Legal provisions involved: Section 71 of the Consumer Protection Act, 2019 and Section 14 of the Insolvency and Bankruptcy Code, 2016.

Judgement by: Supreme Court of India

Judge/Bench: Justice Dipankar Datta and Justice Augustine George Masih

Facts

A group of flat buyers filed consumer complaints against Ansal Crown Infrabuild Pvt. Ltd. for delay in giving possession of flats. The consumer commission passed orders only against the company and not against its directors or promoters. When the company failed to comply, the buyers started execution proceedings. 

During this time, insolvency proceedings were initiated against the company and a moratorium came into force. The buyers then tried to recover money from the directors and promoters.

Key legal provisions

Section 71 of the Consumer Protection Act, 2019 

Section 14 of the Insolvency and Bankruptcy Code, 2016.

Issues raised

Can execution continue after a moratorium? Can directors or promoters be made liable at the execution stage?

Arguments of the case

The buyers argued that they should be allowed to proceed against the directors. The respondents argued that the order was only against the company and that the moratorium barred execution.

Judgement

The Supreme Court dismissed the appeal and held that once a moratorium is declared, execution proceedings must stop. It also clarified that directors or promoters cannot be made personally liable when no order was passed against them.

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