# Mansi Brar Fernandes v. Shubha Sharma and Anr

- **Citation:** 2025 INSC 1110
- **Court:** Supreme Court of India
- **Decided:** 2025-09-12
- **Case number:** Civil Appeal No. 3826 of 2020
- **Bench:** J.B. Pardiwala, R. Mahadevan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mansi-brar-fernandes-v-shubha-sharma-and-anr-37989
- **Pages:** 43

## Headnote

Whether the appellants, fall within the category of "speculative
investors" so as to disentitle them from initiating proceedings u/s.7
of the IBC; whether the Ordinance/Amendment Act introducing
threshold requirements for filing of s.7 IBC applications by allottees
was applicable to the facts of the present case.
Headnotes†
Insolvency and Bankruptcy Code, 2016 - s.7 - NCLAT set
aside the NCLT's order and reversed the admission of the
application filed u/s.7 by the appellants, holding that they
were "speculative investors" and not genuine homebuyers/
financial creditors - Appellants, if fall within the category
of "speculative investors" disentitling them from initiating
proceedings u/s.7:
Held: 1.1 Yes - In C.A No. 3826 of 2020, the MoU executed
reveals that possession was never contemplated - The agreement
stipulated a buyback whereby Rs.35 lakhs invested would be
returned with an additional Rs.65 lakhs as premium within 12
months - Though four apartments were notionally "allotted", the
appellant paid only Rs.35 lakhs with no provision for the balance -
Instead, the corporate debtor issued post-dated cheques of Rs.1
crore, which were repeatedly dishonoured - Successive extensions
of the MoU were granted without justification, and the appellant
invoked proceedings u/s.138, N.I. Act for recovery. [Para 18.5]
1.2 Thus, the appellant's true interest lay in assured returns, not
possession - The MoU was in substance a buyback contract, not
an agreement to sell flats - By the standard in Pioneer Urban
case, the appellant was a speculative investor, disentitling her
from invoking s.7. [Para 18.5]
* Author
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1.3 Further, in C.A. No. 3903 of 2022, the MoU provided for an
investment of Rs.25 lakhs per unit with assured returns of 25%
per annum after 24 months - It contained a compulsory buyback
clause and provisions for profit-sharing over and above guaranteed
returns - The repeated use of the term "investment" coupled
with a risk-free exit option, confirms that possession was never
intended - While the NCLT admitted the appellant's s.7 application
ex parte, the NCLAT correctly reversed the order - A homebuyer
cannot simultaneously demand refund with guaranteed returns
while retaining the option to refuse possession. [Para 18.6]
1.4 On the facts and law, both the appellants are speculative
investors - Their claims are in the nature of recovery, not insolvency
resolution - Findings of the NCLAT treating the appellants as
speculative investors upheld - Both impugned orders, setting
aside admission of the s.7 applications, affirmed. [Paras 18.7, 18.8]
Insolvency and Bankruptcy Code, 2016 - Insolvency and
Bankruptcy Code (Amendment) Ordinance, 2019 - IBC
(Amendment) Act, 2020 - Appellants in C.A. No. 540 of 2021
and C.A. No. 5495 of 2025 assailed the first impugned order
passed by NCLAT on the limited ground of non-compliance with
the 2019 Ordinance, promulgated on 28.12.2019 - Appellants
stated that the s.7 petition under the IBC filed by Respondent
No.1 on 02.01.2020, was reserved on 04.12.2019, i.e., prior
to the promulgation of the Ordinance - As on 28.12.2019,
the application was still pending consideration - Thus, the
Ordinance and the subsequent Amendment Act squarely
applied to the proceedings and the failure of Respondent
No.1 to satisfy the threshold requirement mandated under
the Ordinance was fatal to the maintainability of the petition -
NCLAT held that the Ordinance (later enacted as Amendment
Act, 2020) was inapplicable to the present case:
Held: Once orders were reserved, the appellant could not have
complied with the Ordinance until pronouncement - To insist
otherwise would be to compel the appellant to perform an
impossibility contrary to the maxim lex non cogit ad impossibilia -
The outcome on grounds of equity should be determined as on
the date the order was reserved, and no subsequent legislative
or administrative change should prejudice the parties - Where
orders were already

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[2025] 10 S.C.R. 169 : 2025 INSC 1110
Mansi Brar Fernandes
v.
Shubha Sharma and Anr.
(Civil Appeal No. 3826 of 2020)
12 September 2025
[J.B. Pardiwala and R. Mahadevan,* JJ.]
Issue for Consideration
Whether the appellants, fall within the category of "speculative
investors" so as to disentitle them from initiating proceedings u/s.7
of the IBC; whether the Ordinance/Amendment Act introducing
threshold requirements for filing of s.7 IBC applications by allottees
was applicable to the facts of the present case.
