Can a Moratorium under Section 14 of Insolvency Bankruptcy Code, leave petitioners without any remedy

In the case of Anjali Rathi v. Today Homes & Infrastructure Pvt. Ltd , the petitioners (Anjali Rathi) were to be given possession of apartment in the Canary Greens, housing project in Gurgaon within 36months by the year 2014.

The developers stopped the project, and the home buyers then went to NCDRC (National Consumer Dispute Redressal Commission), to get back their principal money paid along with interest. NCDRC in July 2018 directed the respondent (Today Homes) to pay the principal amount along with a 12% interest.

By April 1, 2019, NCDRC had given an order that Director Ajay Sood may be taken into custody and personal properties of the Judgement Debtor can be attached to pay the home buyers.

At the same time, under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, proceedings were initiated against Respondent before the National Company Law Tribunal (NCLT), and a moratorium was declared in terms of Section 14 of the IBC. Under the said Section 14, the assets of the corporate debtor cannot be disposed of, transferred, alienated or encumbered.

The Bench of Justices DY Chandrachud, Vikram Nath and Hima Kohli clarified that petitioners would not be barred by the moratorium, though they could not proceed against corporate debtor, they could still sue the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments Act .

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