Case Note & Summary
The dispute arose from a group housing project, Canary Greens, in Gurgaon, developed by Today Homes & Infrastructure Pvt. Ltd. The petitioners, home buyers, entered into agreements with the developer, which stipulated possession delivery within thirty-six months, expected in 2014. However, the project was abandoned, prompting the petitioners to seek redress from the National Consumer Dispute Redressal Commission (NCDRC). On 12 July 2018, the NCDRC ordered the developer to refund the principal amount with interest, which the developer failed to comply with, leading to execution proceedings initiated by the petitioners. The NCDRC's orders were challenged by the developer in the Delhi High Court, resulting in a stay on certain execution orders. The Supreme Court was approached after the NCDRC's further orders and the developer's petition against the NCDRC's requirement for the Managing Director's personal appearance. During the proceedings, a corporate insolvency resolution process was initiated against the developer under the Insolvency and Bankruptcy Code (IBC), leading to a moratorium on legal actions against the corporate debtor. The petitioners argued for the attachment of the promoters' personal properties based on the approved resolution plan, which stipulated their liability for past obligations. The Supreme Court clarified that while the moratorium applies to the corporate debtor, it does not prevent actions against its promoters. The court directed the National Company Law Tribunal (NCLT) to expedite the approval of the resolution plan and allowed the petitioners to pursue their claims against the promoters post-approval. The appeals were disposed of with liberty granted to the petitioners to seek further remedies after the NCLT's decision.
Headnote
A) Consumer Protection - Execution of Refund Orders - Enforcement of NCDRC Orders - Consumer Protection Act, 1986, Sections 25, 27 - Petitioners sought execution of refund orders against the developer who failed to comply with the NCDRC's directive. The court clarified that while the moratorium under the IBC applies to the corporate debtor, it does not prevent actions against its promoters for honoring settlements reached (Paras 15-16).
Issue of Consideration
Whether the petitioners can enforce their rights against the promoters of the corporate debtor despite the ongoing moratorium under the Insolvency and Bankruptcy Code.
Final Decision
The Supreme Court disposed of the appeals, clarifying that the moratorium under the IBC does not bar actions against the promoters of the corporate debtor for honoring settlements. The NCLT was directed to expedite the approval of the resolution plan, and petitioners were granted liberty to pursue further remedies post-approval.
Law Points
- Consumer protection
- execution proceedings
- insolvency resolution
- moratorium
- settlement agreements
