A writ petition has been filed by the homebuyer in Supreme Court challenging the validity of section 3 of IBC (Amendment) Ordinance 2019 and also demanded stay on the operation of Section 3 of the Code.
Section 3 the of IBC (Amendment) Ordinance 2019 adds certain proviso to Section 7 of the IBC and set out new condition for the real estate allottees:
“Section 3 of IBC (Amendment) Ordinance 2019 states as follows: In Section 7 of the Principal act in subsection 1 before the explanation, the following provision should be inserted, namely: 2 [Provided that for the financial creditors, referred to in clauses (a) and (b) of subsection (6A) of section 21, an application for initiation corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such creditors in the same class or not less than ten per cent. of the total number of such creditors in the same class, whichever is less:
Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten per cent. of the total number of such allottees under the same real estate project, whichever is less:
Provided also that where an application for initiating the corporate insolvency resolution process against a corporate debtor has been filed by a financial creditor referred to in the first or second provisos and has not been admitted by the Adjudicating Authority before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019, such application shall be modified to comply with the requirements of the first or second provisos as the case may be within thirty days of the commencement of the said Ordinance, failing which the application shall be deemed to be withdrawn before its admission. “
The plea taken by the homebuyers is that the ordinance is violative of Article 14 and 21 of the Constitution of India and is also contrary to the well settled principle of Hon’ble Supreme Court in Pioneer Urban Land and Infrastructure & Anr. V. Union of India and has made the said judgement ineffective as the said section only refers to the homebuyers and real estate allottees and not any other financial creditors.
The petitioner has also submitted that the said ordinance when denies the homebuyers to approach Hon’ble National Company Law Tribunal, also denies them from accessing their fundamental rights.
The ordinance adversely affects the real estate allottees as the details of allottees are never disclosed on the public domain as the same is impermissible
under the law to publish the details of the allottees in such public domain as the same would result in violation of their Right to Privacy as guaranteed under Article 21 of the Constitution of India.
The petitioner argues that, the allottees have lost their money, home and now the right to approach Hon’ble National Company Law Tribunal, for which they have paid Rs. 25,000/-. Even those cases are listed for the final arguments before the NCLT, will have to comply with the NCLT, will have to comply with this condition within one month or else their cases will be considered as withdrawn. “
By the abovementioned contention, the petitioner has prayed for the section to be struck down.