The Supreme Court has ruled that insolvency protections under the IBC only apply to the defaulting company, not its promoters or directors. This verdict allows homebuyers to continue legal actions against developers’ leadership for personal liabilities, even when the company is undergoing insolvency proceedings.
In a decision that clarifies the scope of the Insolvency and Bankruptcy Code (IBC), the Supreme Court has ruled that the legal moratorium—a temporary freeze on legal actions—granted to a company under the insolvency process does not extend to its promoters or directors. This judgment ensures that individuals managing a company cannot use the Corporate Insolvency Resolution Process (CIRP) as a shield to avoid accountability…