TaxTMI 
TaxTMI 
In Tejas J. Shah & Amisha T. Shah & Ors. Versus Mantri Technology Constellations Pvt. Ltd. (Now Known As Buoyant Technology Constellations Pvt. Ltd.) & Ors. - 2026 (7) TMI 1787 - Supreme Court, the respondent No. 1 Mantri Technology Constellations Private Limited (‘Respondent No. 1’ for reference) in association with the Respondent No. 2, Mantri Developers Private Limited developed a project known as ‘Mantri Manayata Energia’. The Respondent Nos. 3 to 5 are the promoters/directors of the said 2 companies. The Respondent No. 6 and 7 are the landowners.
The appellants, in the present civil appeals are homebuyers and booked residential apartments in the said project. It was agreed to handover the apartments to the appellants by 31.12.2018. The appellants already paid substantial amount to the respondent No.1. Despite the payment, the Respondent No. 1 did not deliver the apartment within the time as promised. Being aggrieved against the action of the respondent No.1, the appellants filed a consumer complaint before the National Consumer Disputes Redressal Commission (‘NCDRC’ for short).
During this period, the National Company Law Tribunal (‘NCLT’ for short) admitted an application for initiation of corporate insolvency resolution process against the respondent No. 1 by an operational creditor, under Section 9 of the Insolvency and Bankruptcy Code, 2016 (‘Code’ for short). Therefore, moratorium was declared by the NCLT under section 14 of the Code.
The appellant filed an interim application before the NCDRC in IA 14200 of 2024 with the prayer to continue to hear its complaint, despite there is a moratorium under Section 14 of the Code, against the Respondent No. 1. The appellants further prayed that the complaint be reheard and proceeded against the respondent nos. 2 to 7. The appellants filed another I.A. No. 15656 of 2024 seeking rehearing of I.A. No. 14200 of 2024 and reiterating their prayer for continuing the hearing of the consumer complaint against the rest of the respondents. The NCDRC rejected the said applications. The NCDRC held that the liability of respondent Nos. 2 to 7 could not be independently examined while there was a moratorium under Section 14 of the Code and adjourned the case sine die.
The appellants filed the present appeal against the rejection of IA s filed by the appellants. The Supreme Court heard the submissions of the parties to the present appeal. The Supreme Court considered the question to be answered in the present appeal is as to whether the NCDRC was justified in rejecting the IAs filed by the appellants on account of the moratorium operating against Respondent No.1.
The Supreme Court analysed the provisions of Section 14 of the Code. The Supreme Court observed that Section 14 of the Code provides that once the insolvency process has begun and a moratorium is declared, among other things, the continuation of pending suits and proceedings against the corporate debtor, including execution proceedings, comes to an automatic halt. The object of this moratorium is to preserve the assets of the corporate debtor during the insolvency resolution proceedings and to facilitate an orderly resolution.
The Supreme Court further observed that the scope of Section 14 cannot be enlarged beyond the statutory limit. The moratorium operates only against the corporate debtor and not other parties. No other category, whether it be any subsidiary company, any managers/ directors, personal guarantors etc. can be added to it unless specifically provided. The Supreme Court got support of this finding from the following case laws-
- P. MOHANRAJ & ORS. Versus M/s. SHAH BROTHERS ISPAT PVT. LTD. - 2021 (3) TMI 94 - Supreme Court – the Supreme Court, while discussing the scope of applicability of the moratorium on Section 138 of Negotiable Instruments Act, 1881 proceedings, noted that Section 14 applied only to the corporate debtor and that natural persons can be held liable under the Act.
- ANSAL CROWN HEIGHTS FLAT BUYERS ASSOCIATION (REGD.) Versus M/s. ANSAL CROWN INFRABUILD PVT. LTD. & ORS. - 2024 (2) TMI 23 - Supreme Court – the Supreme Court held that this Court held that 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.
- SARANGA ANILKUMAR AGGARWAL Versus BHAVESH DHIRAJLAL SHETH & ORS. - 2025 (3) TMI 373 - Supreme Court, the Supreme Court held that that the protective sweep of a moratorium must remain in the four walls as carved out by the statute. It ought not be expanded in a manner that stultifies remedies envisaged under the Consumer Protection Act, unless expressly provided. The object of the Code is to facilitate the resolution process and not to eclipse the statutory remedies.
The Supreme Court observed that the NCLAT observed that the liability arising from the allegations of deficiency in service was yet to be determined. The alleged deficiency pertained only to Respondent No.1 since all agreements for construction and sale were entered into between the appellants and respondent No.1. As a result of which, the NCLAT held that the proceedings could not be split up to continue against the remaining respondents. The Supreme Court held that the findings of the NCLAT are erroneous. The Supreme Court observed that the moratorium under Section 14 of the Code is only on the corporate debtor against whom the corporate insolvency resolution process was initiated. There is no independent moratorium against the respondents Nos. 2 to 7. The Supreme Court observed that the NCDRC was not justified in rejecting the appellant’s prayer to proceed the complaint against the respondents other than Respondent No.1.
Having itself observed that the liability arising from deficiency in service are yet to be determined, NCLAT could not have simultaneously concluded that the alleged deficiency was attributable o absence of any such statutory bar, the Commission was required to adjudicate the complaint against the said respondents and determine, upon consideration of the rival pleadings and objections, whether any liability could ultimately be fastened upon them. It was not open to the Commission to foreclose that inquiry at the interlocutory stage. The respondents have raised several objections, including absence of privity of contract, maintainability of the complaint and the absence of any independent obligation under the agreements, which are yet to be decided by NCDRC. Therefore, the Supreme Court held that the impugned order cannot be sustained and partly allowed the appeal.
The Supreme Court directed the NCDRC to proceed to hear the complaint and dispose the same in respect of respondent Nos. 2 to 7.