The Supreme Court on Tuesday ruled that developers cannot evade monetary penalties imposed for consumer rights violations under the guise of insolvency proceedings, underlining that allowing such a practice would erode consumer trust and worsen the already vulnerable position of homebuyers due to possession delays and contract breaches. The ruling came while the court dismissed an appeal filed by Saranga Anilkumar Aggarwal, proprietor of East & West Builders (RNA Corp Group Co), who had sought relief from penalties imposed by the National Consumer Disputes Redressal Commission. (HT Archive) A bench of justices Vikram Nath and PB Varale emphasised that penalties imposed by consumer courts serve a regulatory function and do not constitute “debt” under the Insolvency and Bankruptcy Code (IBC). Permitting a stay on regulatory penalties under the guise of insolvency proceedings, it said, would undermine the very purpose of the Consumer Protection Act (CPA) and embolden errant developers to escape liability through insolvency proceedings. “Homebuyers, many of whom invest their life savings in purchasing residential units, are already in a precarious position due to …