SARANGA ANILKUMAR AGGARWAL VERSUS BHAVESH DHIRAJLAL SHETH & ORS. [CIVIL APPEAL NO(S). 4048 OF 2024]
BENCH: JUSTICES VIKRAM NATH AND PRASANNA B. VARALE
COURT: SUPREME COURT
JUDGEMENT DATE: March 4, 2025
In a significant development, the Supreme Court ruled that an interim moratorium under Section 96 of the Insolvency & Bankruptcy Code, 2016 does not apply to penalty proceedings under Section 27 of the Consumer Protection Act, 1986.
The Court explained that Section 79(15) of the IBC excludes certain liabilities, such as fines and penalties, from the moratorium’s effect. As a result, penalties imposed by Consumer Redressal Forums under the regulatory statutes like the CP Act do not fall within the scope of the moratorium.
“The present case does not involve a mere financial dispute but concerns the enforcement of consumer rights through regulatory penalties. Given that the legislative intent behind the CP Act is to ensure compliance with consumer welfare measures, staying such penalties would be contrary to public policy. Further, 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 statutes.”, the court observed