2025 INSC 1110 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3826 OF 2020

MANSI BRAR FERNANDES ... APPELLANT

VERSUS

SHUBHA SHARMA AND ANR . ... RESPONDENT(S)

WITH

CIVIL APPEAL NO. 540 OF 2021

SHUBHA SHARMA ... APPELLANT

VERSUS

MANSI BRAR FERNANDES AND ANR. ... RESPONDENT(S)

WITH

CIVIL APPEAL NO. 5495 OF 2025

ASHLESH GUPTA AND ANR. ... APPELLANT(S)

VERSUS

MANSI BRAR FERNANDES AND ANR. ... RESPONDENT(S)

2

WITH

CIVIL APPEAL NO. 3903 OF 2022

SUNITA AGARWAL ... APPELLANT

VERSUS

ANKIT GOYAT AND ANR. ... RESPONDENT(S)

J U D G M E N T

R. MAHADEVAN, J.

1. There are four appeals, which, having been heard together, are being

disposed of by this common judgment.

2. The first three appeals, viz., C.A. No. 3826 of 2020, C.A. No. 540 of 2021,

and C.A. No. 5495 of 2025 arise out of the final judgment and order dated

17.11.2020

1

passed by the National Company Law Appellate Tribunal, New

Delhi

2

, in Company Appeal (AT) (Insolvency) No. 83 of 2020. The fourth appeal,

viz., C.A. No. 3903 of 2022, is directed against the final judgment and order dated

1

For short, “the first impugned order”

2

For short, “the NCLAT”

3

12.08.2021

3

passed by the NCLAT in Company Appeal (AT) (Insolvency)

No.1020 of 2019.

3. C.A. No. 3826 of 2020 has been preferred by the appellant – Mansi Brar

Fernandes in her capacity as a homebuyer / financial creditor. Cross-appeals, viz.,

C. A. No. 540 of 2021 and C.A. No. 5495 of 2025 have been filed by Shubha

Sharma and Ashlesh Gupta, respectively – former and present directors of Gayatri

Infra Planner Private Limited – Respondent No. 2 / Corporate Debtor. C.A. No.

3903 of 2022 has been filed by the appellant – Sunita Agarwal, also a homebuyer

/ financial creditor, against the Corporate Debtor Antriksh Infratech Pvt. Ltd.

4. By the first impugned order dated 17.11.2020, the NCLAT reversed the

admission of the application filed under Section 7 of the Insolvency and

Bankruptcy Code, 2016

4

by the appellant – Mansi Brar Fernandes, holding that

she was a “speculative investor” and not a genuine homebuyer / financial creditor.

Following this, by its second impugned order dated 12.08.2021, the NCLAT set

aside the admission of the Section 7 application filed by the appellant – Sunita

Agarwal, holding that she too fell within the category of “speculative buyer” who

sought to profit from a lucrative agreement. The directors of the Corporate

Debtor, in their cross-appeals, have further challenged the first impugned order

3

For short, “the second impugned order”

4

For short, “the IBC”

4

on the limited ground of non-applicability of the Ordinance / Amendment Act to

the facts of the present case.

PREFATORY

5. The Insolvency and Bankruptcy Code, 2016 (IBC) is a landmark economic

legislation enacted to consolidate and amend the laws relating to reorganisation

and insolvency resolution of corporate persons, partnership firms, and individuals

in a time-bound manner. Its primary objectives are the maximisation of value of

assets, promotion of entrepreneurship, availability of credit, and balancing of

stakeholder interests – creditors, investors, employees and workmen inter alia.

Yet, the IBC is also a highly misunderstood legislation. The nomenclature of the

Code itself has often contributed to this perception. In popular imagination, the

IBC is associated with bankruptcy and recovery of the “last drop of life” from a

company. But a closer look reveals that the true character of the IBC lies not in

its sombre title but in its design and purpose. It privileges resolution over ruin,

revival over decay, and seeks to breathe life back into companies where revival

is possible, while providing for an orderly and dignified closure where it is not.

As emphasized by this Court in Swiss Ribbons v. Union of India

5

and a catena

of subsequent decisions, liquidation is not the primary object of the Code, but a

measure of last resort. The Code is designed to revive and restructure distressed

5

(2019) 4 SCC 17

5

entities, so that they continue as going concerns – safeguarding business

continuity, protecting employment, and maximising value of stakeholders.

5.1. Within this framework, the homebuyers occupy a distinct position.

Although their advances were, in substance, financial contributions to real estate

projects, they initially lacked representation in the Committee of Creditors (CoC).

To correct this imbalance, Parliament amended the IBC to recognize allottees as

“financial creditors”, thereby ensuring that their voices are represented in the

resolution process. The legislative intent was to protect genuine homebuyers,

secure completion of projects, and ensure delivery of homes. For such

stakeholders, liquidation rarely yields meaningful relief.

5.2. However, this amendment also gave rise to an unintended consequence: a

surge of individual Section 7 petitions, often filed not by genuine homebuyers but

by speculative investors seeking premature exits or enhanced returns. Many of

these applications were aimed at holding promoters to ransom by threatening

commencement of the Corporate Insolvency Resolution Process. Such misuse

burdened the adjudicatory machinery, strained the real estate sector, and stalled

projects that could otherwise have been revived. To curb this mischief, through

an ordinance and subsequent amendment, Parliament introduced a threshold

requirement: at least 10% of the allottees or 100 in number must act collectively

to file a Section 7 application against a real estate developer. This safeguard was

6

designed to prevent a handful of disgruntled or speculative investors from

derailing entire projects to the detriment of genuine homebuyers.

5.3. The residential real estate sector plays a systemic role in the Indian

economy. It is closely interlinked with banking, steel, cement, and allied

industries, and is among the largest employment generators. Despite robust

demand, the sector has been plagued by delays, defaults, and lack of

accountability, leaving countless families without possession of homes despite

having invested their life savings. In this backdrop, this Court has consistently

reiterated that the IBC is not a recovery mechanism or a bargaining chip for

individual disputes. Rather, it is a collective mechanism intended to revive viable

projects and safeguard the fundamental right to shelter of genuine homebuyers.

5.4. With this prefatory discussion on the objectives of the IBC, the legislative

recognition of homebuyers, and the safeguards introduced against speculative

misuse, we now turn to the facts of the present case.

BRIEF FACTS

6. The appellant (Mansi Brar Fernandes) and Respondent No. 2 (Gayatri Infra

Planner Pvt. Ltd) had entered into a Memorandum of Understanding (MoU) dated

06.04.2016 which a buy back agreement for four flats in Gayatri Life at Plot No.

1F, Sector 16, Greater Noida (West), Uttar Pradesh. She paid a sum of

Rs.35,00,000/- via cheque towards part consideration, and the MoU included a

7

buy-back clause exercisable solely at the discretion of the Corporate Debtor. If

the buy-back option was not exercised, the appellant was entitled to receive

possession of the flats without payment of any additional amount. Despite the

MoU having been extended twice (first on 07.04.2017 and second on

07.10.2017), neither flats were delivered, nor payment made; and post-dated

cheques worth Rs.1 crore handed over by the Corporate Debtor, were returned

dishonoured upon presentation. The appellant thereafter initiated section 7 IBC

proceedings in the capacity as an allottee / Financial Creditor, before the National

Company Law Tribunal, New Delhi

6

, besides initiating the proceedings under

Section 138 of the Negotiable Instruments Act, 1881

7

. The NCLT issued notice

to the Corporate Debtor and after detailed arguments, admitted the application

vide order dated 02.01.2020. Challenging the same, Respondent No. 1 preferred

an appeal before the NCLAT, which allowed the appeal and set aside the CIRP

proceedings initiated by the appellant against the Corporate Debtor, by the first

impugned order.

