Mansi Brar Fernandes Vs Shubha Sharma And Anr (Supreme Court of India)
Supreme Court held that speculative investors cannot be permitted to trigger CIRP as this would undermine revival, destabilise projects, and prejudice genuine homebuyers. Accordingly, orders, setting aside admission of the Section 7 applications, stand affirmed.
Facts- The present appeal arise out of final judgement and order dated 17.11.2020 passed by the National Company Law Appellate Tribunal. 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 Bankruptcy Code, 20164 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 on the limited ground of non-applicability of the Ordinance / Amendment Act to the facts of the present case.
Conclusion- Held 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 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.
