Case at a Glance
Flat buyers of the Ansal Crown Heights project won NCDRC orders on 28 February 2022 directing the builder company to deliver possession or refund their money with 9% interest. When the company went into insolvency and a moratorium applied, they sought to execute the orders against its directors and promoters, who had been named in the complaints but never served or proceeded against. The Supreme Court upheld the NCDRC’s refusal, holding that a decree binds only the party against whom it was passed and that execution cannot be used to fasten liability never adjudicated. The appeals were dismissed, with liberty to pursue other remedies under the Companies Act, the IBC or civil law.
Buyers signed flat buyer agreements with Ansal Crown Infrabuild Pvt. Ltd., promising possession within 36 months; those dates expired between December 2013 and December 2015. Two consumer complaints were filed in 2018 naming the company and its directors and promoters. On 25 January 2018, however, the NCDRC issued notice only to the company and directed an amended memo of parties; that order was never challenged. On 28 February 2022 the NCDRC allowed the complaints against the company.
The company then went into insolvency under the IBC. When the NCDRC adjourned execution sine die on 18 May 2023 because of the moratorium, the Supreme Court on 17 January 2024 set that order aside, holding that the moratorium protects only the corporate debtor and permitting execution to proceed against the directors subject to their objections. On 20 June 2024 the NCDRC dismissed the execution applications against the directors, holding the orders executable only against the company. The homebuyers appealed.
The Key Question Before the Court
Can an NCDRC order passed against a builder company be executed against its directors and promoters who were named in the complaint but never served, heard or held liable?
A Decree Is Executed As It Stands
The Court held that the complaints proceeded only against the company, and there were no pleadings, issues or findings against the directors. Relying on Rajbir v. Suraj Bhan, it reiterated that the decree must be executed as it is and an executing court cannot go behind or beyond it. A company is a legal person distinct from its shareholders and directors, as explained in Electronics Corporation of India Ltd. v. Secretary, Revenue Department, Govt. of A.P., (1999) 05 SC CK 0051; their liability is limited unless they gave a guarantee or undertaking, and none was pleaded. Lifting the corporate veil requires a prior, reasoned finding of fraud or misuse of the corporate form, which was never sought.
The Consumer Protection Act requires notice, pleadings, an opportunity to contest and recorded findings before liability is fixed; execution cannot become a surrogate forum to impose liability that was never adjudicated. Once the moratorium applied to the judgment-debtor company, the modes of execution under Section 71 of the Consumer Protection Act, 2019 could not be used indirectly against non-judgment-debtors. The earlier order of 17 January 2024 only removed the moratorium bar and did not decide that the directors were personally liable.
What the Court Actually Held
- An NCDRC order passed only against a builder company binds that company and cannot be executed against its directors or promoters who were not proceeded against.
- Execution proceedings cannot be used to fasten personal liability that was never pleaded, tried or adjudicated.
- The corporate veil cannot be lifted in execution without a prior finding of fraud or misuse of the corporate form.
- The appeals were dismissed without costs, with liberty to the homebuyers to pursue remedies against promoters or directors under the Companies Act, the IBC or civil law, if the statutory requirements are met.
Why This Judgment Matters
- It tells homebuyers that naming directors in a complaint is not enough; they must be served and held liable in the order itself.
- It clarifies how the IBC moratorium and Section 71 execution interact for consumer decrees against builders.
- It reaffirms separate corporate personality in consumer execution.
What Should Advocates Take Away From the Judgment?
For Homebuyers
- If you want directors personally liable, ensure they are issued notice and the order is passed against them too.
- If an order excluding them is passed early in the case, challenge it then; it cannot be fixed at the execution stage.
For Counsel
- Plead specific grounds — guarantee, undertaking, fraud — if seeking personal liability of directors.
- Explore Companies Act, IBC or civil remedies, which the Court expressly left open.
Key Takeaways
- A decree binds only the party it is passed against.
- Directors not proceeded against cannot be reached in execution.
- The IBC moratorium shields the company; it does not create director liability.
- Other remedies against promoters remain open.
Frequently Asked Questions
My builder is in insolvency. Can I recover my refund from its directors?
Not through execution of a consumer order passed only against the company. The Court left open remedies under the Companies Act, the IBC or civil law, if their requirements are met.
The directors were named in our complaint. Does that make them liable?
No. Here notice was issued only to the company and no findings were recorded against the directors, so the order bound only the company.
Did the earlier Supreme Court order of January 2024 make directors liable?
No. The Court said that order only removed the moratorium bar and left the question of the directors’ liability to be decided.
Conclusion
The judgment is a hard lesson for homebuyers in stalled projects: the battle over who is liable has to be fought at the complaint stage, not after the decree.
Practical takeaway: In consumer complaints against builders, insist on notice to directors and seek specific findings against them if personal liability is intended.
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