Headnotes†
Insolvency and Bankruptcy Code, 2016 - s.7 - NCLAT set
aside the NCLT's order and reversed the admission of the
application filed u/s.7 by the appellants, holding that they
were "speculative investors" and not genuine homebuyers/
financial creditors - Appellants, if fall within the category
of "speculative investors" disentitling them from initiating
proceedings u/s.7:
Held: 1.1 Yes - In C.A No. 3826 of 2020, the MoU executed
reveals that possession was never contemplated - The agreement
stipulated a buyback whereby Rs.35 lakhs invested would be
returned with an additional Rs.65 lakhs as premium within 12
months - Though four apartments were notionally "allotted", the
appellant paid only Rs.35 lakhs with no provision for the balance -
Instead, the corporate debtor issued post-dated cheques of Rs.1
crore, which were repeatedly dishonoured - Successive extensions
of the MoU were granted without justification, and the appellant
invoked proceedings u/s.138, N.I. Act for recovery. [Para 18.5]
1.2 Thus, the appellant's true interest lay in assured returns, not
possession - The MoU was in substance a buyback contract, not
an agreement to sell flats - By the standard in Pioneer Urban
case, the appellant was a speculative investor, disentitling her
from invoking s.7. [Para 18.5]
* Author
170
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1.3 Further, in C.A. No. 3903 of 2022, the MoU provided for an
investment of Rs.25 lakhs per unit with assured returns of 25%
per annum after 24 months - It contained a compulsory buyback
clause and provisions for profit-sharing over and above guaranteed
returns - The repeated use of the term "investment" coupled
with a risk-free exit option, confirms that possession was never
intended - While the NCLT admitted the appellant's s.7 application
ex parte, the NCLAT correctly reversed the order - A homebuyer
cannot simultaneously demand refund with guaranteed returns
while retaining the option to refuse possession. [Para 18.6]
1.4 On the facts and law, both the appellants are speculative
investors - Their claims are in the nature of recovery, not insolvency
resolution - Findings of the NCLAT treating the appellants as
speculative investors upheld - Both impugned orders, setting
aside admission of the s.7 applications, affirmed. [Paras 18.7, 18.8]
Insolvency and Bankruptcy Code, 2016 - Insolvency and
Bankruptcy Code (Amendment) Ordinance, 2019 - IBC
(Amendment) Act, 2020 - Appellants in C.A. No. 540 of 2021
and C.A. No. 5495 of 2025 assailed the first impugned order
passed by NCLAT on the limited ground of non-compliance with
the 2019 Ordinance, promulgated on 28.12.2019 - Appellants
stated that the s.7 petition under the IBC filed by Respondent
No.1 on 02.01.2020, was reserved on 04.12.2019, i.e., prior
to the promulgation of the Ordinance - As on 28.12.2019,
the application was still pending consideration - Thus, the
Ordinance and the subsequent Amendment Act squarely
applied to the proceedings and the failure of Respondent
No.1 to satisfy the threshold requirement mandated under
the Ordinance was fatal to the maintainability of the petition -
NCLAT held that the Ordinance (later enacted as Amendment
Act, 2020) was inapplicable to the present case:
Held: Once orders were reserved, the appellant could not have
complied with the Ordinance until pronouncement - To insist
otherwise would be to compel the appellant to perform an
impossibility contrary to the maxim lex non cogit ad impossibilia -
The outcome on grounds of equity should be determined as on
the date the order was reserved, and no subsequent legislative
or administrative change should prejudice the parties - Where
orders were already reserved prior to the promulgation of the
Ordinance, the requirement cannot be retrospectively enforced
[2025] 10 S.C.R.
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Mansi Brar Fernandes v. Shubha Sharma and Anr.
so as to defeat vested rights - The subsequent compliance by
the appellant during appellate proceedings sufficiently cures the
defect, and the act of the Court must not prejudice the litigant -
Therefore, the finding of the NCLAT in respect of the inapplicability
of the Ordinance/Amendment Act to the facts of the present case
requires interference, and the first impugned order is set aside to
that effect - Ordinance/Amendment Act is squarely applicable to
the facts of the present case. [Paras 19.6, 19.7]
Directions by Supreme Court - In the larger interests of
bona fide homebuyers and the stability of the real estate
sector - Insolvency and Bankruptcy Code, 2016 - Real Estate
(Regulation and Development) Act, 2016 (RERA) - Right to
shelter, an integral part of the right to life u/Art.21 of the
Constitution of India - Constitutional obligation of the state
to protect homebuyers:
Held: 1.1 Vacancies in NCLT / NCLAT shall be filled on a war
footing - Dedicated IBC benches with additional strength should
be constituted - Services of retired judges may be utilized on
ad hoc basis until regular appointments are mad - This Court is
cognizant of the fact that similar directions have been issued in
the past, including in Pioneer Urban case, but no effective step
has been taken on the ground. [Para 21.2]
1.2 The Union Government shall, within three months, file a
compliance report on measures taken to upgrade NCLT/NCLAT
infrastructure nationwide - The recent closure of Chandigarh
NCLT and portions of Delhi NCLT due to water seepage in the
Courtrooms and Chambers of Members underscores the urgency
of robust infrastructural support. [Para 21.2]
1.3 Within three months, a Committee chaired by a retired High
Court Judge shall be constituted, with representatives from the
Ministry of law, Ministry of Housing, domain experts in Real Estate,
Finance and IBC from NIUA, HUDCO's HSMI, IIMs, NLUs, and
NITI Aayog, as well as two eminent industry representatives - The
Committee shall suggest commercially viable systemic reforms for
cleansing and infusing credibility into the real estate sector - NITI
Aayog/ NIUA shall provide research and secretarial support -
The Committee shall submit its report within six months of its
constitution. [Para 21.2]
1.4 States shall ensure that RERA authorities are adequately staffed
with infrastructure, experts, and resource - At least one member
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of every RERA must be a legal expert or consumer advocate
with proven expertise in real estate field - RERAs must conduct
thorough diligence before granting approval to any project - Failure
to do so, resulting in miscarriage of justice, shall amount to an
error unpardonable in law and may invite strict intervention by this
Court. [Para 21.2]
1.5 Since real estate is the second largest sector in IBC proceedings,
IBBI , in consultation with RERA authorities, shall constitute a council
to frame specific guidelines for insolvency proceedings in real
estate, including timelines for project-wise CIRP, and safeguards
for allottees. [Para 21.2]
1.6 Resolution of real estate insolvency should, as a rule, proceed
on a project-specific basis rather than the entire corporate debtor,
unless circumstances justify otherwise - This would protect solvent
projects and genuine homebuyers from collateral prejudice - IBBI
shall also devise a mechanism to enable handover of possession
to willing allottees where substantial units in a project are complete.
