Saranga Anilkumar Aggarwal Vs Bhavesh Dhirajlal Sheth & Ors. (Supreme Court of India)
Supreme Court held that the penalties imposed by the National Consumer Disputes Redressal Commission [NCDRC] are regulatory in nature and do not constitute “debt” under the IBC. Thus, penalty imposed by NCDRC needs to be complied with.
Facts- The present appeal has been filed against the final judgment and order passed by the National Consumer Disputes Redressal Commission, wherein multiple penalties (27 in total) were imposed on the appellant for failing to deliver possession of residential units to homebuyers as per the agreed timeline. The appellant seeks a stay on the penalty proceedings before the NCDRC, contending that an application under Section 95 of the Insolvency and Bankruptcy Code, 2016 has been filed against them, triggering an interim moratorium under Section 96 of the IBC.
Conclusion- The appellant cannot invoke insolvency proceedings as a shield to evade statutory liabilities. The objective of the IBC is to provide a mechanism for resolving financial distress, not to nullify obligations arising under regulatory
Held that the penalties imposed by the NCDRC are regulatory in nature and do not constitute “debt” under the IBC. The moratorium under Section 96 of the IBC does not extend to regulatory penalties imposed for non-compliance with consumer protection laws. Thus, the appeal is accordingly dismissed, and the appellant is directed to comply with the penalties imposed by the NCDRC within a period of eight weeks from the date of this judgment.
