Introduction

The Supreme Court ruled that penalty orders passed by the NCDRC cannot be stayed under Section 96 of the Insolvency and Bankruptcy Code (IBC). In this case, homebuyers had filed consumer complaints against the appellant, which the NCDRC upheld, imposing penalties for deficiency in service. When the appellant failed to comply, R1 and R2 initiated execution proceedings. The appellant sought a stay, citing an interim moratorium under Section 96 due to ongoing proceedings under Section 95 initiated by SBI. The NCDRC rejected the stay request, leading to the present appeal.

Dismissing the appeal, the SC held that penalties imposed by the NCDRC are regulatory in nature and do not qualify as "debt" under the IBC. The moratorium under Section 96 does not cover regulatory penalties for non-compliance with consumer protection laws. The Court referred to Section 79(15) of the IBC, which lists "excluded debts," including fines imposed by courts or tribunals, damages for negligence, and maintenance liabilities. Since penalties by tribunals fall within "excluded debts," they remain unaffected by the interim moratorium.

The SC emphasized that the scope of the interim moratorium under Section 96 is limited and does not apply to all types of debts. It warned that granting a blanket stay on regulatory penalties would undermine consumer protection laws. Therefore, the penalties imposed by the NCDRC remain enforceable despite insolvency proceedings under the IBC. The case cited is Saranga Anilkumar Aggarwal v. Bhavesh Dhirajlal Sheth & Ors. 2025 INSC 314, decided on 04.03.2025.