[Para 21.2]
1.7 The Union Government shall consider establishing a revival fund
under NARCL or expanding the SWAMIH Fund, to provide bridge
financing for stressed projects undergoing CIRP, thereby preventing
liquidation of viable projects and safeguarding homebuyer interests -
SWAMIH Fund is a commendable initiative; however, being a large
fund involving public money, every rupee must be utilised strictly
for its intended purpose of last-mile financing - To prevent misuse,
directed that a comprehensive periodic performance audit by the
CAG be carried out, with reports placed in the public domain in a
form comprehensible even to laypersons. [Para 21.2]
1.8 Regulations shall ensure meaningful representation of allottees
in the CoC through authorized representatives, with safeguards
against conflicts of interest. [Para 21.2]
1.9 At the admission stage of s.7 petitions filed by allottees, NCLTs
must record a prima facie finding on whether the applicant is a
genuine homebuyer or speculative investor - This would prevent
unnecessary admissions and reduce docket burden. [Para 21.2]
1.10 The Government shall prioritize e-filing, video-conferencing,
and dedicated case management systems for IBC matters, in view
of the heavy caseload before NCLTs. [Para 21.2]
[2025] 10 S.C.R.
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Mansi Brar Fernandes v. Shubha Sharma and Anr.
1.11 Every residential real estate transaction for new housing
projects shall be registered with local revenue authorities upon
payment of at least 20% of the property cost by buyer/allottee -
Further, to protect senior citizens and bona fide homebuyers,
contracts that significantly deviate from the Model RERA Agreement
to Sell, or that incorporate returns/buyback clauses where the
allottee is over the age of 50, must be supported by an affidavit
sworn before the competent Revenue Authority, certifying that the
allottee understands the attendant risks. [Para 21.2]
1.12 In projects at nascent stages, such as where land is yet to
be acquired or construction has not commenced, proceeds from
allottees shall be placed in an escrow account and disbursed in
phases aligned with project progress, as per a RERA-sanctioned
SOP - Every RERA shall devise such SOPs within six months
from today. [Para 21.2]
Insolvency and Bankruptcy Code, 2016 - Suggestions by
Supreme Court - To the Union Government, for future reform -
To protect the interests of genuine homebuyers; the economy
at large and fortify safeguards for bona fide homebuyers -
Real Estate (Regulation and Development) Act, 2016 (RERA).
[Para 21.2]
Insolvency and Bankruptcy Code, 2016 - Distinction between
speculative investors and genuine homebuyers - Role of
speculative investors in residential real estate - Speculative
investors cannot misuse the remedial framework of the
Insolvency and Bankruptcy Code:
Held: 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. [Para 21]
Words and Phrases - "Speculation" and "Speculator" -
Definition - Discussed. [Para 18.4]
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Insolvency and Bankruptcy Code, 2016 - Objectives of the IBC -
Legislative recognition of homebuyers - Safeguards introduced
against speculative misuse - Discussed. [Paras 5 - 5.4]
Insolvency and Bankruptcy Code, 2016 - Criteria to identify
speculative investors - Determination of whether an allottee
is a speculative investor, must be holistic, having regard to
the terms of the agreement, the allotment letter, the payment
terms, and the overall conduct of the allottee:
Held: Criteria to identify speculative investors (i) expectation of
unusually high profits; and (ii) activity in the nature of business or
trade - Non-exhaustive indicators include: (1) If the agreement
substitutes possession with a buyback or refund option, or any other
special arrangement, the allottee is likely a speculative investor -
(2) Insistence on refund with high interest, coupled with refusal
to accept possession would indicate speculation - (3) Purchase
of multiple units, especially in double digits, shall invite greater
scrutiny, though it is not conclusive - If the terms of the agreement
provide for possession or refund in the event of failure to give
possession alone, this factor may not be held against the allottee -
(4) Special rights, preferential treatment, or unusual privileges to
the allottee would signal investment intent - (5) Deviation from
the RERA Model Agreement shall be a crucial indicator as to the
nature of the transaction-the greater the departure, the greater
the likelihood of speculation - (6) Unrealistic interest rates and
promises of 20-25% returns over a short duration are indicative
of speculation - However, the distinction between speculative
investors and genuine homebuyers is relevant only at the stage of
initiation of CIRP - Such allottees are not barred from filing claims
for the principal amount invested, or from pursuing remedies before
other fora in accordance with law. [Paras 18.4.4, 18.4.5, 18.4.6]
Case Law Cited
Pioneer Urban Land and Infrastructure Ltd v. Union of India [2019]
