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 |
| Precedent Value | Binding authority |
| Overrules / Affirms | Affirms existing precedent; upholds strict execution-as-decree principle |
| Type of Law | Consumer Protection Act, 2019; Insolvency & Bankruptcy Code, 2016 |
| Questions of Law | Whether execution of a consumer commission’s decree can extend to directors/promoters not impleaded or adjudicated; scope of moratorium under Section 14 IBC for corporate officers |
| Ratio Decidendi |
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| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by Court |
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| Facts as Summarised by the Court |
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Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts and consumer dispute redressal commissions |
| Persuasive For | High Courts, other tribunals dealing with consumer or insolvency-related execution |
| Follows | Rajbir v. Suraj Bhan (2022), Electronics Corpn. v. Secy., Revenue Deptt. (1999) |
What’s New / What Lawyers Should Note
- Confirms that execution of a consumer commission’s decree cannot be extended to non-party directors/promoters unless their personal liability was specifically adjudicated.
- Clarifies that a moratorium under Section 14 IBC bars execution only against the corporate debtor, but does not by itself create personal liability for directors/promoters.
- Reinforces that piercing the corporate veil requires pleadings, proof of fraud or abuse, and a reasoned determination before execution.
- Emphasises strict compliance with decree-as-pronounced; execution courts cannot amend or enlarge liability.
- Lawyers can cite this decision to resist execution attempts on non-parties where original orders did not bind them.
Summary of Legal Reasoning
- Finality of Lis and Scope of Decree
NCDRC’s January 25, 2018 order confined complaints to the company alone; directors/promoters received no notice, no pleadings, no issues framed, and no findings recorded. Once adjudication binds only the named respondent (the company), execution must conform strictly to that decree. - Execution-As-Decree Principle
Citing Rajbir v. Suraj Bhan: an executing court cannot extend liability beyond the decree. - Corporate Personality and Moratorium
Electronics Corpn. of India Ltd.: company is distinct from its shareholders or directors. Moratorium under Section 14 IBC interdicts execution against the corporate debtor only; it does not automatically impose liability on directors/promoters. - Requirement of Adjudicated Liability
No pleadings or findings against directors; no guarantees or sureties admitted or proved; Section 14(3) IBC not triggered. Execution cannot be a surrogate for adjudicating personal liability. - Veil-Piercing Inapplicable
Exceptional remedy requiring pleading and proof of fraud/abuse of corporate form; absent here, cannot be invoked at execution stage. - Effect of Supreme Court’s January 17, 2024 Order
That order removed the moratorium-related bar but did not impose personal liability; it left liability determination open to NCDRC. NCDRC’s subsequent dismissal of execution against directors was on merits and consistent with law.
Arguments by the Parties
Petitioner (Flat-Buyers Association)
- Directors/promoters, as de facto project handlers, must satisfy the decree if the company cannot, despite moratorium.
- Supreme Court’s January 17, 2024 order permits execution proceedings against directors.
- Continuation of execution ensures effective relief to allottees who have invested funds.
Respondents (Company Directors/Promoters)
- Only the company was party to the original complaints; no notice or adjudication against directors/promoters.
- No guarantees, sureties, or personal undertakings were furnished by them.
- Moratorium under Section 14 IBC bars execution against the corporate debtor; no independent liability exists for directors.
- Piercing the corporate veil is not permissible absent pleaded and proved fraud or corporate abuse.
Factual Background
A flat-buyers association entered into agreements with a developer promising possession within 36 months. Possession was delayed, leading to two NCDRC complaints initially naming both the company and its directors/promoters. On January 25, 2018, the NCDRC confined the lis to the company alone. The company failed to comply with relief orders (possession or refund with interest), prompting execution applications. An insolvency moratorium on the company led NCDRC to stay execution sine die; the Supreme Court lifted that stay (January 17, 2024), allowing execution against directors/promoters. On revival, NCDRC dismissed execution against non-party directors for lack of adjudicated liability.
Statutory Analysis
- Consumer Protection Act, 2019 (Section 71): Execution modes include attachment and sale of property, but execution must conform strictly to decree parties.
- Insolvency & Bankruptcy Code, 2016 (Section 14): Moratorium prevents enforcement of claims against the corporate debtor but does not automatically extend to officers/directors. Section 14(3) IBC (liability of directors) not attracted absent specific findings or guarantees.
- Corporate Veil Doctrine: Recognised as exceptional; requires prior pleadings and proof of fraud or misuse of corporate personality before courts may disregard company’s separate legal entity status.
Alert Indicators
- ✔ Precedent Followed – existing execution principles and corporate-debtor distinction affirmed.