Tejas J. Shah & Ors. v. Mantri Technology Constellations Pvt. Ltd. & Ors.

In this case, a group of homebuyers booked residential apartments in a project developed by a builder company. Despite paying a substantial amount of money, they did not receive possession of their homes within the agreed timeframe. Frustrated by the delay, they filed a consumer complaint before the National Consumer Disputes Redressal Commission (NCDRC) against the developer company, its sister company, its promoters/directors, and the landowners, alleging deficiency in service. During the pendency of this complaint, the main developer company was declared bankrupt by the National Company Law Tribunal (NCLT). Under Section 14 of the Insolvency and Bankruptcy Code (IBC), a 'moratorium' or temporary freeze was placed on all lawsuits against this bankrupt company. Relying on this, the NCDRC completely paused the consumer case, stating that the liability of directors could not be examined separately. The homebuyers appealed to the Supreme Court of India. The Supreme Court overturned the NCDRC's decision, clarifying that the legal freeze (moratorium) applies strictly and only to the bankrupt company itself. It does not provide any protection to personal directors, promoters, or landowners. The Supreme Court directed the Consumer Commission to immediately resume hearing the case against the directors and other parties. This landmark judgment ensures that flat buyers are not left helpless when builder companies declare bankruptcy.

Homebuyers booked flats in a housing project but did not get possession by the promised 2018 deadline. They filed a consumer complaint against the builder, its directors, and the landowners. Meanwhile, the main builder company was declared bankrupt, which triggered a legal halt on all cases against it.

The Supreme Court held that the bankruptcy freeze applies strictly to the bankrupt company, not to its directors or associates. It ordered the Consumer Commission to immediately resume hearing the case against the directors and landowners.

This judgment protects common homebuyers by ensuring that promoters and directors cannot hide behind their company's bankruptcy to escape accountability. It allows buyers to pursue justice and seek refunds or compensation from the remaining active owners and directors.