10 SCR 381 : (2019) 8 SCC 416 - relied on.
His Holiness Kesavananda Bharati Sripadagalavaru v. State of
Kerala [1973] Supp. 1 SCR 1; Swiss Ribbons v. Union of India
[2019] 3 SCR 535 : (2019) 4 SCC 17; Manish Kumar v. Union of
India [2021] 14 SCR 895 : (2021) 5 SCC 1; Madhubhai Amathalal
Gandhi v. The Union of India [1961] 1 SCR 191 : AIR 1961 SC 21;
[2025] 10 S.C.R.
175
Mansi Brar Fernandes v. Shubha Sharma and Anr.
Duni Chand Rataria v. Bhuwalka Brothers Ltd. [1955] 1 SCR
1071 : AIR 1955 SC 182; Jute Investment Co. Ltd v. CIT [1980]
1 SCR 902 : (1980) 1 SCC 117; Rameshwar Lal v. Municipal
Council Tank and Others [1996] Supp. 5 SCR 227 : (1996) 6
SCC 100; High Court Bar Association, Allahabad v. State of U.P.
and Others, MANU/SC/0149/2024; Jang Singh v. Brijlal [1964] 1
SCR 145 : AIR 1966 SC 1631; State of Punjab v. Shamlal Murari
[1976] 2 SCR 82 : AIR 1976 SC 1177; A.R. Antulay v. R.S. Nayak,
MANU/SC/0002/1988; Samatha v. State of A.P. [1997] Supp. 2
SCR 305: (1997) 8 SCC 191; Chameli Singh v. State of U.P [1995]
Supp. 6 SCR 827 : (1996) 2 SCC 549 - referred to.
Binani Industries Ltd v. Bank of Baroda (2018) 150 SCL 703;
Subha Sharma v. Mansi Brar Fernandes [decided on 17.11.2020
in Company Appeal (AT) (Insolvency) No. 83 of 2020]; Sushil
Ansal v. Ashok Tripathi Company Appeal (AT) (Ins) No. 452 of
2020 - referred to.
Alexander Rodger v. The Comptoir D'escompte De, Paris Law
Reports Vol. III 1869-71 page 465 at page 475 - referred to.
Books and Periodicals Cited
P. Ramanatha Iyer's Law Lexicon (6th edition) - referred to.
List of Acts
Insolvency and Bankruptcy Code, 2016; Negotiable Instruments Act,
1881; Insolvency and Bankruptcy Code (Amendment) Ordinance,
2019; Real Estate (Regulation and Development) Act, 2016 (RERA);
Constitution of India; IBC (Amendment) Act, 2020.
List of Keywords
Speculative investors; Speculative buyer; Not genuine homebuyers;
Threshold requirements for filing of s.7 IBC applications by allottees;
Buy-back agreement; Buy-back clause; Buy-back plan; Buyback contract; Buy back agreement for flats; Flats not delivered;
Construction never commenced; Buy back the apartment; Pioneer
Urban case; Real estate sector; Right to housing; Right to life
under Article 21 of the Constitution of India; Right to shelter; CIRP
proceedings against the Corporate Debtor set aside; NCLAT set
aside the admission of the Section 7 application; Speculation;
Speculator; Speculative misuse; Bonafide homebuyers; Cheques
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dishonoured; CIRP proceedings; Profit from a lucrative agreement;
Expectation of unusually high profits; Threshold requirement
mandated under the Insolvency and Bankruptcy Code (Amendment)
Ordinance, 2019; Agreement substitutes possession with a buyback
or refund option; Insistence on refund with high interest; Refusal
to accept possession; Purchase of multiple units; Preferential
treatment; Unusual privileges to the allottee; Deviation from the
RERA Model Agreement; Unrealistic interest rates; Profit-sharing
over and above guaranteed returns; Recovery; Insolvency
resolution; Lex non cogit ad impossibilia; Stability of the real estate
sector; Model RERA Agreement to Sell; Actus curiae neminem
gravabit.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3826 of 2020
From the Judgment and Order dated 17.11.2020 of the National
Company Law Appellate Tribunal in CAAT(I) No. 83 of 2020
With
Civil Appeal Nos. 540 of 2021, 5495 of 2025, and 3903 of 2022
Appearances for Parties
Advs. for the Appellant:
Saurabh Mishra, Sr. Adv., Chandra Shekhar Yadav, Awanish Sinha,
Vineet Kumar, Ms. Harshita Gulati, Ms. Anindita Mitra, Akhil Anand,
Ms. Nupur Kumar, Ms. Diksha Dadu.
