A group of home buyers have challenged the additions
made to Section 7 of the Insolvency and Bankruptcy (Amendment) Ordinance, 2019.
The amendment stated that to initiate insolvency against a
builder/developer an application to initiate insolvency must be moved by
at least 100 or 10 of the total allottees from the same project.
The main ground for filing the said writ
petition was that the ordinance discriminated
against the home buyers, as no such pre-conditions were imposed on other
financial creditors under IBC.
The writ petition further stated "The Ordinance is completely against the fundamental rights guaranteed
to the home buyers (Financial Creditors) under Article 14 and 21 of the
Constitution of India. The Union of India has brought in the Ordinance with
absolute discrimination by putting a precondition/threshold in the form of
minimum number of allottees of a particular project required for filing an
application for triggering the code under Section 7 of the IBC, which is not
applicable to other financial creditors under IBC,".
"Because the Ordinance runs in complete contradiction to IBC and imposing
such a pre-condition on the filing of the application under Section 7 of the
IBC is completely against the objective of the IBC, as the pre-condition for
any financial creditor to approach the adjudicating authority is quantum of the
debt and not the number of financial creditors,"
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