In a significant ruling for homebuyers and real estate disputes, the Supreme Court has clarified that consumer court orders passed against a company cannot automatically be enforced against its directors or promoters. The decision came in a batch of appeals filed by flat buyers of the Ansal Crown Heights project, who were seeking to recover their money after years of delay and legal battles.
Background of the Case
The dispute began when hundreds of buyers booked apartments in the Ansal Crown Heights project in Faridabad. Under the flat buyer agreements, the developer-M/s Ansal Crown Infrabuild Pvt. Ltd.-had promised possession within 36 months. That deadline passed between 2013 and 2015, but the flats were never handed over.
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Frustrated buyers approached the National Consumer Disputes Redressal Commission (NCDRC) in 2018. In February 2022, the NCDRC ordered the company to either complete the project and give possession with interest, or refund the entire amount with interest.
When the builder failed to comply, the buyers moved for execution of the order. By then, insolvency proceedings had started against the company under the Insolvency and Bankruptcy Code (IBC), bringing a legal moratorium into force.
Because recovery from the company became difficult during insolvency, the buyers tried to proceed against the company’s directors and promoters personally. Their argument was simple: if the company cannot pay, those who ran it should be held accountable.
Initially, the Supreme Court had clarified in an earlier order that the IBC moratorium protects only the company-not its directors-leaving the door open for action against them. The case was sent back to the NCDRC to decide whether the directors could be made liable.
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The NCDRC, however, refused to proceed against the directors, saying the original consumer complaints were decided only against the company. The buyers then returned to the Supreme Court.
Court’s Observations
Hearing the matter, a bench led by Justice Dipankar Datta took a close look at how the case had unfolded from the very beginning.
The Court noted that when the consumer complaints were first admitted, the NCDRC had consciously decided to proceed only against the company and not against its directors or promoters. No notice was ever issued to them, no pleadings were filed against them, and no findings were recorded fixing personal responsibility.
“The order neither records any determination of liability against the directors nor contains any direction requiring them to perform any act,” the bench observed.
The judges stressed a basic but crucial principle of law: execution must strictly follow the decree. If a decree is passed only against a company, it cannot later be enforced against individuals who were never held liable in the first place.
Citing earlier judgments, the Court reiterated that a company is a separate legal entity. “A clear distinction must be drawn between a company and its shareholders,” the bench said, underlining that personal liability cannot be assumed just because someone is a director.
The buyers had argued that since the Supreme Court earlier allowed execution proceedings to continue against directors despite the IBC moratorium, the NCDRC should have gone ahead.
The Court clarified that its earlier order only removed the technical bar created by the moratorium. It did not declare that the directors were personally liable.
“The protection of the moratorium will not be available to the directors, provided they are otherwise liable,” the bench explained. But in this case, there was no prior finding that made them liable in the first place.
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Why “Piercing the Corporate Veil” Didn’t Apply
The buyers also tried to rely on the idea of “piercing the corporate veil”-a legal doctrine that allows courts to ignore a company’s separate identity in cases of fraud or misuse.
The Supreme Court firmly rejected this approach here. It said such a step can be taken only when there are clear pleadings and proven findings of fraud.
“There was no allegation, much less a determination, that the corporate structure was abused,” the Court noted.
Without that foundation, holding directors personally responsible at the execution stage would amount to creating liability where none was ever adjudicated.
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The Final Decision
After reviewing the entire record, the Supreme Court upheld the NCDRC’s view and dismissed the buyers’ appeals.
The bench concluded that the consumer court’s decree binds only Ansal Crown Infrabuild Pvt. Ltd., not its directors or promoters. Since the buyers never challenged the earlier order that limited the case to the company alone, they could not now expand its scope during execution.
“The executing court cannot go beyond the decree,” the Court reminded.
However, the judges left one important door open. While execution under the consumer law cannot proceed against the directors, the buyers are free to explore other legal remedies-under company law, insolvency law, or civil proceedings-if the legal conditions for such action are met.
With that clarification, the Supreme Court brought the long-running dispute to a close, drawing a firm line between corporate liability and personal responsibility.
Case Title: Ansal Crown Heights Flat Buyers Association v. Ansal Crown Infrabuild Pvt. Ltd.
Case No.: Civil Appeals Nos. 8465–8466, 8539, 10874–10878 of 2024
Decision Date: January 12, 2026
