Moratorium Shield Gets Trimmed For Personal Guarantors

The Supreme Court, in its recent judgment titled Saranga Anilkumar Aggarwal vs. Bhavesh Dhirajlal Sheth and Ors. 2025 SCC OnLine SC 493, has held that the interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016 ("Code") would not be applicable to execution of regulatory penalties imposed by courts or tribunals.

The appellant/ personal guarantor was aggrieved by an order passed by National Consumer Disputes Redressal Commission rejecting his contention that the penalties imposed under section 27 of the Consumer Protection Act, 1986 cannot be executed against the personal guarantor who is undergoing personal insolvency proceedings under section 95 of the Code. The personal guarantor had contended that by virtue of interim moratorium under Section 96 of the Code, the execution proceedings should be stayed.