Wednesday, March 29, 2023

Supreme Court stays IBC ordinance; one home buyer can move NCLT

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The Supreme Court has stayed the retrospective operation of an IBC ordinance which restricted the right of home buyers to approach the National Company Law Tribunal. The ordinance mandated at least 100 home buyers or 10% for a project to file jointly before NCLT.

Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019, promulgated on December 28, 2019, was challenged by way of a writ petition on the ground of arbitrariness.

A bench led by Justice RF Nariman Supreme Court stayed the ordinance, thus stating that the NCLT cannot reject the applications of the home buyers or investors for non-compliance of the new amendment. The impact will be that all cases can now continue before NCLT which were filed by single home buyers and investors against defaulting developers.

Advocate Vinod Sampat has called it “a huge victory for home buyers” as there were over 1000 cases pending before NCLT of single home buyers and in case this ordinance would not have been stayed by the top court, then all cases would have been deemed dismissed on January 28, 2020.

The constitutional validity of the ordinance will be tested before the apex court bench, while the interim order assures the continuity of the cases pending before the NCLT.

— India Legal Bureau

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