Directors can be held liable for non-compliance under the Consumer Protection Act even during a corporate debtor's insolvency moratorium.

ORDER

1. Heard learned counsel for the parties.

2. Challenge is to order dated 01.10.2021 of the State Commission in EA/9/2019 in CC/20/2016, vide which an application filed by the Appellant herein was dismissed. The Appellant herein has filed an application dated 06.07.2021 before the State Commission praying for substitution of his name on the ground that he is no more the Director of the JD Company M/s.

Ramnath Developers Private Limited. Following prayers were made in the said application:

“PRAYER: It is therefore most humbly prayed to this Hon’ble Commission to:

a) Discharge and substitute the applicant – Mr. Sudeshchandra Gupta from the present proceeding as person representing the OP/Accused in the present matter;

b) Substitute name of accused/OP – Mr. Sudeshchandra Gupta in the present proceeding with the name of newly appointed IRP as acting director of the OP – Company.

Or in the alternative

b) In alternate- stay the present proceeding sine-die till the completion of entire Corporate Insolvency Resolution Process before the National Company Law Tribunal in Company petition (IB) No. 451/ALD/2019;

c) Pass any such order as this Hon’ble commission may deem fit in favour of the OP’s/Accused in the given facts and circumstances of the case.”

3. In this regard extract of relevant paras of impugned order dated 01.10.2021 of State Commission is reproduced below:

3. The foremost ground taken by the present non applicant No. 2 is that during the pendency of the present proceedings the Hon’ble National Company Law Tribunal, Allahabad Bench in Company Petition(IB) No. 451/ ALD/2019 by order dated 23/01/2020 has initiated the Corporate Insolvency Resolution Process as the O.P. was unable to pay the corporate debt. The National Company Law Tribunal has also declared Moratorium on O.P. in terms of Section 14 of the Insolvency and Bankruptcy Code, 2016 and has thereby stayed.

a. The institution of suits or continuation of pending suits or proceedings against the corporate debtor.

b. Transferring, encumbering any of assets.

c. Any action or foreclosure d. The recovery of any property by an owner or lessor where such property is in possession of the corporate debtor.

4. The non applicant No. 2 has contended that the Hon’ble National Company Law Tribunal (NCLT) has also appointed Mr. Gangaram Agrawal as Interim Resolution Professional and directed him to take further steps. Accordingly, the entire Board of Directors of O.P. M/s Ramnath Developers Pvt. Ltd. stands suspended and all the affairs are being managed by the Resolution Professional. Non applicant No. 2 - Mr. Sudeshchandra Gupta is no longer a director in the present proceedings and no personal liability can be imposed upon non applicant No. 2 - Mr. Sudeshchandra Gupta in his personal capacity. Non applicant No.2 - Mr. Sudeshchandra Gupta cannot be compelled to represent the O.P. company as a director and so in view of Moratorium being declared the proceedings cannot continue and need to be stayed.

5. The non applicant No. 2 has further taken a plea that the present proceedings under Section 27 of the Consumer Protection Act, 1986 is meant to enforce a civil remedy and therefore it amounts to a “proceeding” within the meaning of Section 14 (1)(a) of the IBC attracting the moratorium. The non applicant No. 2 has contended that the present proceedings are in respect of transaction which relates to debt owned by the corporate debtor and so the same cannot continue after Moratorium is declared. On the basis of the aforesaid contentions the non applicant No. 2 has prayed that his name be substituted in the pre