7. The appellants in C.A. No. 540 of 2021 and C.A. No. 5495 of 2025 assail

the first impugned order dated 17.11.2020 passed by the NCLAT on the limited

ground of non-compliance with the Insolvency and Bankruptcy Code

(Amendment) Ordinance, 2019, promulgated on 28.12.2019. The appellants

6

For short, “the NCLT”

7

For short, “N.I. Act”

8

stated that the Section 7 petition under the IBC filed by Respondent No. 1 (Mansi

Brar Fernandes) on 02.01.2020, was reserved on 04.12.2019, i.e., prior to the

promulgation of the Ordinance. As on 28.12.2019, the application was still

pending consideration. Consequently, the Ordinance and the subsequent

Amendment Act squarely applied to the proceedings. It was urged that the failure

of Respondent No. 1 to satisfy the threshold requirement mandated under the

Ordinance is fatal to the maintainability of the petition.

7.1. The appellants further stated that specifically, the third proviso to Section

7 IBC mandated compliance even for insolvency applications filed by financial

creditors that had not yet been admitted by the Adjudicating Authority within

thirty days of the promulgation of the Ordinance / Amendment Act. In the absence

of such compliance, the proviso expressly deemed such pending applications to

have been withdrawn prior to admission. Therefore, the finding of the NCLAT

that the Ordinance was inapplicable to the facts of the present case, is erroneous,

untenable, and unsustainable in law, and the admission order was liable to be set

aside on this ground alone.

7.2. The appellants also stated that compliance with the requirements of the

Ordinance / Amendment Act cannot be subsequently cured in appellate

proceedings before the NCLAT. Hence, after the Ordinance / Amendment Act, a

Section 7 IBC petition could not have been admitted by the Adjudicating

Authority, unless the statutory threshold prescribed for allottees to initiate CIRP

9

against a real estate project was met. The admission order dated 02.01.2020,

therefore, failed to give effect to the binding mandate of the Ordinance /

Amendment Act. Consequently, the appellants submitted that the requirements of

the Ordinance / Amendment Act are squarely attracted, and to that extent, the first

impugned order of the NCLAT warrants interference by this Court.

8. The facts of the case in CA. No. 3903 of 2022 are that Respondent No. 2

(Antriksh Infratech Pvt. Ltd) approached the appellant (Sunita Agarwal), and

represented that they were in the process of developing a housing project in the

name and style of “Antriksh Urban Greek” at L-Zone, Dwarka, New Delhi - 110

075. The appellant agreed to invest a sum of Rs.25,00,000/- and paid the same by

cheque dated 08.07.2015. Pursuant thereto, Respondent No. 2 issued letters dated

13.07.2015, stating that a 4BHK residential unit on the 6

th

floor, admeasuring

2500 sq.ft. @ Rs. 5000/- per sq.ft., had been booked in the name of the appellant

under buy-back plan, and also issued receipt No. 0492 dated 13.07.2015

acknowledging the payment of Rs.25,00,000/-. On 28.07.2015, an Agreement /

MoU was executed between Respondent No.2 and the appellant. As per Clause

2(a) of the Agreement, Respondent No. 2 admitted the payment of Rs. 25,00,000/-

and agreed to provide a return of 25% per annum at the end of 24 months or upon

the issuance of final LTC by the competent authority, whichever was earlier. The

24-month period ended on 07.07.2017.

10

8.1. Since construction was never commenced and, as reported by the

Insolvency Resolution Professional appointed by the NCLT, even land had not

been acquired by Respondent No. 2, the appellant issued a demand notice/e-mail

dated 01.02.2019 demanding a sum of Rs. 47,31,164.38 (comprising the principal

amount of Rs. 25,00,000/- plus interest @ 25% per annum till 08.02.2019).

Respondent No. 2, however, refused to accept the notice. The appellant also sent

the notice through e-mail on 01.02.2019.

8.2. Thereafter, the appellant filed an application under Section 7 IBC before

the NCLT. On 02.05.2019, the NCLT issued notice to Respondent No. 2 and

directed filing of an affidavit of service, renotifying the case on 10.05.2019. The

appellant served the complete set of the petition and documents on Respondent

No. 2 through e-mail on 07.05.2019, and filed an affidavit of service along with

a certificate under Section 65B of the Indian Evidence Act on 14.05.2019. Vide

order dated 15.05.2019, the NCLT directed that the matter proceed ex parte as

Respondent No. 2 failed to appear. Arguments were heard on 30.08.2019, and by

order dated 17.09.2019, the NCLT admitted the Section 7 IBC petition and

appointed an Interim Resolution Professional (IRP) to act in accordance with the

Code.

8.3. Challenging the said order, Respondent No. 1 preferred Company Appeal

(AT) (Insolvency) No. 1020 / 2019 before the NCLAT. In support, Respondent

No. 1 relied upon the NCLAT judgment dated 17.11.2020 in Subha Sharma v.

11

Mansi Brar Fernandes and others [Company Appeal (AT) (Insolvency) No. 83

of 2020] wherein, the NCLAT, referring to clauses of a similar agreement, held

that at the end of the stipulated period, the corporate debtor was obliged to buy-

back the apartment and refund the amount along with premium, which was a

lucrative agreement for the investor, thereby making the allottee a speculative

investor. On this reasoning and applying the ratio of this Court in Pioneer Urban

Land and Infrastructure Ltd v. Union of India

8

, the NCLAT by the second

impugned order dated 12.08.2021, set aside the NCLT’s admission order.

Aggrieved thereby, the appellant is before this Court with the present appeal.

CONTENTIONS OF THE PARTIES

9. According to the learned senior counsel for the appellant, the appellant

(Mansi Brar Fernandes) is a homebuyer and qualifies as a financial creditor under

Section 5(8)(f) of the IBC. She entered into a MoU dated 06.04.2016 with the

Corporate Debtor (Gayatri Infra Planner Pvt. Ltd) for the purchase / buy-back of

four apartments in its project “Gayatri Life”, and paid a sum of Rs.35 lakhs

through cheque as part consideration. The MoU, which was commercially

structured by the Corporate Debtor itself, contained a buy-back clause that was

entirely at the option of the Corporate Debtor. It could either buy back the units

after 12 months for Rs.1 crore or hand over possession of the flats to the appellant

8

(2019) 8 SCC 416

12

at no extra cost. The MoU was extended twice, i.e., on 07.04.2017 (for six

months) and 07.10.2017 (for twelve months), and all post-dated cheques issued

by the Corporate Debtor for Rs.1 crore, were dishonoured upon presentation.

Despite the expiry of the final extension period on 06.10.2018, the Corporate

Debtor failed to hand over the flats or honour its buy-back commitment, thereby

constraining the appellant to initiate proceedings under Section 138 of the

N.I.Act, and subsequently, file a Section 7 IBC petition.

9.1. Continuing further, it was submitted that the NCLT, by order dated

02.01.2020 admitted the petition, holding that the appellant was a homebuyer /

financial creditor under Section 5(8)(f), and that the Corporate Debtor had

committed default. However, on appeal, the NCLAT reversed the admission,

branding the appellant as a speculative investor. The learned counsel submitted

that this finding is wholly erroneous, as it was based merely on the existence of

the buy-back clause, the dishonour of post-dated cheques, and the appellant’s

resort to remedies under the N.I. Act. None of these, it was argued, demonstrate

speculative intent. On the contrary, the appellant never withdrew from the MoU

and was always willing to accept possession of the flats, while the option of buy-

back was solely with the Corporate Debtor, not the appellant. The NCLAT’s

approach, according to the learned counsel, disregards the builder’s default and

unfairly penalise the homebuyer.

13

9.2. It was also submitted that the transaction clearly bears the hallmarks of a

financial debt, having the commercial effect of borrowing and carrying the

element of time value of money, as recognized in the IBC. The sum of Rs.35 lakhs

was duly received by the Corporate Debtor, reflected in its financial records, and

is undisputed. The transaction is not alleged to be preferential, undervalued,

fraudulent, or extortionate under Sections 43 to 50 IBC, and the appellant is not

a related party of the Corporate Debtor or its promoters. Reliance was placed on

the judgment of this Court in Pioneer Urban Land and Infrastructure Ltd v.

