Mansi Brar Fernandes vs. Shubha Sharma

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REPORTABLE

IN THE SUPREME COURT OF INDIA
2025 INSC 1110
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
Signature Not Verified
Digitally signed by
CHANDRESH
Date: 2025.09.12
18:24:47 IST
Reason:

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

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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
1
17.11.2020 passed by the National Company Law Appellate Tribunal, New
2
Delhi , 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

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12.08.2021 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
4
Bankruptcy Code, 2016 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”

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

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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

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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
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Company Law Tribunal, New Delhi , besides initiating the proceedings under
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Section 138 of the Negotiable Instruments Act, 1881 . 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”

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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

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

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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.

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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
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Land and Infrastructure Ltd v. Union of India , 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

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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.

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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.

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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
th
compliance with the amendment introduced on 28 December 2019 to Section 7

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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

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(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

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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.

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Similarly, in Binani Industries Ltd v. Bank of Baroda , 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

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(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

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

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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
11
Consumer Commissions, NCLT, NCLAT, and RERA .
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 o f 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

12
Court, in Madhubhai Amathalal Gandhi v. the Union of India 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
th
18.4. “Speculation” has been defined in P. Ramanatha Iyer’s Law Lexicon (6
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.
13
18.4.1. In Duni Chand Rataria v. Bhuwalka Brothers Ltd. 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 .
14
18.4.2. In Jute Investment Co. Ltd v. CIT , 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
15
line with settled jurisprudence of this Court .
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
16 17 18
others , Jang Singh v. Brijlal and State of Punjab v. Shamlal Murari , 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
19
in Alexander Rodger v. The Comptoir D’escompte De Paris , as quoted in
20
A.R. Antulay v. R.S. Nayak 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
21
nothing less. In Samatha v. State of A.P. , 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.
22
State of U.P. , 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
23
enshrined under Article 21 .
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.

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24
(5) Since real estate is the second largest sector in IBC proceedings, IBBI , 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
25 26
NARCL or expanding the SWAMIH 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

27
periodic performance audit by the CAG 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

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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.