Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | 2016 Insolvency and Bankruptcy Code |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Act(s) Referred | Constitution of India Insolvency and Bankruptcy Code, 2016 (31 of 2016) |
Case(s) Referred | Referred Case 0 Referred Case 1 Referred Case 2 |
Case Type | Writ Petition |
Court | Supreme Court of India |
Disposal Nature | Petition Disposed Off |
Headnote | Insolvency and Bankruptcy Code, 2016 – ss.3(30), 3(31), 5(7),5(8), 7, 17, 18, 20, 21(6) and 21(6A)(b) – JIL, a high-tech townshipdeveloper defaulted in repayment of its dues to IDBI bank – Banksought the initiation of a Corporate Insolvency Resolution Process(CIRP) against JIL – For submission of claims, JIL separated homebuyers from financial and operational creditors – Writ Petition byhome buyers who pleaded that their interest was getting ignored asonly financial and operational creditors were recognized by CIRP– They further pleaded for pro-rata disbursement of the amountdeposited by the JIL among buyers who sought a refund – Held:Plea cannot be accepted – Firstly, during the pendency of the CIRP,as a matter of law, it was impermissible for the Court to direct apreferential payment to be made to a particular class of financialcreditors, whether secured or unsecured – Directing disbursementof amount to home buyers who seek refund would be manifestlyimproper and cause injustice to the secured creditors since it wouldamount to a preferential disbursement to a class of creditors –Secondly, only 8% of the home buyers have sought refund of theirmonies, while 92% preferred possession of the homes which theyhave purchased – Allowing a refund to one class of financialcreditors would not be in the overall interest of a composite planformulated under the provisions of the IBC – Thirdly, one of themajor reasons for the enactment of the IBC was to protect the interestof lenders i.e. banks and financial institutions, who are answerableto their stakeholders – Fourthly, the RBI constituted an InternalAdvisory Committee (IAC), which recommended to also initiate aCIRP against JAL (the holding company of JIL) under the IBC –Banking Regulation Act, 1949 – ss. 35AA and 35AB (enacted byamendment 2017) – Constitution of India – Art.32. |
Judge | Hon'ble Dr. Justice D.Y. Chandrachud |
Neutral Citation | 2018 INSC 681 |
Petitioner | Chitra Sharma And Ors. |
Respondent | Union Of India And Ors. |
SCR | [2018] 12 S.C.R. 1044 |
Judgement Date | 2018-08-09 |
Case Number | 744 |
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