- Case
- ANSAL CROWN HEIGHTS FLAT BUYERS ASSOCIATION (REGD.) v. M/S ANSAL CROWN INFRABUILD PVT. LTD. (Supreme Court of India, 12-01-2026)
- Law
- Consumer Protection Act, Insolvency and Bankruptcy Code, Companies Act, Code of Civil Procedure.
Facts: Flat buyers, represented by Ansal Crown Heights Flat Buyers Association, filed consumer complaints against M/S Ansal Crown Infrabuild Pvt. Ltd. (ACIPL) for failure to deliver possession of flats. The NCDRC initially directed proceedings only against ACIPL, excluding its directors/promoters (respondents 2 to 9). The complaints were allowed against ACIPL, directing project completion, occupancy certificate procurement, and flat handover with interest, or alternatively, refund of the deposited amount.
Procedural Posture: When ACIPL failed to comply, execution proceedings were initiated. Due to a corporate insolvency resolution process under the IBC against ACIPL, the NCDRC adjourned proceedings sine die, including against the directors. This adjournment was challenged and set aside by the Supreme Court, allowing execution proceedings against the directors but granting them liberty to raise objections. The NCDRC then dismissed the execution applications against the directors, holding the order executable only against ACIPL. The present appeals challenge this dismissal.
Issue: Can execution proceedings be initiated against the directors/promoters of a judgment-debtor company (ACIPL) in a consumer complaint where the initial order was only against the company, and no notice was issued to the directors/promoters in the original proceedings?
Holding: No, execution proceedings cannot be initiated against the directors/promoters (respondents 2 to 9) in this case. The Supreme Court upheld the NCDRC's decision.
Reasoning: The Court reasoned that the NCDRC consciously admitted the complaint only against ACIPL and declined to issue notice to the directors/promoters. This order attained finality as it was never challenged. The proceedings continued solely against ACIPL, with no pleadings, issues framed, or findings recorded against the directors. The decree binds only ACIPL, and execution cannot enlarge liability to bind non-parties. The Court emphasized that a clear distinction exists between a company and its shareholders/directors. The lifting of the corporate veil is unwarranted without specific pleadings and a determination of fraud or misuse of the corporate form. The moratorium under Section 14 of the IBC shields only the corporate debtor, but this doesn't automatically make directors liable if they weren't parties to the original order. The appellant failed to establish any guarantee or surety furnished by the directors.
