Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-008465-008466 – 2024 |
| Diary Number | 30127/2024 |
| Judge Name | HON’BLE MR. JUSTICE DIPANKAR DATTA |
| Bench |
HON’BLE MR. JUSTICE DIPANKAR DATTA HON’BLE MR. JUSTICE SATISH CHANDRA SHARMA |
| Concurring or Dissenting Judges | HON’BLE MR. JUSTICE AUGUSTINE GEORGE MASIH (concurring) |
| Precedent Value | Binding authority |
| Overrules / Affirms | Affirms existing precedents |
| Type of Law | Civil – Consumer Protection Act execution; Insolvency & Bankruptcy Code moratorium |
| Questions of Law | Can persons who were arrayed but never served or adjudicated be subjected to execution of a decree against a company simply by virtue of being its directors/promoters? |
| Ratio Decidendi |
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| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon |
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| Facts as Summarised by the Court |
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Practical Impact
| Category | Impact |
|---|---|
| Binding On | National Consumer Disputes Redressal Commission and all subordinate consumer fora when executing decrees |
| Persuasive For | Other High Courts and the Supreme Court in execution petitions involving non-party directors/promoters |
| Follows |
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What’s New / What Lawyers Should Note
- Reaffirms that execution must conform strictly to the decree and cannot be used to impose liability on persons never served or adjudicated.
- Clarifies that a moratorium under Section 14 IBC does not prevent execution proceedings against directors/officers but does not, by itself, render them liable.
- Emphasises that piercing the corporate veil requires affirmative pleadings and findings of fraud or misuse of corporate form.
- Confirms that directors/promoters not bound by guarantees or specific undertakings in the original complaint cannot be made execution-debtors.
Summary of Legal Reasoning
- NCDRC’s January 2018 order confined the lis to ACIPL; no notice, pleadings, issues, evidence, or findings against directors/promoters.
- Execution must strictly conform to the decree; courts cannot enlarge liability beyond adjudicated parties (Rajbir v. Suraj Bhan).
- No personal guarantees or sureties were pleaded or proved against respondents 2–9; Section 14(3) IBC inapplicable.
- A moratorium under IBC Section 14 interdicts execution modes against the corporate debtor but does not itself create liability for directors.
- Piercing the corporate veil is an exceptional remedy requiring clear allegations and findings of fraud or dishonest misuse – absent here.
- This Court’s 17 Jan 2024 order removed the moratorium barrier but expressly left the question of personal liability open for NCDRC’s adjudication.
- NCDRC correctly dismissed execution against directors/promoters for lack of any adjudicated liability; appeals dismissed.
Arguments by the Parties
Petitioner (Buyers’ Association):
- Directors/promoters are the real controllers and should be liable as co-debtors.
- Moratorium on ACIPL should not shield those who enriched themselves and frustrated buyers.
- This Court’s January 2024 order invited execution against directors if otherwise liable.
Respondents 2–9 (Directors/Promoters):
- Never served or adjudicated; no pleadings, evidence, or findings to fasten liability.
- Execution must follow the decree which binds only ACIPL.
- No guarantees or undertakings by them; corporate veil cannot be pierced without fraud findings.
Factual Background
An association of flat buyers filed two NCDRC complaints against M/s. Ansal Crown Infrabuild Pvt. Ltd. (ACIPL) and its directors/promoters for failing to deliver possession within 36 months. NCDRC admitted the first complaint only against ACIPL (directing amendment of parties) and proceeded to allow both complaints in February 2022, awarding possession or refund with interest. A moratorium under Section 14 IBC stayed execution against ACIPL; this Court’s January 2024 order removed that bar and remitted execution to NCDRC. On remand, NCDRC dismissed execution against directors/promoters for lack of any adjudicated liability.
Statutory Analysis
- Section 14, Insolvency & Bankruptcy Code, 2016 – Moratorium operates only against the corporate debtor.
- Section 71, Consumer Protection Act, 2019 – Modes of execution (attachment and sale, attachment of bank accounts, withdrawal from accounts) are interdicted by a moratorium but apply only to the judgment-debtor.
Alert Indicators
- ✔ Precedent Followed – Strict conformity of execution to the decree; reaffirming settled law on execution and corporate personality.