Homebuyers filed a writ petition in SC challenging IBC amendment.

Homebuyers opposed the central government’s ordinance to amend the Insolvency & Bankruptcy Code (IBC) 2016 and demanded a stay of the operation of Section 3 of the Insolvency and Bankruptcy Code (Amendment) 2019, which aims to modify Section 7 of the IBC.

“The writ petition is filed by 11 petitioners from 11 different projects, including Pioneer Urban Land & Infrastructure, Emaar MGF Land, BPTP, Supertech, Ansals. The petitioners say they are being exacerbated by the developers’ inactions and the vagueness in promulgating the Ordinance titled Insolvency and Bankruptcy Code, 2019,” said Advocate Aditya Parolia of PSP Legal representing the home buyers.

The judgment is in complete contradiction to the fundamental rights granted under Article 14 and the 21 of the Constitution of India to house buyers (Financial Creditors), the plea said.

Piyush Singh, advocate, PSP Legal, who is the representative of the home buyers, said that “the central government has enforced the decision with absolute prejudice by imposing a pre-condition/ threshold in the form of minimum number of delegated persons for a particular project required to apply to trigger the code under Section 7 of the IBC, which cannot be applicable to other financial creditors under the IBC.”

“The ordinance is in contrast to the well-established principle set out in the Pioneer Urban Land and Infrastructure & Anr. v Union of India and has rendered the judgment ineffective,” said Singh.

According to the home buyers’ plea, no person who collects so many financial creditors from the same project will meet the minimum threshold by the span of 30 days as defined in section 3 of the Ordinance.

“The information of the allottees has never been published on a public domain or on any website, as the same is not allowed under the legislation to publish the data of the allottees in such public domain, because the same will breach their Right to Privacy as given in Article 21 of the Constitution of India,” Parolia explained.

Section 3 of the ordinance on the face is also in violation of Article 14 since the threshold of at least 10% or 100 of the total allottees in a given project for filing an application under Section 7 of the IBC applies only to real estate allottees or other class of creditors and not to any other financial creditors, the home buyers claimed in their petition.