The Supreme Court ruled that the moratorium ordered under the Insolvency and Bankruptcy Code (IBC) is not applicable on Proceedings in respect of Directors or Management Of Corporate Debtors.
The petitioners, Anjali Rathi, and others were the home buyers in a group housing project, Canary Greens in Sector 73, Gurgaon, being developed by the first respondent. Homebuyer agreements were entered into between the eleven petitioners and the first respondent. Clause 21 of the agreements envisaged that possession of the apartments would be delivered within a period of thirty-six months, which in almost all cases was to be in 2014.
The grievance of the petitioners is that the project was abandoned by the developer. As a result, they instituted proceedings before the National Consumer Dispute Redressal Commission seeking a refund of their monies with interest. On 12 July 2018, the NCDRC allowed their claim by directing the first respondent to refund the principal amount paid by the petitioners together with 12 percent interest from the date of deposit along with costs within four weeks. There was a provision in the order for interest to be enhanced to 14 percent if the amount was not paid within the stipulated period. This order of the NCDRC has attained finality.
The proceedings were initiated against the first respondent, Today Homes & Infrastructure Pvt. Ltd. before the National Company Law Tribunal under Section 9 of the Insolvency and Bankruptcy Code 20168 by an operational creditor. The Adjudicating Authority admitted the petition, following which the corporate insolvency resolution process was initiated and a moratorium was declared under Section 14 of the IBC.
Mr. Pawanshree Agarwal, counsel appearing on behalf of the petitioners submitted that during the course of the proceedings before this Court, settlements were arrived at, and hence the promoters of the Corporate Debtor, namely, the first respondent should be held liable personally to honor the settlements, particularly having regard to the order dated 1 April 2019, which was passed by the NCDRC in the course of the execution proceedings. In this context, reliance has been placed on paragraph 10(g) of the Resolution Plan which has been approved by the CoC, which contains the following stipulation which said that the erstwhile management, promoters, shareholders, managers, directors, officers, employees, workmen or other personnel who were in charge on or before CIRP commence date of THIPL shall continue to be liable for all the liabilities, claims, demand, obligations, penalties, etc. arising out of any (i) proceedings, inquiries, investigations, orders, show causes, notices, suits, litigation, etc.
The three-judge bench of Justice Dr Dhananjaya Y Chandrachud, Justice Vikram Nath and Justice Hima Kohli clarified that the moratorium was only in relation to the Corporate Debtor (as highlighted above) and not in respect of the directors/management of the Corporate Debtor, against whom proceedings could continue.
The petitioners would not be prevented by the moratorium under Section 14 of the IBC from initiating proceedings against the promoters of the first respondent Corporate Debtor in relation to honoring the settlements reached before this Court. However, as indicated earlier, this Court cannot issue such a direction relying on a Resolution Plan which is still pending approval before an Adjudicating Authority,” the Apex Court observed.
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