Advs. for the Respondents:
Ms. Nupur Kumar, Kaustubh Shukla, Ms. Pushpanjali Singh,
Praveen Kumar Singh, Ms. Harshita Gulati, Vineet Kumar, Vishal
Sinha, Ms. Anindita Mitra, Ms. Mantika Haryani, Ms. Astha Sharma,
Bhanu Mishra.
Judgment / Order of the Supreme Court
Judgment
R. Mahadevan, J.
1.
There are four appeals, which, having been heard together, are
being disposed of by this common judgment.
[2025] 10 S.C.R.
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Mansi Brar Fernandes v. Shubha Sharma and Anr.
2.
The first three appeals, viz., C.A. No. 3826 of 2020, C.A. No. 540
of 2021, and C.A. No. 5495 of 2025 arise out of the final judgment
and order dated 17.11.20201 passed by the National Company Law
Appellate Tribunal, New Delhi2, in Company Appeal (AT) (Insolvency)
No. 83 of 2020. The fourth appeal, viz., C.A. No. 3903 of 2022, is
directed against the final judgment and order dated 12.08.20213
passed by the NCLAT in Company Appeal (AT) (Insolvency) No.1020
of 2019.
3.
C.A. No. 3826 of 2020 has been preferred by the appellant - Mansi
Brar Fernandes in her capacity as a homebuyer / financial creditor.
Cross-appeals, viz., C. A. No. 540 of 2021 and C.A. No. 5495
of 2025 have been filed by Shubha Sharma and Ashlesh Gupta,
respectively - former and present directors of Gayatri Infra Planner
Private Limited - Respondent No. 2 / Corporate Debtor. C.A. No. 3903
of 2022 has been filed by the appellant - Sunita Agarwal, also a
homebuyer / financial creditor, against the Corporate Debtor Antriksh
Infratech Pvt. Ltd.
4.
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.
PREFATORY
5.
The Insolvency and Bankruptcy Code, 2016 (IBC) is a landmark
economic legislation enacted to consolidate and amend the laws
relating to reorganisation and insolvency resolution of corporate
1
For short, "the first impugned order"
2
For short, "the NCLAT"
3
For short, "the second impugned order"
4
For short, "the IBC"
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persons, partnership firms, and individuals in a time-bound manner. Its
primary objectives are the maximisation of value of assets, promotion
of entrepreneurship, availability of credit, and balancing of stakeholder
interests - creditors, investors, employees and workmen inter alia. Yet,
the IBC is also a highly misunderstood legislation. The nomenclature
of the Code itself has often contributed to this perception. In popular
imagination, the IBC is associated with bankruptcy and recovery of the
"last drop of life" from a company. But a closer look reveals that the
true character of the IBC lies not in its sombre title but in its design
and purpose. It privileges resolution over ruin, revival over decay, and
seeks to breathe life back into companies where revival is possible,
while providing for an orderly and dignified closure where it is not.
As emphasized by this Court in Swiss Ribbons v. Union of India5
and a catena of subsequent decisions, liquidation is not the primary
object of the Code, but a measure of last resort. The Code is designed
to revive and restructure distressed entities, so that they continue
as going concerns - safeguarding business continuity, protecting
employment, and maximising value of stakeholders.
5.1. Within this framework, the homebuyers occupy a distinct
position. Although their advances were, in substance, financial
contributions to real estate projects, they initially lacked
representation in the Committee of Creditors (CoC). To correct
this imbalance, Parliament amended the IBC to recognize
allottees as "financial creditors", thereby ensuring that their
voices are represented in the resolution process. The legislative
intent was to protect genuine homebuyers, secure completion of
projects, and ensure delivery of homes. For such stakeholders,
liquidation rarely yields meaningful relief.
5.2. However, this amendment also gave rise to an unintended
consequence: a surge of individual Section 7 petitions, often filed
not by genuine homebuyers but by speculative investors seeking
premature exits or enhanced returns. Many of these applications
were aimed at holding promoters to ransom by threatening
commencement of the Corporate Insolvency Resolution Process.
Such misuse burdened the adjudicatory machinery, strained
the real estate sector, and stalled projects that could otherwise
5
(2019) 4 SCC 17
[2025] 10 S.C.R.
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Mansi Brar Fernandes v. Shubha Sharma and Anr.
have been revived. To curb this mischief, through an ordinance
and subsequent amendment, Parliament introduced a threshold
requirement: at least 10% of the allottees or 100 in number
must act collectively to file a Section 7 application against a
real estate developer. This safeguard was designed to prevent
a handful of disgruntled or speculative investors from derailing
entire projects to the detriment of genuine homebuyers.
5.3. The residential real estate sector plays a systemic role in
the Indian economy. It is closely interlinked with banking,
steel, cement, and allied industries, and is among the largest
employment generators. Despite robust demand, the sector has
been plagued by delays, defaults, and lack of accountability,
leaving countless families without possession of homes despite
having invested their life savings. In this backdrop, this Court
has consistently reiterated that the IBC is not a recovery
mechanism or a bargaining chip for individual disputes. Rather,
it is a collective mechanism intended to revive viable projects
and safeguard the fundamental right to shelter of genuine
homebuyers.