Union of India (supra), wherein the 2018 amendment recognising homebuyers

as financial creditors was held to be clarificatory in nature. It was submitted that

the presence of a buy-back clause in the MoU does not exclude a homebuyer from

the purview of Section 5(8)(f), especially where such clause was devised by the

builder and not at the instance of the allottee.

9.3. The learned senior counsel further pointed out that during the pendency of

the present appeal, another Section 7 IBC petition filed by Amit Joshi and others

against the same Corporate Debtor was admitted by the NCLT on 28.03.2023 and

a CIRP is presently ongoing. The appellant has already submitted her claim in

those proceedings. She clarified that she does not seek revival of her original

Section 7 IBC petition, but only challenges the erroneous finding of the NCLAT

branding her as a “speculative investor”, which prejudices her rights in the

ongoing CIRP and under other proceedings including those under the N. I. Act.

14

9.4. In view of this subsequent CIRP, it was submitted that it is not necessary

for this Court to adjudicate on other issues raised in the first impugned order,

including the maintainability of her Section 7 IBC application in light of the 2018

amendment to the IBC requiring a threshold number of homebuyers to initiate

insolvency proceedings. For the same reason, the cross-appeals preferred by

Shubha Sharma and Ashlesh Gupta also do not require consideration.

9.5. With these submissions, the learned senior counsel prayed that the

impugned finding of the NCLAT describing the appellant as a “speculative

investor” be set aside, she be recognised as a homebuyer and financial creditor

under Section 5(8)(f) IBC, and she be treated at par with similarly situated

allottees in the ongoing CIRP in Amit Joshi (supra).

10. The learned counsel for the applicant in IA. No. 9936 of 2021 in C.A. No.

3826 of 2020 / intervenor submitted that the applicant– Gayatri Life Buyers

Welfare Society – comprises allottees of the now-defunct residential housing

project “Gayatri Life” promoted by the corporate debtor / Respondent No. 2. The

members of the applicant who hold 89 apartment units in the said project, had

supported the appellant – Mansi Brar Fernandes – before the NCLAT by filing

affidavits in support of initiation of CIRP against the corporate debtor. They

continue to support the appellant / homebuyer in seeking admission of the builder

to insolvency proceedings. Therefore, there is material and substantial

compliance with the amendment introduced on 28

th

December 2019 to Section 7

15

of the IBC, and the hyper-technical objections taken by the corporate debtor in

this regard merit rejection.

11. On behalf of Respondent No. 2 (Gayatri Infra Planner Private Limited), the

Resolution Professional made the following submissions:

(i) The appellant, claiming to be a financial creditor, seeks to rely on a

Memorandum of Understanding dated 06.04.2016, which was purely provisional

in nature and did not result in final allotment. The appellant had paid Rs.35 lakhs

out of a total consideration of Rs.1,03,78,521/- for four flats and the MoU

provided the company a discretionary option to repurchase the flats for Rs.1 crore

within 12 months, failing which the appellant would be entitled to possession.

This optional buy-back clause does not create any binding repayment obligation,

and therefore, does not constitute a “financial debt” under the IBC. The

appellant’s own case confirms that the buy-back was at the sole discretion of the

respondent, and no evidence has been adduced to show that the company

exercised the option or agreed to repay Rs.1 crore. The transaction was clearly

speculative in nature, structured to yield an abnormal return of over 350% within

a short duration, reflecting an investment for profit and not a genuine homebuying

intent.

(ii) Furthermore, the appellant fully aware of the project’s construction

timeline, instead sought to recover money under the garb of insolvency

proceedings. As held in Pioneer Urban and Infrastructure Ltd v. Union of India

16

(supra), the IBC cannot be used by speculative investors to initiate coercive

proceedings. Therefore, the appellant not being a financial creditor under section

5(8)(f) had no locus to initiate CIRP, and the Admission Order was rightly set

aside. The first impugned order correctly distinguishes the appellant as a

“speculative investor” rather than a genuine allottee, and upholds the principles

underlying the Code.

(iii) The appellant is not a genuine allottee but a speculative investor who

entered into a transaction with the Corporate Debtor purely for assured financial

returns and not for the purpose of acquiring residential property. A speculative

allottee, as recognized in law, is one who seeks short term gains through devices

like buy-back clauses and post-dated cheques (PDCs) with no genuine intent to

obtain possession or use the property for residential purposes. In contrast, a

genuine allottee under section 5(8)(f) is a person who seeks a home for personal

use and falls within the protective ambit of the Code. In the present case, the

appellant was issued Post-dated cheques against the investment made, a practice

not followed in respect of genuine homebuyers, thereby clearly indicating the

speculative nature of the transaction. The MoU executed between the appellant

and the Corporate Debtor included a buy-back clause offering the appellant an

exorbitant return of Rs.1 crore on an investment of Rs.35 lakhs within 12 months,

reflecting a commercial arrangement rather than a residential purchase. The

structure of the MoU, absence of a builder-buyer agreement, lack of follow-up

17

for possession, and reliance on section 138 N.I. Act proceedings all point to the

appellant’s intent to profit financially rather than obtain residential possession.

(iv) The NCLAT, in the first impugned order, rightly found that the appellant

was a speculative investor and not a genuine allottee. It specifically observed that

the MoU was a highly lucrative agreement designed to yield massive returns with

no real obligation on the part of the appellant to pay the balance amount for the

flats. Further, the appellant never sought possession during the term of the MoU,

nor monitored the project’s progress, thereby indicating the absence of genuine

buyer conduct. The transaction lacked the characteristics of a real estate allotment

protected under the IBC or the Real Estate (Regulation and Development) Act,

2016 (RERA). The appellant’s failure to produce any registered builder-buyer

agreement or other formal documentation also supports the conclusion that the

arrangement was speculative in nature.

(v) Moreover, the appellant’s attempt to use the IBC framework only after

dishonour of the PDCs and commencement of CIRP proceedings reflects a

coercive and opportunistic invocation of the Code, which has been disapproved

by this Court in Pioneer Urban Land & Infrastructure Ltd v. Union of India

(supra), wherein, it was clearly held that speculative investors cannot misuse the

IBC for recovery of returns or enforcement of investment contracts disguised as

real estate allotments. The present case squarely falls within that prohibition.

18

Similarly, in Binani Industries Ltd v. Bank of Baroda

9

, it has been reiterated that

the IBC is not a recovery mechanism for investors who do not qualify as genuine

stakeholders affected by insolvency.

(vi) The NCLAT, by order dated 17.11.2020 in Company Appeal (AT)(Ins)

No.83 of 2020, directed initiation of reverse CIRP against Respondent No. 2, and

the construction of the project continues smoothly under IRP supervision.

(vii) The respondent company has always been ready and willing to allot the

four flats on a fully paid-up basis to the appellant, which would entitle the

appellant to take possession of the same upon completion of construction.

However, the appellant was only interested in the premium of Rs.1 crore from the

respondent company, instead of delivery of the flats. That apart, the appellant

sought to encash the cheques and even filed a complaint under section 138 of the

N.I. Act.

(viii) Respondent No. 2 was admitted into Corporate Insolvency Resolution

Process (CIRP) on 28.03.2023, pursuant to an order passed by the NCLT in C.P.

(IB) No. 350/(PB)/2021, under Section 7 IBC, whereupon a moratorium under

Section 14 came into effect.

(ix) The Respondent company is currently undergoing CIRP, and the

construction is progressing under the supervision of the IRP, who is ensuring that

9

(2018) 150 SCL 703

19

possession is handed over to genuine homebuyers in a fair and lawful manner.

The CoC proceedings have been stayed by the NCLAT, and the project continues

to be developed smoothly. The appellant’s speculative claim, if allowed, would

upset the priority and fairness principle enshrined in the Code and prejudice the

rights of genuine homebuyers and creditors.

(x) In view of the above submissions, it was prayed that the appeal be

dismissed, and the findings of the NCLAT -holding the appellant to be a

speculative investor not entitled to initiate proceedings under section 7 of the IBC

– be confirmed.

