Ansal Crown Heights Flat Buyers Assn. vs Ansal Crown Infrabuild (P) Ltd.

2024 INSC 54 NON-REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). 4480-4481 OF 2023

ANSAL CROWN HEIGHTS FLAT BUYERS ASSOCIATION (REGD.) …...APPELLANT(S) VERSUS

M/S. ANSAL CROWN INFRABUILD PVT. LTD. & ORS. …...RESPONDENT(S)

WITH CIVIL APPEAL NO(S). 4247 OF 2023

JUDGMENT

ABHAY S. OKA, J.

1. The impugned orders in these appeals are more or less

identical. Therefore, we are making a reference to the factual

aspects in Civil Appeal Nos. 4480-4481 of 2023. In a complaint

filed by the homebuyers before the National Consumer Disputes

Redressal Commission (for short ‘the National Commission’), an

order was made by the National Commission directing the Developer

to complete the project in all respects and handover the possession

of the allotted flats/apartments to the members of the Association

of the homebuyers within the time specified. In the said order, a

direction was issued giving an option to the homebuyers, which

reads thus: -

Signature Not Verified Digitally signed by Neetu Khajuria Date: 2024.01.24

“...(vi) If the Members of the Complainant 10:32:35 IST Reason: Association are not interested to wait any more for taking possession of the allotted Apartment and they want refund of the their deposited amount, the Opposite Party Developer shall refund the entire deposited amount along with interest @9% p.a. from 2

the respective date of deposit till payment, within a period of six weeks from today failing which the amount shall carry interest @ 12% p.a. for the said period. The Allottees shall also be entitled for a sum of ₹ 25,000/- as costs.”

2. It is this direction which was sought to be executed by the

appellants by filing execution applications. The developer is a

company against whom the National Commission issued the aforesaid

direction. The said company is the subject-matter of the

proceedings under Section 9 of the Insolvency and Bankruptcy Code,

2016 (for short ‘the IBC’). The National Company Law Tribunal (for

short ‘the NCLT’) has admitted the petition filed under Section 9

of the IBC against the said company. The appellants sought to

execute the direction(s) of the National Commission not only

against the company but also against the several individuals.

3. By the impugned orders, the National Commission held that the

decree cannot be executed against the company due to the operation

of the moratorium under Section 14 of the IBC. Thereafter, the

National Commission observed that in view of moratorium against the

company, it would not be appropriate to proceed in the same

execution against the opposite party Nos. 2 to 9. Another

observation was made that other opposite parties (opposite party

Nos. 2 to 9 to the execution application) were not parties in the

main complaint. The appellant is the applicant/decree holder in the

execution applications.

4. The submission in brief of the appellants is that under the

provisions of the IBC, there is no prohibition on proceeding

against the directors/officers of the company, which is the

subject-matter of moratorium under Section 14 of the IBC. 3

5. A reliance is placed by the appellant on the second proviso to

sub-Section (1) of Section 32A of the IBC and a decision of this

Court in the case of P. Mohanraj vs. Shah Bros. Ispat (P) Ltd.1.

Our attention is also invited to another decision of this Court in

the case of Anjali Rathi and others vs. Today Homes and

Infrastructure Pvt. Ltd. And Others2. Hence, the submission is that

the view taken by the National Commission is erroneous.

6. Mr. Nikhil Nayyar, the learned senior counsel appearing for

the respondent Nos. 2, 4, 5, 6, 7 and 8 and Mr. Pradeep Aggarwal,

the learned counsel appearing for the respondent Nos. 3 and 9

submitted that under the order which is sought to be executed,

there is no liability fastened on the opposite party Nos. 2

to 9(the respondent Nos. 2 to 9). It is submitted that the National

Commission has held that opposite party Nos. 2 to 9(the respondent

Nos. 2 to 9) were not parties to the main complaint. Their

submission is that in the case of Anjali Rathi(supra), this Court

made a departure by permitting the appellants to proceed against

the promoters of the company, which was subject to moratorium only

because there was a settlement arrived at between them before this

Court. He further submitted that these opponents cannot be held

liable.

7. We may note here that the National Commission has not made any

adjudication on the question whether the opposite party Nos. 2

to 9(the respondent Nos. 2 to 9) in the execution application were

under an obligation to abide by the directions issued against the

1 (2021) 6 SCC 258 2 (2021) SCC OnLine SC 729 4

company. This issue has not been considered at all by the National

Commission. There is no finding recorded by the National Commission

that in view of any particular provision of the IBC, moratorium

will apply to the directors/officers of the company.

8. In the case of Anjali Rathi(supra), a Bench of three Hon’ble

Judges has quoted with approval paragraph ‘102’ of its earlier

judgment in the case of P. Mohanraj(supra). Paragraph ‘102’ in the

case of P. Mohanraj(supra), which reads thus:-

“102. Since the corporate debtor would be covered by the moratorium provision contained in Section 14 IBC, by which continuation of Sections 138/141 proceedings against the corporate debtor and initiation of Sections 138/141 proceedings against the said debtor during the corporate insolvency resolution process are interdicted, what is staed in paras 51 and 59 in Aneeta Hada [Aneeta Hada v. Godfather Travels & tours (P) Ltd., (2012) 5 SCC 661 : (2012) 3 SCC (Civ) 350 : (2012) 3 SCC (Cri) 241] would then become applicable. The legal impediment contained in Section 14 Ibc would make it impossible for such proceedings to continue or be instituted against the corporate debtor. Thus, for the period of moratorium, since no Sections 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Sections 141(1) and (2) of the Negotiable Instruments Act. This being the case, it is clear that the moratorium provision contained in Section 14 IBC would apply only to the corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments Act.” (Underline supplied)

9. What is relevant is paragraph ‘18’ in the case of Anjali Rathi

(supra), which reads thus: -

“18. We thus clarify that 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.

5 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.”

10. Thus, this Court approved the view taken in the case of P.

Mohanraj(supra) that notwithstanding moratorium, the liability, if

any, of the directors/officers will continue. This Court,

therefore, permitted the appellants to expressly proceed against

the promoters of the company though there was a moratorium under

Section 14 of the IBC affecting the company.

11. Therefore, we are of the view that only because there is a

moratorium under Section 14 of the IBC against the company, it

cannot be said that no proceedings can be initiated against the

opposite party Nos. 2 to 9(the respondent Nos. 2 to 9) for

execution, provided that they are otherwise liable to abide by and

comply with the order, which is passed against the company. The

protection of the moratorium will not be available to the

directors/officers of the company.

12. Therefore, we set aside the impugned judgments and orders and

remit the execution application to the National Commission. The

execution will continue against the opposite party Nos. 2 to 9(the

respondent Nos. 2 to 9) in the execution application.

13. It is open for the opposite party Nos. 2 to 9(the respondent

Nos. 2 to 9) to raise a contention that they are not bound to

implement the order sought to be executed. They are entitled to

file additional objections along with documents raising the issue

of executability as against them.

6

14. We clarify that the issue whether opposite party Nos. 2 to

9(the respondent Nos. 2 to 9) to the execution are otherwise

liable, will have to be decided by the National Commission in

accordance with law.

15. The appeals are partly allowed on the above terms.

16. Pending application(s), if any, shall stand disposed of.

…………………………...J. [ABHAY S. OKA]

…………………………...J. [UJJAL BHUYAN] NEW DELHI;

JANUARY 17, 2024.