5.4. With this prefatory discussion on the objectives of the IBC,
the legislative recognition of homebuyers, and the safeguards
introduced against speculative misuse, we now turn to the facts
of the present case.
BRIEF FACTS
6.
The appellant (Mansi Brar Fernandes) and Respondent No. 2
(Gayatri Infra Planner Pvt. Ltd) had entered into a Memorandum of
Understanding (MoU) dated 06.04.2016 which a buy back agreement
for four flats in Gayatri Life at Plot No. 1F, Sector 16, Greater Noida
(West), Uttar Pradesh. She paid a sum of Rs.35,00,000/- via cheque
towards part consideration, and the MoU included a buy-back clause
exercisable solely at the discretion of the Corporate Debtor. If the
buy-back option was not exercised, the appellant was entitled to
receive possession of the flats without payment of any additional
amount. Despite the MoU having been extended twice (first on
07.04.2017 and second on 07.10.2017), neither flats were delivered,
nor payment made; and post-dated cheques worth Rs.1 crore
handed over by the Corporate Debtor, were returned dishonoured
upon presentation. The appellant thereafter initiated section 7 IBC
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proceedings in the capacity as an allottee / Financial Creditor, before
the National Company Law Tribunal, New Delhi6, besides initiating
the proceedings under Section 138 of the Negotiable Instruments
Act, 18817. The NCLT issued notice to the Corporate Debtor and
after detailed arguments, admitted the application vide order dated
02.01.2020. Challenging the same, Respondent No. 1 preferred an
appeal before the NCLAT, which allowed the appeal and set aside
the CIRP proceedings initiated by the appellant against the Corporate
Debtor, by the first impugned order.
7.
The appellants in C.A. No. 540 of 2021 and C.A. No. 5495 of 2025
assail the first impugned order dated 17.11.2020 passed by the
NCLAT on the limited ground of non-compliance with the Insolvency
and Bankruptcy Code (Amendment) Ordinance, 2019, promulgated
on 28.12.2019. The appellants stated that the Section 7 petition
under the IBC filed by Respondent No. 1 (Mansi Brar Fernandes)
on 02.01.2020, was reserved on 04.12.2019, i.e., prior to the
promulgation of the Ordinance. As on 28.12.2019, the application
was still pending consideration. Consequently, the Ordinance and
the subsequent Amendment Act squarely applied to the proceedings.
It was urged that the failure of Respondent No. 1 to satisfy the
threshold requirement mandated under the Ordinance is fatal to the
maintainability of the petition.
7.1. The appellants further stated that specifically, the third proviso
to Section 7 IBC mandated compliance even for insolvency
applications filed by financial creditors that had not yet been
admitted by the Adjudicating Authority within thirty days of
the promulgation of the Ordinance / Amendment Act. In the
absence of such compliance, the proviso expressly deemed such
pending applications to have been withdrawn prior to admission.
Therefore, the finding of the NCLAT that the Ordinance was
inapplicable to the facts of the present case, is erroneous,
untenable, and unsustainable in law, and the admission order
was liable to be set aside on this ground alone.
7.2. The appellants also stated that compliance with the requirements
of the Ordinance / Amendment Act cannot be subsequently
6
For short, "the NCLT"
7
For short, "N.I. Act"
[2025] 10 S.C.R.
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Mansi Brar Fernandes v. Shubha Sharma and Anr.
cured in appellate proceedings before the NCLAT. Hence, after
the Ordinance / Amendment Act, a Section 7 IBC petition could
not have been admitted by the Adjudicating Authority, unless
the statutory threshold prescribed for allottees to initiate CIRP
against a real estate project was met. The admission order
dated 02.01.2020, therefore, failed to give effect to the binding
mandate of the Ordinance / Amendment Act. Consequently, the
appellants submitted that the requirements of the Ordinance /
Amendment Act are squarely attracted, and to that extent, the
first impugned order of the NCLAT warrants interference by
this Court.
8.
The facts of the case in CA. No. 3903 of 2022 are that Respondent
No. 2 (Antriksh Infratech Pvt. Ltd) approached the appellant (Sunita
Agarwal), and represented that they were in the process of developing
a housing project in the name and style of "Antriksh Urban Greek"
at L-Zone, Dwarka, New Delhi - 110 075. The appellant agreed to
invest a sum of Rs.25,00,000/- and paid the same by cheque dated
08.07.2015. Pursuant thereto, Respondent No. 2 issued letters dated
13.07.2015, stating that a 4BHK residential unit on the 6th floor,
admeasuring 2500 sq.ft. @ Rs. 5000/- per sq.ft., had been booked
in the name of the appellant under buy-back plan, and also issued
receipt No. 0492 dated 13.07.2015 acknowledging the payment of
Rs.25,00,000/-. On 28.07.2015, an Agreement / MoU was executed
between Respondent No.2 and the appellant. As per Clause 2(a)
of the Agreement, Respondent No. 2 admitted the payment of
Rs. 25,00,000/- and agreed to provide a return of 25% per annum
at the end of 24 months or upon the issuance of final LTC by the
competent authority, whichever was earlier. The 24-month period
ended on 07.07.2017.
