The Supreme Court has ruled that a moratorium imposed under the Insolvency and Bankruptcy Code (IBC) applies only to the corporate debtor and does not automatically protect promoters, directors, or other respondents from legal proceedings. Setting aside an order of the National Consumer Disputes Redressal Commission (NCDRC), the Court held that the consumer complaint filed by homebuyers can continue against the remaining respondents even while insolvency proceedings are pending against the developer company.
The judgment was delivered by a Bench of Justice Vikram Nath and Justice Sandeep Mehta on July 27, 2026.
Background of the Case
The appeals were filed by Tejas J. Shah, Amisha T. Shah and others, who had booked apartments in the Mantri Manyata Energia housing project being developed by Mantri Technology Constellations Pvt. Ltd., now known as Buoyant Technology Constellations Pvt. Ltd. According to the homebuyers, they had paid a substantial part of the sale consideration, but possession of their flats was not handed over by the agreed deadline of December 31, 2018.
The homebuyers approached the NCDRC in 2023, alleging deficiency in service and unfair trade practices against the developer company, its associated entities, directors, promoters and landowners. During the pendency of the complaint, the National Company Law Tribunal (NCLT), Bengaluru, admitted insolvency proceedings against the developer company and imposed a moratorium under Section 14 of the IBC.
Following the insolvency order, the buyers requested the NCDRC to continue the consumer complaint against the remaining respondents, arguing that the moratorium protected only the corporate debtor. However, the Commission rejected the applications and adjourned the complaint indefinitely, prompting the present appeals before the Supreme Court.
Court's Observations
The Supreme Court examined the scope of Section 14 of the IBC and observed that the provision is limited in its operation. The Bench explained that the purpose of the moratorium is to preserve the assets of the corporate debtor during the insolvency resolution process and not to halt proceedings against every person connected with the company.
Referring to earlier decisions, the Court reiterated that the statutory protection under Section 14 extends only to the corporate debtor unless the law specifically provides otherwise. Promoters, directors, subsidiary companies and other individuals cannot claim the benefit of the moratorium merely because insolvency proceedings are pending against the company.
Rejecting the NCDRC's reasoning, the Bench said the Commission had effectively decided the issue of liability without conducting a full hearing.
The Bench observed,
“In the absence of any legal bar against continuation of proceedings qua the said respondents, the NCDRC was not justified in rejecting appellants’ prayer to proceed with the complaint against the rest of the respondents.”
The Court further noted that the real issue before the NCDRC was not whether Respondent Nos. 2 to 7 were liable, but whether proceedings could legally continue against them despite the moratorium. Since no statutory protection existed in their favour, the Commission should have decided the complaint on merits instead of stopping the proceedings at an interlocutory stage.
Supreme Court's Decision
While the homebuyers requested the Supreme Court to grant them relief directly, the Bench declined to do so. It pointed out that several objections raised by the respondents - including maintainability of the complaint, absence of contractual relationship and other legal issues - had not yet been examined by the NCDRC. Therefore, the Court chose not to express any opinion on those questions.
Allowing the appeals in part, the Supreme Court set aside the NCDRC's order rejecting the interlocutory applications. It directed the Commission to resume hearing Consumer Complaint No. 13 of 2023 against Respondent Nos. 2 to 7 in accordance with law.
At the same time, the Court clarified that proceedings against the developer company will continue to remain subject to the moratorium imposed under Section 14 of the IBC.
Case Details
Case Title: Tejas J. Shah & Amisha T. Shah & Ors. v. Mantri Technology Constellations Pvt. Ltd. (Now Known as Buoyant Technology Constellations Pvt. Ltd.) & Ors.
Case Number: Civil Appeal Nos. 4289–4290 of 2025
Judge: Justice Vikram Nath and Justice Sandeep Mehta
Decision Date: July 27, 2026