12. The learned senior counsel for the appellants in C.A. No. 540/2021 and

C.A No. 5495 of 2025 assailed the finding of the NCLAT in the first impugned

order in respect of inapplicability of Ordinance / Amendment Act, to the facts of

the present case, on the following grounds:

(i) The NCLAT erred in concluding that the provisions of the Insolvency and

Bankruptcy Code (Amendment) Ordinance, 2019 (later enacted as Amendment

Act, 2020) were inapplicable to the present case. The Ordinance was promulgated

on 28.12.2019, prior to the NCLT’s admission order dated 02.01.2020. Hence, its

provisions squarely governed the present proceedings.

(ii) The Ordinance / Amendment Act does not envisage any carve-out or

exception in favour of real estate allottees. The statutory threshold introduced by

20

the amendment applies uniformly, and an allottee is required to comply with the

threshold requirement before initiating proceedings under Section 7 IBC. The

company cannot be deprived of its right to insist on such compliance before being

subjected to CIRP.

(iii) The NCLAT erroneously assumed that this court’s interim order in the

earlier proceedings had the effect of staying the Ordinance /Amendment Act. It

failed to appreciate that the legal effect of an interim order is entirely distinct from

that of a stay order. The statutory amendments remained fully operative and

binding at the relevant time.

(iv) The impugned order runs contrary to the plain language and intent of the

Ordinance / Amendment Act, which clearly applied to the present case. The

finding of inapplicability is legally impermissible as well as factually

unsustainable.

(v) This Court in Manish Kumar v. Union of India

10

upheld the constitutional

validity of the Ordinance / Amendment Act and recognized the crucial importance

of the threshold prescribed for financial creditors who are allottees.

(vi) The respondent (Mansi Brar Fernandes), in her reply affidavit before the

NCLAT, effectively admitted non-compliance with the statutory threshold. On

this ground alone, the Section 7 application was liable to be rejected.

10

(2021) 5 SCC 1

21

(vii) The appellants were deprived of their right to natural justice, as they were

not afforded an opportunity to rebut the filing of the Section 7 application. This

procedural lapse further vitiates the impugned order.

(viii) On these grounds, it was submitted that the NCLAT’s finding on the

inapplicability of the Ordinance / Amendment Act is contrary to law,

unsustainable on facts, and liable to be set aside.

13. The learned senior counsel for the appellant in C.A. No. 3903 of 2022

submitted that Section 5(8)(f) was added by way of amendment on 17.08.2018

with effect from 06.06.2018 under which the debt of appellant comes within the

definition of financial debt. The definition of ‘allottee’ under 5(8)(f)(ii) is taken

from RERA which under section 2(d) defines ‘allottee’. The appellant falls in the

category of ‘allottee’. The constitutional validity of section 5(8)(f) has been

upheld by this Court in Pioneer Urban Land Infrastructure Ltd and another v.

Union of India (supra).

13.1. It was further submitted that the finding of the NCLAT that as the appellant

entered into an MoU, the appellant becomes “speculative investor” is patently

illegal, as the MoU was executed by both parties and they remain bound by that.

The appellant has not changed her stand depending upon the market conditions

and therefore, by no stretch of imagination, she is “speculative investor” as parties

are bound by definitive terms.

22

13.2. It was also submitted that the second impugned order was passed ignoring

the interim order dated 11.12.2020 passed by this Court in C.A. No. 3826/2020

[Mansi Brar Fernandes v. Shubha Sharma and another]. Moreover, the corporate

debtor is admittedly, withholding the money of the appellant since 13.07.2015

and did not deliver the promised unit.

13.3. The learned senior counsel further submitted that vide orders dated

01.10.2019, 13.11.2019 and 19.11.2019, the NCLAT had recorded the

submissions of the IRP that “there is no land for project”. In these circumstances,

the second impugned order is liable to be set aside.

ANALYSIS AND FINDINGS

14. We have heard the learned senior counsel appearing for all the parties, and

perused the materials available on record.

14.1. This Court by order dated 11.12.2020 in Civil Appeal No. 3826 of 2020,

granted an ad-interim direction to the effect that the finding of the National

Company Law Appellate Tribunal that the appellant is a ‘speculative investor’ is

confined to the facts of the present case and shall not be treated as a precedent in

any other case for the present.

15. The present matter, though seemingly straightforward, provides this Court

with a timely occasion to clarify and reaffirm key principles under the Insolvency

and Bankruptcy Code, 2016, particularly on the role of speculative investors in

residential real estate. While subsequent legislative amendments have sought to

23

address this concern, uncertainty persists in pending matters before Tribunals. A

clear pronouncement at this stage will eliminate inconsistency, prevent

conflicting orders, and bring stability to a sector vital significance to the Indian

middle class.

15.1. This case also raises a jurisprudential concern: the manner in which

litigants may be protected from prejudice caused by changes in law or external

factors arising after hearings conclude, but before judgment is delivered. Courts

and Tribunals across the country are grappling with an ever-increasing docket

explosion. While such a surge indicates greater citizen engagement with the

justice system, it also results in orders being reserved for longer than desirable.

Though Courts ordinarily take judicial notice of subsequent changes in law, the

failure to do so should not operate to the detriment of any party. In the context of

the present case, Article 21 demands that bona fide homebuyers receive

expeditious and effective redressal before the designated fora, including the

Consumer Commissions, NCLT, NCLAT, and RERA

11

.

15.2. In this necessary in this backdrop to reiterate certain settled principles:

• RERA remains the primary forum for redressal of homebuyers’ grievances;

• The IBC is a forum of last resort, intended to secure revival and completion

of viable projects, not to serve as a debt recovery mechanism; and

11

Upendra Choudhury v. Bulandshahar Development Authority and others, (2022) 11 SCC 449

24

• Consumer forums should confine themselves to adjudicating individual

service deficiencies, thereby avoiding conflicting or overlapping orders

across multiple fora.

15.3. The decision of this Court in Pioneer Urban Land and Infrastructure Ltd

v. Union of India (supra) drew a distinction between speculative investors and

genuine homebuyers. The present case affords an opportunity to reinforce that

distinction through a principled intelligible differentia, so as to protect bona fide

homebuyers, deter misuse of the Code by speculative investors, and prevent

dishonest developers from exploiting systemic loopholes.

15.4. Strict adherence to IBC timelines and settled precedent is imperative to

realise two complementary objectives:

(i)ensuring revival and completion of stalled projects for the benefit of genuine

homebuyers; and

(ii)curbing speculative activity which has functioned as a “slow poison” for the

residential real estate sector and, by extension, the Indian middle class.

15.5. A balanced judicial approach in this regard will have far-reaching benefits:

protecting homebuyers, restoring confidence in the real estate market, and

encouraging reputed business houses and conglomerates to participate in

residential development. In taking this approach, this Court seeks to contribute

towards cleansing and strengthening a core economic sector that sustains millions

25

of livelihoods in both the organised and unorganised economy and touches the

lives of people at their most fundamental level.

16. In the present case, as indicated above, there are two impugned orders,

whereby the NCLAT set aside the admission of Section 7 IBC applications by the

NCLT, holding that the appellants in C.A. No. 3826 of 2020 and 3903 and 2022

viz., Mansi Brar Fernandes and Sunita Agarwal, respectively, were “speculative

investors”. Further, in the first impugned order, the NCLAT held that the statutory

requirements introduced by the Ordinance / Amendment Act were not applicable

to the facts of the present case. It is however, undisputed that Section 7 IBC

application filed by one Amit Joshi was admitted by the NCLT and that the CIRP

is presently ongoing against the Corporate Debtor – Gayatri Infra Planner Pvt.

Ltd.

17. In light of these facts, the following issues arise for consideration in these

appeals:

(i) Whether the appellants, Mansi Brar Fernandes and Sunita Agarwal, fall

within the category of “speculative investors” so as to disentitle them

from initiating proceedings under Section 7 of the IBC?

(ii) Whether the Ordinance / Amendment Act introducing threshold

requirements for filing of Section 7 IBC applications by allottees was

applicable to the facts of the present case?