8.1. Since construction was never commenced and, as reported
by the Insolvency Resolution Professional appointed by the
NCLT, even land had not been acquired by Respondent No. 2,
the appellant issued a demand notice/e-mail dated 01.02.2019
demanding a sum of Rs. 47,31,164.38 (comprising the principal
amount of Rs. 25,00,000/- plus interest @ 25% per annum till
08.02.2019). Respondent No. 2, however, refused to accept
the notice. The appellant also sent the notice through e-mail
on 01.02.2019.
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8.2. Thereafter, the appellant filed an application under Section 7
IBC before the NCLT. On 02.05.2019, the NCLT issued notice to
Respondent No. 2 and directed filing of an affidavit of service,
renotifying the case on 10.05.2019. The appellant served the
complete set of the petition and documents on Respondent
No. 2 through e-mail on 07.05.2019, and filed an affidavit of
service along with a certificate under Section 65B of the Indian
Evidence Act on 14.05.2019. Vide order dated 15.05.2019, the
NCLT directed that the matter proceed ex parte as Respondent
No. 2 failed to appear. Arguments were heard on 30.08.2019,
and by order dated 17.09.2019, the NCLT admitted the Section 7
IBC petition and appointed an Interim Resolution Professional
(IRP) to act in accordance with the Code.
8.3. Challenging the said order, Respondent No. 1 preferred
Company Appeal (AT) (Insolvency) No. 1020 / 2019 before the
NCLAT. In support, Respondent No. 1 relied upon the NCLAT
judgment dated 17.11.2020 in Subha Sharma v. Mansi Brar
Fernandes and others [Company Appeal (AT) (Insolvency) No.
83 of 2020] wherein, the NCLAT, referring to clauses of a similar
agreement, held that at the end of the stipulated period, the
corporate debtor was obliged to buy-back the apartment and
refund the amount along with premium, which was a lucrative
agreement for the investor, thereby making the allottee a
speculative investor. On this reasoning and applying the ratio
of this Court in Pioneer Urban Land and Infrastructure
Ltd v. Union of India8, the NCLAT by the second impugned
order dated 12.08.2021, set aside the NCLT's admission order.
Aggrieved thereby, the appellant is before this Court with the
present appeal.
CONTENTIONS OF THE PARTIES
9.
According to the learned senior counsel for the appellant, the appellant
(Mansi Brar Fernandes) is a homebuyer and qualifies as a financial
creditor under Section 5(8)(f) of the IBC. She entered into a MoU
dated 06.04.2016 with the Corporate Debtor (Gayatri Infra Planner
Pvt. Ltd) for the purchase / buy-back of four apartments in its project
8
(2019) 8 SCC 416
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Mansi Brar Fernandes v. Shubha Sharma and Anr.
"Gayatri Life", and paid a sum of Rs.35 lakhs through cheque as part
consideration. The MoU, which was commercially structured by the
Corporate Debtor itself, contained a buy-back clause that was entirely
at the option of the Corporate Debtor. It could either buy back the units
after 12 months for Rs.1 crore or hand over possession of the flats
to the appellant at no extra cost. The MoU was extended twice, i.e.,
on 07.04.2017 (for six months) and 07.10.2017 (for twelve months),
and all post-dated cheques issued by the Corporate Debtor for Rs.1
crore, were dishonoured upon presentation. Despite the expiry of the
final extension period on 06.10.2018, the Corporate Debtor failed
to hand over the flats or honour its buy-back commitment, thereby
constraining the appellant to initiate proceedings under Section 138
of the N.I.Act, and subsequently, file a Section 7 IBC petition.
9.1. Continuing further, it was submitted that the NCLT, by order dated
02.01.2020 admitted the petition, holding that the appellant was a
homebuyer / financial creditor under Section 5(8)(f), and that the
Corporate Debtor had committed default. However, on appeal,
the NCLAT reversed the admission, branding the appellant
as a speculative investor. The learned counsel submitted that
this finding is wholly erroneous, as it was based merely on the
existence of the buy-back clause, the dishonour of post-dated
cheques, and the appellant's resort to remedies under the N.I.
Act. None of these, it was argued, demonstrate speculative
intent. On the contrary, the appellant never withdrew from the
MoU and was always willing to accept possession of the flats,
while the option of buy-back was solely with the Corporate
Debtor, not the appellant. The NCLAT's approach, according
to the learned counsel, disregards the builder's default and
unfairly penalise the homebuyer.
9.2. It was also submitted that the transaction clearly bears the
hallmarks of a financial debt, having the commercial effect of
borrowing and carrying the element of time value of money,
as recognized in the IBC. The sum of Rs.35 lakhs was duly
received by the Corporate Debtor, reflected in its financial
records, and is undisputed. The transaction is not alleged to
be preferential, undervalued, fraudulent, or extortionate under
Sections 43 to 50 IBC, and the appellant is not a related party
of the Corporate Debtor or its promoters. Reliance was placed
on the judgment of this Court in Pioneer Urban Land and
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Infrastructure Ltd v. Union of India (supra), wherein the 2018
amendment recognising homebuyers as financial creditors
was held to be clarificatory in nature. It was submitted that the
presence of a buy-back clause in the MoU does not exclude
a homebuyer from the purview of Section 5(8)(f), especially
where such clause was devised by the builder and not at the
instance of the allottee.
