Consumer Complaint Is Not Maintainable Against Corporate Debtor During Subsistence Of Moratorium: Bombay High Court

The Nagpur Bench of the Bombay High Court, comprising of Justice M.M. Nerkiar, has held that the consumer complaint before the District Consumer Dispute Redressal is not maintainable if the insolvency of the corporate debtor has been admitted during the continuance of the moratorium. The petition was filed against the order of the District Consumer Dispute Redressal. In the impugned order the commission had directed the petitioner to return the JCB machine to the respondent. Previously, the Reserve Bank of India had issued a notification superseding the Board of Directors of the petitioner company. Thereafter, the RBI approached the NCLT seeking initiation of the CIRP of the corporate debtor. The NCLT admitted the petition and imposed a moratorium under section 14 of the IBC. During the period when the moratorium was in force, the Respondent No. 1 filed a consumer complaint alleging that the appellant's employees (Respondents 2 and 3) had illegally repossessed his JCB machine. The District Commission allowed the complaint and directed the return of the JCB machine. It also used a bailable warrant against the petitioner's CEO and owner in recovery proceedings. The petitioner, through its authorized officer, challenged the consumer complaint and the enforcement mechanism before the Hon'ble High Court. The petitioner contended that consumer proceedings were barred during the subsistence of the moratorium. Also, the petitioner company was not a party before the consumer commission; therefore, they are not bound by the orders. It also highlighted that the issued warrant is against the spirit of the moratorium. The bench observed that by virtue of section 14 of the IBC, no proceedings can be instituted against the corporate debtor during the subsistence of the moratorium. Further, the court observed that the petitioner company was not made a party before the consumer commission; therefore, the order will not have binding value upon the petitioner company. Though the warrant issued against the owner and CEO of the company was stayed by the consumer commission, the Hon'ble Court still declared that bad in law. The Court further observed that there is no doubt that the respondent herein is the victim, as he had paid consideration and lost the possession of the JCB; however, the stringent provision of the IBC doesn't permit lodging or instituting any proceedings against the petitioner. The bench also considered the submission of the respondent that the proceedings were instituted due to deficiencies in services and are not of a recovery nature. The bench observed that the commission directed to return the JCB upon payment of the dues. Thus, it would be a monetary decree and will come under the definition of the 'property' u/s 3(27) of the IBC. Therefore, the institution of a suit or proceedings is barred. Case Name: Srei Equipment Finance Limited v. Rajesh Bajirao Khandewar and Others Case No.: Criminal Writ Petition No. 41 of 2025 Judgment Date: 17.10.2025Click Here To Read/Download The Order

Consumer Complaint Is Not Maintainable Against Corporate Debtor During Subsistence Of Moratorium: Bombay High Court

Mohd.Rehan Ali

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