26

18. Issue No.1 – Speculative Investors

18.1. The determination of whether an allottee is a speculative investor depends

on the facts of each case. The inquiry must be contextual and guided by the intent

of the parties. Indicative factors include: (i) the nature and terms of the contract;

(ii) the number of units purchased; (iii) presence of assured returns or buyback

clauses; (iv) the stage of completion of the project at the time of investment; and

(v) existence of alternative arrangements in lieu of possession. Possession of a

dwelling unit remains the sine qua non of a genuine homebuyer’s intent.

Speculation in real estate and Pioneer Urban

18.2. The problem of speculative misuse of real estate agreements has long been

recognised. Such speculative arrangements artificially inflate demand, fuel asset

bubbles, and prejudice genuine buyers. Unlike financial markets – where

speculation may sometimes serve a liquidity function – speculation in residential

housing undermines stability, fairness, and the very object of housing

development. Schemes of assured returns, compulsory buybacks, or excessive

exit options are in truth financial derivatives masquerading as housing contracts.

These arrangements enable developers, on the one hand, to mislead gullible

individuals, and seasoned investors, on the other, to ‘jump ship’ when the market

turns or to hold developers to ransom by invoking the IBC as a coercive recovery

mechanism, thereby creating a situation of ‘heads I win, tails you lose’. This

27

Court, in Madhubhai Amathalal Gandhi v. the Union of India

12

while

deprecating speculative activities in the stock market, strongly cautioned against

such distortions, observing:

“These mischievous potentialities inherent in the transactions, if left uncontrolled,

would tend to subvert the main object of the institution of stock exchange and

convert it into a den of gambling which would ultimately upset the industrial

economy of the country”.

18.3. This Court in Pioneer Urban Land and Infrastructure Ltd v. Union of

India (supra), while upholding the constitutional validity of the 2018 amendment

recognising allottees as financial creditors, drew a crucial distinction between

genuine homebuyers and speculative investors. It clarified that speculative

investors cannot be permitted to misuse the Code as a debt recovery mechanism.

The judgment struck a balance: ensuring representation of genuine homebuyers

in the CoC, while shielding developers and projects from being derailed by

investors who never intended to take possession.

18.3.1. The Court further noted that remedies under RERA and the

Consumer Protection Act are additional, not exclusive. Both statutes operate

alongside the IBC, but with distinct purposes: RERA protects individual investors

by enforcing compliance with project obligations, while the IBC operates in rem

to revive the corporate debtor and maximise value for all stakeholders.

12

AIR 1961 SC 21

28

18.3.2. Importantly, Pioneer Urban held that once a prima facie default is

established under Section 7 of the Code, the burden shifts onto the developer to

demonstrate that the applicant is a defaulter, or that the process has been invoked

fraudulently, with malicious intent, or by a speculative investor. These safeguards

were intended to prevent “trigger-happy” investors from destabilising projects or

prematurely driving developers into insolvency.

18.3.3. For better appreciation, the relevant paragraph of the said decision

is reproduced below:

“56. It can thus be seen that just as information utilities provide the kind of

information as to default that banks and financial institutions are provided under

Sections 214 to 216 of the Code read with Regulations 25 and 27 of the Insolvency

and Bankruptcy Board of India (Information Utilities) Regulations, 2017,

allottees of real estate projects can come armed with the same kind of information,

this time provided by the promoter or real estate developer itself, on the basis of

which, prima facie at least, a “default” relating to amounts due and payable to

the allottee is made out in an application under Section 7 of the Code. We may

mention here that once this prima facie case is made out, the burden shifts on the

promoter/real estate developer to point out in their reply and in the hearing before

NCLT, that the allottee is himself a defaulter and would, therefore, on a reading

of the agreement and the applicable RERA Rules and Regulations, not be entitled

to any relief including payment of compensation and/or refund, entailing a

dismissal of the said application. At this stage also, it is important to point out, in

answer to the arguments made by the petitioners, that under Section 65 of the

Code, the real estate developer can also point out that the insolvency resolution

process under the Code has been invoked fraudulently, with malicious intent,

or for any purpose other than the resolution of insolvency. This the real estate

developer may do by pointing out, for example, that the allottee who has

knocked at the doors of NCLT is a speculative investor and not a person who is

genuinely interested in purchasing a flat/apartment. They can also point out

that in a real estate market which is falling, the allottee does not, in fact, want

to go ahead with its obligation to take possession of the flat/apartment under

RERA, but wants to jump ship and really get back, by way of this coercive

measure, monies already paid by it. Given the above, it is clear that it is very

difficult to accede to the petitioners’ contention that a wholly one-sided and

futile hearing will take place before NCLT by trigger-happy allottees who would

29

be able to ignite the process of removal of the management of the real estate

project and/or lead the corporate debtor to its death.”

Criteria to identify speculative investors

18.4. “Speculation” has been defined in P. Ramanatha Iyer’s Law Lexicon (6

th

edition) as “a risky investment of money for the sake of and in expectation of

unusually large profits”. A “speculator” is “one who practices speculation in trade

or business”. Two elements emerge: (i)expectation of unusually high profits; and

(ii)activity in the nature of business or trade. These elements accord with the ratio

of Pioneer Urban, which described speculative investors as those seeking refund

or profit without an intention to occupy.

18.4.1. In Duni Chand Rataria v. Bhuwalka Brothers Ltd.

13

this Court

considered the validity of an ordinance of the State of West Bengal prohibiting

speculative transactions in the jute trade. A Constitution Bench (four Judges) held

that constructive delivery by intermediate parties would be valid provided that it

culminated in actual delivery to the end purchaser. The Court observed:

“The mate’s receipts or the delivery orders as the case may be, represented the

goods. The sellers handed over these documents to the buyers against cash

payment ….The constructive delivery of possession which was obtained by the

intermediate parties was thus translated into a physical or manual delivery of

possession in the ultimate analysis eliminating the unnecessary process of each of

the intermediate parties taking and in his turn giving actual delivery of possession

of the goods …..”

13

AIR 1955 SC 182

30

Thus, where there is an actual chain of delivery ending with possession by a

genuine buyer, the transaction is not speculative. Conversely, in the present

context, where there is no intention to take possession, the onus to find another

buyer and effect resale is cast on the developer. Delivery in such cases is more in

the nature of a lien or an option. For a genuine allottee, however, delivery and

possession are a sine qua non.

18.4.2. In Jute Investment Co. Ltd v. CIT

14

, this Court held that for a

transaction to fall outside the ambit of “speculative” under the Income-tax Act,

1961, actual delivery of the commodity is essential. By analogy, where an allottee

has no intention to take delivery of the unit, the arrangement assumes the

character of a speculative transaction.

18.4.3. Pioneer Urban (supra), in para 56, defines a speculative investor as

one who intends to evade possession and “jump ship”, or one who is not

genuinely interested in purchasing a flat / apartment. Any allottee, who, from the

inception of the agreement, does not intend to take possession, or who later

abandons such intent, falls within this category. Such an allottee is primarily

concerned with refund or profit, and not with completion of the project.

14

(1980) 1 SCC 117

31

18.4.4. Thus, the determination of whether an allottee is a speculative

investor, must be holistic, having regard to the terms of the agreement, the

allotment letter, the payment terms, and the overall conduct of the allottee.

18.4.5 . Non-exhaustive indicators include:

(1) If the agreement substitutes possession with a buyback or refund option, or

any other special arrangement, the allottee is likely a speculative investor.

(2) Insistence on refund with high interest, coupled with refusal to accept

possession would indicate speculation.

(3) Purchase of multiple units, especially in double digits, shall invite greater

scrutiny, though it is not conclusive. If the terms of the agreement provide for

possession or refund in the event of failure to give possession alone, this factor

may not be held against the allottee.

(4) Special rights, preferential treatment, or unusual privileges to the allottee

would signal investment intent.

(5) Deviation from the RERA Model Agreement shall be a crucial indicator as to

the nature of the transaction – the greater the departure, the greater the likelihood

of speculation.

