9 August 2019, the Supreme Court of India (‘SC’) has
pronounced its judgment in a matter which will have significant
implications on the rights of home buyers (‘Judgment’).
a better understanding of the Judgment, it will be helpful to
understand the jurisprudence behind the law involved.
SC analyzed the arguments put forth by the parties involved and
decided that the provisions of the Amendment Act under challenge
were not violative of the Constitution of India. The rationale
employed by the SC in determining various facets of the challenge
is set out below:
The Judgment has now put beyond doubt that Homebuyers are to be
treated as financial creditors under the IBC. This means that
Homebuyers will now be entitled to invoke the corporate insolvency
resolution process set out in the IBC under section 7, by means of
an application to the National Company Law Tribunal. However, the
admission of the application made by the Homebuyer would be
subject to the satisfaction of the National Company Law Tribunal
based on the evidence of default furnished by the Homebuyer.