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Anjali Rathi & Ors. v. Today Homes & Infrastructure Pvt. Ltd. & Ors.

Civil Appeal · 2021 INSC 460Decided 8 Sept 2021
Civil Appeal Nos. 5231-38 of 2019
Dr. Justice D.Y. Chandrachud · Justice Vikram Nath · Justice Hima Kohli

Background

Home buyers in a Gurgaon housing project sued after the developer abandoned the project, and the National Consumer Disputes Redressal Commission (NCDRC) ordered a refund with interest in their favour. When the developer failed to pay, the buyers initiated execution proceedings, including seeking personal appearance and potential detention of the developer's director, but the developer meanwhile went into insolvency resolution, and a consortium of home buyers themselves became the resolution applicant with a plan pending approval before the insolvency Adjudicating Authority (NCLT).

Decision Breakdown

The Supreme Court directed the NCLT to decide the pending application for approval of the Resolution Plan expeditiously, preferably within six weeks. It declined, at this pre-approval stage, to order attachment of the promoters' personal properties as sought by the home buyers. The Court clarified, relying on its earlier ruling in P. Mohanraj v. Shah Bros. Ispat, that the insolvency moratorium under Section 14 of the IBC protects only the corporate debtor itself and does not bar the home buyers from pursuing the promoters personally to enforce settlements reached before the Court. The petitions and connected appeals were disposed of on these terms, with liberty to pursue further remedies after the NCLT's decision.

Lesson Learnt

When a company goes through insolvency proceedings, the statutory moratorium shields only the company itself from lawsuits: it does not protect the company's individual promoters or directors from being personally pursued for dues or settlement obligations.

Official source (sci.gov.in)View Judgment (PDF)

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