SC upholds 100-allottees rule in IBC Amendment
Real Estate

SC upholds 100-allottees rule in IBC Amendment

In a step that will safeguard real estate companies from frivolous litigation, the Supreme Court (SC) has upheld the constitutional validity of the Insolvency and Bankruptcy Code (IBC) amendment that requires at least 100 allottees, or 10% of creditors, to invoke an insolvency petition against a company.

A Bench of Justices said in its order that insisting on a threshold concerning these categories of creditors would lead to a halt in indiscriminate litigation, possibly resulting in an uncontrollable docket explosion as far as the authorities who work with the Code are concerned.

Upholding the constitutional validity of Sections 3, 4, and 10 of the IBC (Amendment) Act, 2020, the court said this was not a situation where, while treating them as financial creditors, they are totally deprived of the right to apply under Section 7 as part of the legislative scheme. The legislative policy reflects an attempt at shielding the corporate debtor from what it considers would be either for frivolous or avoidable applications, the court added.

The court backed the IBC amendment, saying it is likely to ensure the filing of the application is preceded by a consensus at least by a minuscule percentage of similarly placed creditors.

In a decision that will give impetus to a resolution plan, the SC has also upheld the inclusion of Section 32A to the Code that ensures a resolution applicant is not saddled with the burden of the actions of the erstwhile management.

The IBC had taken a major step in providing a clean slate to buyers of stressed companies by barring criminal proceedings such as attachment, seizure, or retention of the property of such companies for offences committed prior to the initiation of insolvency proceedings.

Also read: Realtor-to-owner loan is operational debt: Tribunal

Image Source

In a step that will safeguard real estate companies from frivolous litigation, the Supreme Court (SC) has upheld the constitutional validity of the Insolvency and Bankruptcy Code (IBC) amendment that requires at least 100 allottees, or 10% of creditors, to invoke an insolvency petition against a company. A Bench of Justices said in its order that insisting on a threshold concerning these categories of creditors would lead to a halt in indiscriminate litigation, possibly resulting in an uncontrollable docket explosion as far as the authorities who work with the Code are concerned. Upholding the constitutional validity of Sections 3, 4, and 10 of the IBC (Amendment) Act, 2020, the court said this was not a situation where, while treating them as financial creditors, they are totally deprived of the right to apply under Section 7 as part of the legislative scheme. The legislative policy reflects an attempt at shielding the corporate debtor from what it considers would be either for frivolous or avoidable applications, the court added. The court backed the IBC amendment, saying it is likely to ensure the filing of the application is preceded by a consensus at least by a minuscule percentage of similarly placed creditors. In a decision that will give impetus to a resolution plan, the SC has also upheld the inclusion of Section 32A to the Code that ensures a resolution applicant is not saddled with the burden of the actions of the erstwhile management. The IBC had taken a major step in providing a clean slate to buyers of stressed companies by barring criminal proceedings such as attachment, seizure, or retention of the property of such companies for offences committed prior to the initiation of insolvency proceedings. Also read: Realtor-to-owner loan is operational debt: Tribunal Image Source

Next Story
Real Estate

Capacit’e Infraprojects Wins Rs 6.21 billion order from Saifee Burhani Upliftment Trust

Capacit’e Infraprojects has secured a Letter of Intent (LOI) worth Rs 6.21 billion (excluding GST) from Saifee Burhani Upliftment Trust (SBUT) for the execution of core and shell works, finishing, MEPF services, and other associated components of the redevelopment project—Sector 07 of the Saifee Burhani Upliftment Project—located at Ward ‘C’, Bhendi Bazaar, Mumbai. This is the third repeat order from SBUT to Capacit’e Infraprojects, underscoring the trust and satisfaction of a long-standing client in the company’s project delivery capabilities. Commenting on the develop..

Next Story
Resources

K Raheja Corp's Volunteering Drive Brings Back-to-School Cheer for Underprivileged Kids

Real estate major K Raheja Corp concluded its latest community initiative under the ‘Time Off for Volunteering’ programme, titled Paint a Pair, Show You Care. Held in association with NGO ConnectFor, the campaign was part of a larger 'Back to School' drive aimed at supporting underprivileged students from the Jhanvi Charitable Trust. More than 45 employees from across group companies—Mindspace Business Parks, Chalet Hotels Ltd., K Raheja Corp Homes, and Inorbit Malls—came together to hand-paint over 60 pairs of canvas shoes for children preparing to return to school. Volunteers al..

Next Story
Infrastructure Urban

CCI Worldwide Logistics Launches ‘Trans Africa’ Freight Service

CCI Worldwide Logistics, the international freight forwarding arm of the CCI Group, has launched ‘Trans Africa’—a technology-led logistics platform aimed at streamlining cross-border trade across Africa. The company is investing Rs 1.06 billion in the initiative, targeting an annual freight volume of 5,000 TEUs by air and sea, with an estimated 15 per cent return on investment. The service is being rolled out in key markets such as Nigeria, Kenya, South Africa, Ghana, and Egypt, with planned expansion into Francophone West Africa, Central Africa, and landlocked nations including Uga..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?