Supreme Court disposes of plea demanding validity of liquidation and Bankruptcy Code Section 3

By-Mudit Mohan Sharma

The Supreme Court has disposed of the petition filed by petitioners (financial creditors) difficult the constitutional vires of Section 3 of the financial condition and Bankruptcy Code (Amendment) Act, 2019.

In specific, the challenge has been set, however not restricted to, Section 3 of the Ordinance that adds provisos in Section 7 of the IBC and launched new condition for land allottee to approach NCLT as being in violation of Article (s) 14 and 21 of the Constitution of India.
A bench comprising of Justice K.M. Joseph and Justice S. Ravindra Bhat unemployed the current petition filed by the petitioner Advocate Taruna Ardhendumauli Prasad on the terms of judgement elapsed this court wherever the similar queries were raised.

“The queries raised during this judicial writ petition area unit coated by the judgment of this court in Manish Kumar Vs Union of India & Anr. [(2021) five SCC 1]. consequently, the judicial writ petition is disposed of in terms of the same judgment,” noted the Court in its order.

The petitioner submitted that the current judicial writ petition is reparable as a result of the petitioner’s area unit a purchaser and have approached the NCLT underneath Section 7 of the IBC. when coming back into result the aforementioned change in Section 7, there’s a probability that the petitioner’s case is going to be withdrawn, if they fail to adjust to the new demand given in section 7 of the IBC. Further, the challenge may be against the Union of India that is a State among that means of Art.12 of the Constitution.

The petitioner any submits that “the gift Act is obviously whimsical in lightweight of the take a look at set down by this Hon’ble Court within the Judgment of Shayara Bano v/s Union of India (2017) 9 SCC 1 that is as follows:

“The take a look at of manifest whimsey, therefore, as set down within the aforementioned judgments would apply to invalidate legislation further as subordinate legislation underneath Article 14. Manifest whimsey, therefore, should be one thing done by the legislature freakishly, irrationally and/or while not adequate determinant principle.

Also, once one thing is completed that is excessive and disproportionate, such legislation would be obviously whimsical.”
The petitioners visited the project in June 2017 and were dismayed to note that the job at the project isn’t going as secure. Thereafter, the petitioners were compelled to run from pillar to post to grasp the standing of the project. 

The basic cognitive process that Supertech restricted has no resources to create the project and deliver the premises, an application was filed by the petitioners to initiate financial condition proceedings against the Supertech/Corporate Debtors to say the paid quantity with interest.

it is submitted that the current Act is imprecise and would solely serve to exacerbate the confusion if any. whereas it posits that Home consumers have to be compelled to constitute 100 pc of the overall allottees or be a hundred in variety, it remains silent on what needs to be done once a number of the allottees settle or withdraw. not like Section 244 of the companies Act, 2013 or the buyer Protection Act, 1986 that clearly delineate litigation proceedings and therefore the procedures governing identical, nothing in this regard has been created herein.