9.3. The learned senior counsel further pointed out that during the
pendency of the present appeal, another Section 7 IBC petition
filed by Amit Joshi and others against the same Corporate
Debtor was admitted by the NCLT on 28.03.2023 and a CIRP
is presently ongoing. The appellant has already submitted her
claim in those proceedings. She clarified that she does not
seek revival of her original Section 7 IBC petition, but only
challenges the erroneous finding of the NCLAT branding her
as a "speculative investor", which prejudices her rights in the
ongoing CIRP and under other proceedings including those
under the N. I. Act.
9.4. In view of this subsequent CIRP, it was submitted that it is not
necessary for this Court to adjudicate on other issues raised
in the first impugned order, including the maintainability of her
Section 7 IBC application in light of the 2018 amendment to
the IBC requiring a threshold number of homebuyers to initiate
insolvency proceedings. For the same reason, the cross-appeals
preferred by Shubha Sharma and Ashlesh Gupta also do not
require consideration.
9.5. With these submissions, the learned senior counsel prayed that
the impugned finding of the NCLAT describing the appellant
as a "speculative investor" be set aside, she be recognised as
a homebuyer and financial creditor under Section 5(8)(f) IBC,
and she be treated at par with similarly situated allottees in the
ongoing CIRP in Amit Joshi (supra).
10. The learned counsel for the applicant in IA. No. 9936 of 2021 in C.A.
No. 3826 of 2020 / intervenor submitted that the applicant- Gayatri
Life Buyers Welfare Society - comprises allottees of the now-defunct
residential housing project "Gayatri Life" promoted by the corporate
debtor / Respondent No. 2. The members of the applicant who hold
89 apartment units in the said project, had supported the appellant -
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Mansi Brar Fernandes v. Shubha Sharma and Anr.
Mansi Brar Fernandes - before the NCLAT by filing affidavits in
support of initiation of CIRP against the corporate debtor. They
continue to support the appellant / homebuyer in seeking admission
of the builder to insolvency proceedings. Therefore, there is material
and substantial compliance with the amendment introduced on 28th
December 2019 to Section 7 of the IBC, and the hyper-technical
objections taken by the corporate debtor in this regard merit rejection.
11. On behalf of Respondent No. 2 (Gayatri Infra Planner Private Limited),
the Resolution Professional made the following submissions:
(i)
The appellant, claiming to be a financial creditor, seeks to rely
on a Memorandum of Understanding dated 06.04.2016, which
was purely provisional in nature and did not result in final
allotment. The appellant had paid Rs.35 lakhs out of a total
consideration of Rs.1,03,78,521/- for four flats and the MoU
provided the company a discretionary option to repurchase
the flats for Rs.1 crore within 12 months, failing which the
appellant would be entitled to possession. This optional buyback clause does not create any binding repayment obligation,
and therefore, does not constitute a "financial debt" under the
IBC. The appellant's own case confirms that the buy-back was
at the sole discretion of the respondent, and no evidence has
been adduced to show that the company exercised the option
or agreed to repay Rs.1 crore. The transaction was clearly
speculative in nature, structured to yield an abnormal return
of over 350% within a short duration, reflecting an investment
for profit and not a genuine homebuying intent.
(ii)
Furthermore, the appellant fully aware of the project's
construction timeline, instead sought to recover money under the
garb of insolvency proceedings. As held in Pioneer Urban and
Infrastructure Ltd v. Union of India (supra), the IBC cannot be
used by speculative investors to initiate coercive proceedings.
Therefore, the appellant not being a financial creditor under
section 5(8)(f) had no locus to initiate CIRP, and the Admission
Order was rightly set aside. The first impugned order correctly
distinguishes the appellant as a "speculative investor" rather
than a genuine allottee, and upholds the principles underlying
the Code.
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(iii) The appellant is not a genuine allottee but a speculative investor
who entered into a transaction with the Corporate Debtor
purely for assured financial returns and not for the purpose
of acquiring residential property. A speculative allottee, as
recognized in law, is one who seeks short term gains through
devices like buy-back clauses and post-dated cheques (PDCs)
with no genuine intent to obtain possession or use the property
for residential purposes. In contrast, a genuine allottee under
section 5(8)(f) is a person who seeks a home for personal use
and falls within the protective ambit of the Code. In the present
case, the appellant was issued Post-dated cheques against the
investment made, a practice not followed in respect of genuine
homebuyers, thereby clearly indicating the speculative nature of
the transaction. The MoU executed between the appellant and
the Corporate Debtor included a buy-back clause offering the
appellant an exorbitant return of Rs.1 crore on an investment
of Rs.35 lakhs within 12 months, reflecting a commercial
arrangement rather than a residential purchase. The structure
of the MoU, absence of a builder-buyer agreement, lack of
follow-up for possession, and reliance on section 138 N.I.