Supreme Court Clarifies Scope of IBC Moratorium: Consumer Complaints to Continue Against Promoters and Directors

In a significant ruling in Tejas J. Shah & Amisha T. Shah & Ors. v. Mantri Technology Constellations Pvt. Ltd. (Civil Appeal Nos. 4289 & 4290 of 2025), vide judgment dated July 27, 2026, reinforcing the rights of homebuyers, the Hon’ble Supreme Court has held that the moratorium imposed under Section 14 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) on a Corporate Debtor does not extend protection to its promoters, directors, and/or other non-corporate parties. The judgment provides much-needed clarity on the interplay between insolvency proceedings and consumer protection laws, particularly in the real estate sector.

The case arose from the complaints filed by the homebuyers in relation to the ‘Mantri Manyata Energia’ residential project. The purchasers alleged that despite making substantial payments, the developer failed to hand over possession of the apartments within the agreed timeline. Consumer complaints were accordingly instituted before the Hon’ble National Consumer Disputes Redressal Commission (“NCDRC”) against the developer company, its promoters, directors, associated entities, and landowners.

During the pendency of the said proceedings before NCDRC, the Hon’ble National Company Law Tribunal, Bengaluru (“NCLT”), admitted the developer company into the Corporate Insolvency Resolution Process (“CIRP”) and imposed a moratorium under Section 14 of IBC. Pursuant thereto, the homebuyers filed an application to continue the proceedings against the remaining Respondents, other than the developer company, being the promoters, associated entities and landowners. However, the NCDRC rejected the said application and thereby, adjourned the matter indefinitely.

In the above context, the Hon’ble Supreme Court, set aside the NCDRC’s order and held that the statutory moratorium operates only in favour of the Corporate Debtor and cannot be extended to individuals or entities against whom no independent moratorium exists. The Court observed that, in the absence of any legal prohibition, the NCDRC was duty-bound to adjudicate the Consumer Complaint against the promoters, directors, and other respondents and determine, after considering the evidence and rival contentions, whether any liability could be fastened upon them. It was further held that the Commission had erred in effectively foreclosing this inquiry at an interlocutory stage.

Accordingly, the Hon’ble Supreme Court directed the NCDRC to proceed with the Consumer Complaint against the remaining Respondents (promoters, associated entities and landowners) in accordance with law, while clarifying that the proceedings against the developer company would continue to remain subject to the moratorium under IBC. The present ruling provides significant clarity on the scope of the statutory moratorium under IBC by holding that its protection is confined to the Corporate Debtor and cannot be extended to promoters, directors, or other non-corporate entities. Consequently, it is now settled that the aggrieved homebuyers can continue to pursue legal recourses/remedies against other related/ non-related parties in similar circumstances, who may be held liable in accordance with law.