(6) Unrealistic interest rates and promises of 20 – 25% returns over a short

duration are indicative of speculation.

32

18.4.6. However, it must be clarified that the distinction between

speculative investors and genuine homebuyers is relevant only at the stage of

initiation of CIRP. Such allottees are not barred from filing claims for the

principal amount invested, or from pursuing remedies before other fora in

accordance with law.

Application to the present appeals viz., C.A. Nos. 3826 of 2020 and 3903 of

2022

18.5. In C.A No. 3826 of 2020 (Mansi Brar Fernandes), the MoU executed

reveals that possession was never contemplated. The agreement stipulated a

buyback whereby Rs. 35 lakhs invested would be returned with an additional

Rs.65 lakhs as premium within 12 months. Though four apartments were

notionally “allotted”, the appellant paid only Rs. 35 lakhs with no provision for

the balance. Instead, the corporate debtor issued post-dated cheques of Rs. 1

crore, which were repeatedly dishonoured. Successive extensions of the MoU

were granted without justification, and the appellant invoked proceedings under

Section 138 of the N.I. Act for recovery. These circumstances make clear that the

appellant’s true interest lay in assured returns, not possession. The MoU was in

substance a buyback contract, not an agreement to sell flats. By the standard in

Pioneer Urban, the appellant was a speculative investor, disentitling her from

invoking Section 7.

33

18.6. In C.A. No. 3903 of 2022 (Sunita Agarwal), the MoU dated 28.02.2015

provided for an investment of Rs. 25 lakhs per unit with assured returns of 25%

per annum after 24 months. It contained a compulsory buyback clause and

provisions for profit-sharing over and above guaranteed returns. The repeated use

of the term “investment” coupled with a risk-free exit option, confirms that

possession was never intended. While the NCLT admitted her Section 7

application ex parte, the NCLAT correctly reversed the order. As this Court has

observed, a homebuyer cannot simultaneously demand refund with guaranteed

returns while retaining the option to refuse possession. Such risk-free contracts

place speculative investors in an advantageous position, to the detriment of

genuine homebuyers and developers.

18.6.1. The reliance placed by the NCLAT on its earlier decision in Subha

Sharma v. Mansi Brar Fernandes [decided on 17.11.2020 in Company Appeal

(AT) (Insolvency) No. 83 of 2020], despite interim order of this Court, does not

vitiate its reasoning. An interim order suspends enforcement between parties, but

does not efface the declaration of law or reasoning in a judgment. Unless

specifically overruled, such reasoning remains available for guidance,

particularly when judicial discipline demands consistency in sensitive sectors

such as real estate.

18.7. On the facts and law, it is evident that both appellants are speculative

investors. Their claims are in the nature of recovery, not insolvency resolution.

34

Consistent with Pioneer Urban, speculative investors cannot be permitted to

trigger CIRP as this would undermine revival, destabilise projects, and prejudice

genuine homebuyers.

18.8. Accordingly, the findings of the NCLAT treating the appellants as

speculative investors warrant no interference. Both impugned orders, setting

aside admission of the Section 7 applications, stand affirmed. However, liberty is

reserved to the appellants to pursue their remedies before appropriate fora in

accordance with law. In such proceedings, the bar of limitation shall not apply, in

line with settled jurisprudence of this Court

15

.

Issue No. 2 – Applicability of Ordinance / Amendment Act to the facts of the

present case (Mansi Brar Fernandes)

19. Section 7 IBC, as amended by the Insolvency and Bankruptcy Code

(Amendment) Ordinance, 2019, enforced with effect from 28.12.2019, added a

proviso to sub-section (1) before the explanation, providing a threshold limit for

initiation of CIRP at the instance of allottees under a real estate project. It

mandated that an application shall be filed jointly by not less than 100 allottees

or not less than 10% of the total number of such allottees under the same real

estate project, whichever is less. It further provided that where an application for

initiating the CIRP against a corporate debtor had been filed by such financial

creditors and had not been admitted by the adjudicating authority before

15

Rameshwar Lal v. Municipal Council Tank and others (1996) 6 SCC 100

35

commencement of the IBC (Amendment) Act, 2020, such application was

required to be modified to comply with the said requirement within thirty days of

commencement of the Act, failing which it would be deemed to be withdrawn

before its admission.

19.1. In the present case, the appellant filed a Section 7 application against the

corporate debtor on 18.03.2019. On 28.12.2019, when the Ordinance was

promulgated, the application was still pending before the Adjudicating Authority.

However, arguments had already been heard and the matter reserved for orders

on 04.12.2019. The order came to be passed on 02.01.2020, admitting the

application without reference to the Ordinance. At that stage, the requirement

introduced by the Ordinance had not been complied with by the appellant.

Nevertheless, she subsequently complied with the said requirement in the

appellate proceedings.

19.2. The NCLAT relied upon the coordinate Bench decision in Sushil Ansal v.

Ashok Tripathi in Company Appeal (AT) (Ins) No. 452 of 2020, wherein reliance

was placed on the interim order of this Court dated 13.01.2020 passed in Manish

Kumar v. Union of India, and observed that the provisions of section 7 as they

stood prior to the amendment continued to occupy the field. Proceeding on that

basis, NCLAT concluded that the IBC Amendment Ordinance, 2019 (later

replaced by the IBC Amendment Act, 2020) had no effect on the present

proceedings. However, such reasoning was erroneous in the facts of the instant

case. It is pertinent to note here that the appellant’s application had already been

36

admitted on 02.01.2020, prior to the status quo order of this court dated

13.01.2020, whereas the Section 7 application filed by Sushil Ansal was admitted

only on 17.03.2020. Thus, while the decision in Sushil Ansal was correct on its

own facts, NCLAT wrongly applied it in Mansi Brar.

19.3. In the present case, limitation was due to expire on 27.01.2020. Even if

computation is reckoned from 02.01.2020 (the date of reopening of the NCLT

after the winter recess), the limitation period would have run its course by

31.01.2020. Although the affidavits bear the date 27.01.2020, the undisputed

position is that they were actually filed before the NCLAT only on 01.02.2020,

by which time the limitation period had already lapsed. Consequently, the

appellant had no option but to comply with the requirements of the Ordinance

which had come into effect on 28.12.2019. However, it was incumbent upon the

NCLT to take cognizance of the Ordinance and afford an opportunity to the

appellant to meet its stipulations. Since no such opportunity was granted, the

appellant had no occasion to comply before the NCLT.

19.4. Indeed, even the respondents have contended that the NCLT ought to have

deferred the admission order in light of the Ordinance. Though no specific

objection was raised on 02.01.2020 by the Director / Respondent No. 1 or the

Corporate Debtor / Respondent No. 2, the failure to consider the Ordinance was

essentially an act of the Court. For such an act, no party can be prejudiced. The

appellant, in fact, succeeded in obtaining the consent of 10% of allottees in

37

compliance with the Ordinance, albeit with slight delay. The provision being

procedural in nature and not affecting substantive rights, no prejudice has been

caused to the respondents.

19.5. This situation exemplifies the doctrine of Actus Curiae Neminem Gravabit

– that an act of the Court shall prejudice no one. Where prejudice arises solely

because of a judicial act, such as reserving orders without accounting for a

legislative change, the Court must neutralise the effect so that no party suffers.

As Benches of this Court of various strengths have consistently held in a catena

of decisions in High Court Bar Association, Allahabad v. State of U.P. and

others

16

, Jang Singh v. Brijlal

17

and State of Punjab v. Shamlal Murari

18

, inter

alia, no litigant can be penalised for delay, mistake, or inadvertence of the Court.

In the words of the great judicial maverick, Justice V.R. Krishna Iyer, in Shamlal

Murari (supra):

“Where the non-compliance, the procedural, will thwart fair hearing or prejudice

doing of justice to parties, the rule is mandatory. But, grammar apart, if

the breach can be corrected without injury to a just disposal of the case, we should

not enthrone a regulatory requirement into a dominant desideratum. After all,

Courts are to do justice, not to wreck this end product on technicalities.

