IBC & Home Buyers – Financial Creditors Vs Speculative Investors
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.
The appellant had entered into MoU dated 6.4.2016 with the Corporate Debtor for purchase / buy-back of four apartments in its project and paid Rs.35 lakhs. The MoU contained a buy-back clause entirely at the option of the Corporate Debtor either to buy back the units after 12 months for Rs.1 crore or hand over possession of the flats without extra cost. The MoU was extended twice and all post dated cheques of CD for Rs.1 crore were dishonoured.
The appellant filed section 7 IBC petition.
HELD that MoU was highly lucrative agreement to yield massive returns with no real obligation on the appellant to pay the balance amount for the flats. The appellant never sought possession. The transaction lacked the characteristics of a real estate allotment protected under IBC or RERA. Failure to produce registered agreement or other formal documentation also supports the concluson that the arrangement was speculative in nature.
Speculative participants driven purely by profit motives cannot be permitted to miuse the IBC which is a remedial framework conceived for revival and the protection of sick companies and genuine home buyers.
To admit speculative claims into insolvency 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.
At the admission of Section 7 IBC petition, NCLT must record a prima facie finding on whether the applicant is a genuine home buyer or speculative investor. This would prevent unnecessary admissions and reduce docket burden.
Judgment dated 12.9.2025 of the Supreme Court in Civil Appeal No.3826 of 2020 of Mansi Brar Fernandes Vs Shubha Sharma and another with connected civil apeals.
