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
Resources

Ajmera Realty launches tree drive on Environment Day

Ajmera Realty & Infra India marked World Environment Day with a large-scale tree plantation initiative—Plant-with-Purpose—across its projects in Mumbai and Bangalore. The drive was inaugurated at Ajmera Manhattan and Ajmera Greenfinity in Wadala, with senior company officials and residents in attendance. The campaign encourages residents to embrace eco-conscious, self-reliant lifestyles by growing useful plants and trees within their communities. Horticulture expert Devendra Bhekar guided residents on creating and maintaining green spaces. Ajmera Realty planted over 500 trees..

Next Story
Resources

Twaron®-reinforced tyre powers Brunel’s solar race car

Teijin Aramid’s Twaron® with circular content will debut in Bridgestone’s race tyres for the 2025 Bridgestone World Solar Challenge, supporting the Brunel Solar Team’s Nuna 13 car. This marks the first use of the recycled-content aramid in a high-performance race tyre. The Twaron®-reinforced belts help enhance durability, reduce rolling resistance, and maintain lightweight strength—critical for the 3,000-km solar race across Australia. Bridgestone combines this with ENLITENTM tech and other recycled inputs to maximise environmental and performance outcomes. Teijin Aramid, a..

Next Story
Building Material

Kamdhenu Paints launches new wood coating range

Kamdhenu Paints has launched a comprehensive premium wood coating range designed for both interior and exterior applications. The collection includes high-performance solutions like Kamwood 2K PU for a rich matt or high-gloss finish, Kamwood 1K PU for clarity and stain protection, and the Kamwood Melamyne system for a smooth, durable finish. Also featured are Kamwood Wood Stains, which enhance wood grains with vibrant colour, and NC Sanding Sealer for high-build grain filling. The range is supported by Kamwood Thinners for ease of application and optimal finish. Saurabh Agarwal, MD, ..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?