Viewed in this perspective, even what is regarded as mandatory traditionally may,

perhaps, have to be moderated into wholesome directions to be complied with in

time or in extended time.”

16

MANU/SC/0149/2024

17

AIR 1966 SC 1631

18

AIR 1976 SC 1177

38

19.6. In the present case, once orders were reserved, the appellant could not have

complied with the Ordinance until pronouncement. To insist otherwise would be

to compel the appellant to perform an impossibility – contrary to the maxim lex

non cogit ad impossibilia. It would be apt to reproduce the words of Lord Cairns

in Alexander Rodger v. The Comptoir D’escompte De Paris

19

, as quoted in

A.R. Antulay v. R.S. Nayak

20

wherein, it was observed thus:

“Now, their Lordships are of opinion, that one of the first and highest duties of all

Courts is to take care that the act of the Court does no injury to any of the suitors.

And when the expression ‘the act of the Court’ is used, it does not mean merely

the act of the primary Court, or of any intermediate Court of appeal, but the act

of the Court as a whole, from the lowest Court which entertains jurisdiction

over the matter up to the highest Court which finally disposes of the case. It is

the duty of the aggregate of those Tribunals, if I may use the expression, to take

care that no act of the Court in the course of the whole of the proceedings does an

injury to the suitors in the Court.”

19.7. Accordingly, the outcome on grounds of equity should be determined as on

the date the order was reserved, and no subsequent legislative or administrative

change should prejudice the parties. In conclusion, while the validity of the

threshold requirement introduced by the Ordinance has been upheld by this court

in Manish Kumar v. Union of India (supra), its application must necessarily

depend on the stage of proceedings and the feasibility of compliance. Where

orders were already reserved prior to the promulgation of the Ordinance, the

requirement cannot be retrospectively enforced so as to defeat vested rights. The

19

Law Reports Vol. III 1869-71 page 465 at page 475

20

MANU/SC/0002/1988

39

subsequent compliance by the appellant during appellate proceedings sufficiently

cures the defect, and the act of the Court must not prejudice the litigant.

Therefore, the finding of the NCLAT in respect of the inapplicability of the

Ordinance / Amendment Act to the facts of the present case requires interference,

and the first impugned order deserves to be set aside to that effect. Accordingly,

this issue is answered by us.

RIGHT TO SHELTER AS A FUNDAMENTAL RIGHT:

CONSTITUTIONAL OBLIGATION OF THE STATE TO PROTECT

HOMEBUYERS

20. This Court has, in a catena of decisions, consistently held and reaffirmed

that the Right to Shelter is an integral part of the right to life under Article 21 of

the Constitution. This recognition casts a corresponding duty on the State to

ensure access to adequate housing, particularly for weaker sections. Indeed,

various welfare schemes such as the Pradhan Mantri Awas Yojana (PMAY) have

been initiated by the Government to provide affordable housing.

20.1. A home is not merely a roof over one’s head; it is a reflection of one’s hopes

and dreams – a safe space for a family, a refuge from the worries of the world.

With India rapidly industrialising and the rural-to-urban mobility proceeding at

lightening pace, the demand for housing has risen sharply.

20.2. Yet, the plight of tax-paying middle-class citizens paints a disheartening

picture. Having invested their lifelong savings in pursuit of a home, many are

40

compelled to shoulder a double burden – servicing EMIs on one hand, and paying

rent on the other – only to find their “dream home” reduced to an unfinished

building. In some cases, construction has not even commenced despite full or

substantial payment. An average homebuyer may be a teacher, lawyer, doctor, IT

professional, or a government employee, who has poured his or her hard-earned

money into the pockets of a developer. For such individuals, a stable roof over

their family’s head is all they desire. The anxiety of not having a home despite

paying a fortune is bound to take a serious toll on health, productivity, and dignity.

20.3. It is therefore imperative that the life savings of a common person

culminate in timely possession of their promised home. Article 21 would mandate

nothing less. In Samatha v. State of A.P.

21

, this Court reiterated that the right to

social and economic justice as well as the right to shelter are fundamental rights

encompassed within the ambit of the right to life. Similarly, in Chameli Singh v.

State of U.P.

22

, this Court observed:

“Shelter for a human being, therefore, is not a mere protection of his life and limb.

It is home where he has opportunities to grow physically, mentally, intellectually

and spiritually. Right to shelter, therefore, includes adequate living space, safe

and decent structure, clean and decent surroundings, sufficient light, pure air and

water, electricity, sanitation and other civic amenities like roads etc. so as to have

easy access to his daily avocation. The right to shelter, therefore, does not mean

a mere right to a roof over one’s head but right to all the infrastructure necessary

to enable them to live and develop as a human being. Right to shelter when used

as an essential requisite to the right to live should be deemed to have been

guaranteed as a fundamental right. As is enjoined in the Directive Principles, the

State should be deemed to be under an obligation to secure it for its citizens, of

course subject to its economic budgeting. In a democratic society as a member of

21

(1997) 8 SCC 191

22

(1996) 2 SCC 549

41

the organised civic community one should have permanent shelter so as to

physically, mentally and intellectually equip oneself to improve his excellence as

a useful citizen as enjoined in the Fundamental Duties and to be a useful citizen

and equal participant in democracy. The ultimate object of making a man

equipped with a right to dignity of person and equality of status is to enable him

to develop himself into a cultured being. Want of decent residence, therefore,

frustrates the very object of the constitutional animation of right to equality,

economic justice, fundamental right to residence, dignity of person and right to

live itself.”

20.4. Thus, it would be thoroughly erroneous to treat home-buying as a mere

commercial transaction, or worse, to reduce housing to the status of speculative

instruments such as stocks, debentures, futures, or options through creative

contractual devices. Housing is neither a luxury nor a commodity for speculation

– it is a fundamental human need. The right to secure, peaceful, and timely

possession of one’s home is therefore a facet of the fundamental right to shelter

enshrined under Article 21

23

.

20.5. The State carries a constitutional obligation to create and strictly enforce a

framework wherein no developer is permitted to defraud or exploit homebuyers.

Ensuring timely project completion must be a cornerstone of India’s urban policy.

Equally, the State must proactively address the menace of a parallel cash economy

and speculative practices in the real estate market, which artificially inflate

housing costs and enable “trigger-happy” investors seeking easy exits to

jeopardize the interests of genuine end-users.

23

U.P. Avas Evam Vikas Parishad v. Friends Coop. Housing Society Ltd., 1995 Supp (3) SCC 456,

Shantistar Builders v. Narayan Khimalal Totame, (1990) 1 SCC 520, Anita Kushwaha v. Pushap Sudan,

(2016) 8 SCC 509

42

20.6. Comparative experience from Western countries demonstrates the dangers

of unchecked speculation. Despite smaller populations, several nations face acute

housing shortages, prompting measures such as restrictions on the number of

houses an individual may own. India must ensure, through robust policies and

strict enforcement, that such a crisis never arises here.

20.7. While recent amendments and regulatory measures are welcome – and the

Government merits commendation for undertaking proactive structural reforms –

much remains to be done. It is imperative that RERA authorities are not reduced

to toothless tigers. They must be equipped with adequate infrastructure,

empowered tribunals, and effective enforcement mechanisms so that their orders

are implemented swiftly, in letter and spirit. Only then can the constitutional

promise of the Right to Shelter under Article 21 be meaningfully realized for

homebuyers.

CONCLUSION

21. This Court reiterates that while investors are integral to any industry and

their interests warrant protection, speculative participants driven purely by profit

motives cannot be permitted to misuse the Insolvency and Bankruptcy Code,

which is a remedial framework conceived for revival and the protection of sick

companies and, in the case of real estate, genuine homebuyers. Such investors

have alternative remedies under consumer law or RERA and even recourse to

Civil Courts in appropriate cases. To admit speculative claims into insolvency

43

proceedings would dilute the intelligible differentia underlying the legislative

scheme, destabilize the residential real estate sector, and erode the social purpose

embedded in housing as a fundamental right.

