The Supreme Court has held that the moratorium under Section 14 of the IBC operates against the corporate debtor alone, and cannot — absent express statutory provision — be extended to protect subsidiary companies, managers, directors or personal guarantors from proceedings brought against them individually.
The Court set aside an NCDRC order that had frozen homebuyers' consumer complaints against a developer's non-corporate-debtor respondents en masse once insolvency proceedings began against the developer itself, and directed that those individual proceedings continue notwithstanding the developer's ongoing CIRP.
The ruling widens the practical recovery avenues available to homebuyers and other claimants during a developer's insolvency: they can keep pursuing individual, promoter or director liability before consumer fora even while the principal developer company sits under CIRP, rather than having every claim frozen simply because the corporate group includes an insolvent entity.