The Supreme Court ruled that the moratorium under Section 14 would not prevent petitioners—home buyers—from bringing legal action against the promoters of the Corporate Debtor in order to enforce the settlements reached before the court.
In the instant case titled Anjali Rathi v. Today Homes and Infrastructure (P.) Ltd., the issue raised for clarification before the Supreme Court was:
Whether the petitioners would be prevented from pursuing proceedings under Section 14?
With regard to this issue, according to the Apex Court, petitioners must present any concerns to the Resolution Plan to the Adjudicating Authority. The NCLT was instructed to make sure that the application for permission is resolved quickly, ideally within six weeks of the day on which a certified copy of the immediate order was received.
The Court further stated that the moratorium under Section 14 would not prevent the petitioners from bringing legal action against the Corporate Debtor's promoters in order to enforce the settlements agreed before the instant court. However, the petitioners' reliance on a Resolution Plan that is currently awaiting approval from an Adjudicating Authority prevents the immediate Court from issuing the direction they are requesting.
The Court categorically stated that,
“The Resolution Professional obtained an order of extension from the NCLT consequent upon the onset of the Covid-19 pandemic and the period of 330 days for completing the resolution process is to expire on 20 August 2021. In this backdrop, it has been submitted on behalf of the Resolution Professional that the proceedings may be allowed to stand over until a date beyond 20 August 2021. In the meantime, it has been stated that all the petitioners have also submitted their claims to the Resolution Professional".
Hence, the Court upheld the right of home buyers to initiate proceedings against the first respondent, observing that despite the moratorium being declared under Section 14, the moratorium was only in relation to corporate debtors and not in relation to the management and directors of the corporate debtor.