Saranga Anilkumar Aggarwal vs Bhavesh Dhirajlal Sheth 2025 INSC 314 - S 96 IBC - Moratorium - Consumer Case
Insolvency and Bankruptcy Act 2016 - Section 96 ; Consumer Protection Act - Section 27 - The penalties imposed by the NCDRC are regulatory in nature and do not constitute "debt" under the IBC- practices. The penalties under Section 27 of the CP Act are aimed at compelling compliance and cannot be equated with recovery of an outstanding debt - The moratorium under Section 96 of the IBC does not extend to regulatory penalties imposed for non-compliance with consumer protection laws. (Para 35,40)
Insolvency and Bankruptcy Act 2016 - Section 14,96 - Distinction between the moratorium applicable to a corporate debtor under Section 14 of the IBC and the interim moratorium applicable to individuals and personal guarantors under Section 96 of the IBC-The former is much broader in scope and stays all proceedings against the corporate debtor, including execution and enforcement actions. However, Section 96 of the IBC is more limited in its scope, staying only "legal actions or proceedings in respect of any debt." Unlike corporate insolvency proceedings, where the goal is a comprehensive resolution of the company’s liabilities, individual insolvency proceedings are designed primarily for restructuring personal debts and providing relief to the debtor. The legislative intent behind limiting the scope of the interim moratorium under Section 96 of the IBC must be respected, and a blanket stay on all regulatory penalties would result in defeating the objectives of consumer protection laws. (Para 30)
Insolvency and Bankruptcy Act 2016 - Section 14,96 - While civil proceedings are generally stayed under IBC provisions, criminal proceedings, including penalty enforcement, do not automatically fall within its ambit unless explicitly stated by law. The penalties imposed by the NCDRC are regulatory in nature and arise due to non- compliance with consumer protection laws. They are distinct from "debt recovery proceedings" under the IBC. (para 27)
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