21.1. The present case, therefore, provides an occasion to fortify safeguards for

bona fide homebuyers, who have invested their life savings, to insulate the real

estate market from speculation and artificial inflation, and to secure speedy and

time-bound adjudication as mandated by the Code. As in the culmination of the

landmark Kesavananda Bharti case, where “Kesavananda Bharati lost but the

country won”, the larger interest of the sector and genuine allottees must prevail

over narrower considerations.

21.2. In exercise of this Court’s jurisdiction, and to advance the constitutional

and statutory objectives, the following directions are issued to the concerned

authorities, in the larger interests of bona fide homebuyers and the stability of the

real estate sector, which demand coordinated action by all stakeholders:

(1) Vacancies in NCLT / NCLAT shall be filled on a war footing. Dedicated

IBC benches with additional strength should be constituted. Services of

retired judges may be utilized on ad hoc basis until regular appointments

are made. This Court is cognizant of the fact that similar directions have

been issued in the past, including in Pioneer Urban case (supra), but no

effective step has been taken on the ground.

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(2) The Union Government shall, within three months, file a compliance

report on measures taken to upgrade NCLT/NCLAT infrastructure

nationwide. The recent closure of Chandigarh NCLT and portions of Delhi

NCLT due to water seepage in the Courtrooms and Chambers of Members

underscores the urgency of robust infrastructural support.

(3) Within three months, a Committee chaired by a retired High Court Judge

shall be constituted, with representatives from the Ministry of law,

Ministry of Housing, domain experts in Real Estate, Finance and IBC from

NIUA, HUDCO’s HSMI, IIMs, NLUs, and NITI Aayog, as well as two

eminent industry representatives. The Committee shall suggest

commercially viable systemic reforms for cleansing and infusing

credibility into the real estate sector. NITI Aayog/ NIUA shall provide

research and secretarial support. The Committee shall submit its report

within six months of its constitution.

(4) States shall ensure that RERA authorities are adequately staffed with

infrastructure, experts, and resources. At least one member of every RERA

must be a legal expert or consumer advocate with proven expertise in real

estate field. RERAs must conduct thorough diligence before granting

approval to any project. Failure to do so, resulting in miscarriage of justice,

shall amount to an error unpardonable in law and may invite strict

intervention by this Court.

45

(5) Since real estate is the second largest sector in IBC proceedings, IBBI

24

, in

consultation with RERA authorities, shall constitute a council to frame

specific guidelines for insolvency proceedings in real estate, including

timelines for project-wise CIRP, and safeguards for allottees.

(6) Resolution of real estate insolvency should, as a rule, proceed on a project-

specific basis rather than the entire corporate debtor, unless circumstances

justify otherwise. This would protect solvent projects and genuine

homebuyers from collateral prejudice. IBBI shall also devise a mechanism

to enable handover of possession to willing allottees where substantial

units in a project are complete.

(7) The Union Government shall consider establishing a revival fund under

NARCL

25

or expanding the SWAMIH

26

Fund, to provide bridge financing

for stressed projects undergoing CIRP, thereby preventing liquidation of

viable projects and safeguarding homebuyer interests. SWAMIH Fund is a

commendable initiative; however, being a large fund involving public

money, every rupee must be utilised strictly for its intended purpose of

last-mile financing. To prevent misuse, we direct that a comprehensive

24

Insolvency and Bankruptcy Board of India

25

National Asset Reconstruction Company Ltd.

26

Special Window for Affordable and Mid-Income Housing

46

periodic performance audit by the CAG

27

be carried out, with reports

placed in the public domain in a form comprehensible even to laypersons.

(8) Regulations shall ensure meaningful representation of allottees in the CoC

through authorized representatives, with safeguards against conflicts of

interest.

(9) At the admission stage of Section 7 petitions filed by allottees, NCLTs

must record a prima facie finding on whether the applicant is a genuine

homebuyer or speculative investor. This would prevent unnecessary

admissions and reduce docket burden.

(10) The Government shall prioritize e-filing, video-conferencing, and

dedicated case management systems for IBC matters, in view of the heavy

caseload before NCLTs.

(11) Every residential real estate transaction for new housing projects

shall be registered with local revenue authorities upon payment of at least

20% of the property cost by buyer/allottee. Further, to protect senior

citizens and bona fide homebuyers, contracts that significantly deviate

from the Model RERA Agreement to Sell, or that incorporate returns /

buyback clauses where the allottee is over the age of 50, must be supported

27

Comptroller and Auditor General of India

47

by an affidavit sworn before the competent Revenue Authority, certifying

that the allottee understands the attendant risks.

(12) In projects at nascent stages, such as where land is yet to be acquired

or construction has not commenced, proceeds from allottees shall be

placed in an escrow account and disbursed in phases aligned with project

progress, as per a RERA-sanctioned SOP. Every RERA shall devise such

SOPs within six months from today.

Suggestions for future reform:

(1) IBBI may consider introducing “Basel-like” early warning frameworks,

drawing from comparative practices, such as, pre-bankruptcy mediation

and preventive restructuring, requiring directors to initiate restructuring

before defaults spiral out of control.

(2) The Union Government should undertake a consultative exercise to bring

about uniformity in RERA Rules across States, to remove ambiguity and

fill lacunae in what is otherwise a watershed legislation.

(3) Housing Boards, State-level Urban Development Authorities (e.g., DDA,

GMADA, MHADA , CHB) and CPSUs should establish dedicated wings

to revive and complete stalled projects under IBC mechanisms. This

would instill faith in the sector, ensure affordable housing, and protect

genuine homebuyers.

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(4) It is a matter of grave concern that despite funding hundreds of crores into

various government-run think tanks and management institutions such as

IIMs and IITs, India still requires a robust homegrown consulting industry.

Collaboration with Indian think tanks and academic institutions should be

strengthened to build indigenous capacity for sectoral restructuring. This

has the potential to improve India’s ease of doing business and accelerate

economic growth.

(5) The Union Government may also consider establishing a body corporate,

on the lines of NARCL or otherwise, promoted by real estate/

construction-focused PSUs or through Public-Private Partnerships, to

identify, take over, and complete stalled projects under the IBC

framework. Unsold inventory from such projects could be utilized

towards affordable housing schemes like PMAY or for Government

quarters, thereby addressing both the housing shortage and revival of sick

projects.

While this is a matter of policy falling within the exclusive domain of the

Government, it cannot remain a silent spectator. The Government is

constitutionally obliged to protect the interests of homebuyers and the economy

at large. It is not merely about houses or apartments; the banking sector, allied

industries, and employment for a large populace are also at stake.

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22. Before parting, we observe that the right to housing is not merely a

contractual entitlement but a facet of the fundamental right to life under Article

21. Genuine homebuyers represent the backbone of India’s urban future, and their

protection lies at the intersection of constitutional obligation and economic

policy. Through these directions, this Court seeks to restore faith in the regulatory

and insolvency framework, deter speculative misuse, and ensure that the “dream

home” of India’s citizens does not turn into a lifelong nightmare.

23. Registry is directed to circulate a copy of this judgement to the learned

Cabinet Secretary to Government of India as well as to the Chief Secretaries of

all States, who shall take necessary steps at the earliest.

24. To sum up:

(i) The findings of the NCLAT holding the appellants (Mansi Brar Fernandes

and Sunita Agarwal) to be speculative investors are affirmed. Consequently, both

the impugned orders setting aside the admission of the Section 7 applications by

the NCLT, also stand affirmed. However, the appellants are at liberty to pursue

their remedies before the appropriate forum in accordance with law, and in such

event, the bar of limitation shall not apply.

(ii) Ordinance / Amendment Act is squarely applicable to the facts of the

present case and to that extent, the first impugned order stands set aside.

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25. With the aforesaid directions and suggestions, all the appeals stand

disposed of. There is no order as to costs.

26. Connected Miscellaneous Application(s), if any, stand disposed of.

…..............................J.

[J.B. PARDIWALA]

................................J.

[R. MAHADEVAN]

NEW DELHI;

SEPTEMBER 12, 2025.