Section 14 IBC Moratorium Applies Only to Corporate Debtor: Supreme Court

The Supreme Court has ruled that the statutory moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 applies only to the corporate debtor and cannot be extended to promoters, directors, landowners or other respondents unless explicitly provided by law.

A Division Bench led by Justices Vikram Nath and Sandeep Mehta held that the protective scope of the moratorium must remain within the IBC framework and cannot obstruct remedies available under the Consumer Protection Act, 2019. The Court set aside an order by the National Consumer Disputes Redressal Commission that had halted proceedings against non-corporate respondents, directing it to adjudicate consumer complaints against promoters and directors while keeping proceedings against the corporate debtor under moratorium.

The judgment arose from a case involving homebuyers of the Mantri Manyata Energia project who had filed complaints against the developer and associated parties for failure to deliver possession despite substantial payments.