AIROnline 2025 SC 140

Supreme Court Of India

(From : National Consumer Disputes Redressal Commission)*

Hon'ble Judge(s): Vikram Nath, Prasanna B. Varale , JJ

Consumer Protection Act (68 of 1986) , S.27— Insolvency and Bankruptcy Code (31 of 2016) , S.96— Penalty orders passed by NCDRC - Execution of - Interim moratorium under IBC - Applicability - Penalties imposed by NCDRC are regulatory in nature and do not constitute "debt" under IBC - Moratorium u/s 96 of IBC does not extend to regulatory penalties imposed for non-compliance with consumer protection laws In the instant case , penalties were imposed on appellant for failing to deliver possession of residential units to homebuyers as per agreed timeline. Appellant sought stay on penalty proceedings on the ground that an application under Section 95 of the Insolvency and Bankruptcy Code, 20162 was filed against them, triggering an interim moratorium under Section 96 of the IBC. Held, penalties imposed by NCDRC are regulatory in nature and do not constitute "debt" under IBC . Moratorium u/s 96 of IBC does not extend to regulatory penalties imposed for non-compliance with consumer protection laws. Statutory scheme of the IBC indicates that penalties arising from regulatory infractions are not covered under the ambit of "debt" as envisioned under the Code. Section 27 of the CP Act empowers consumer fora to impose penalties to ensure adherence to consumer protection norms. These penalties do not arise from any "debt" owed....