocutory stage.
