Supreme Court Warns Against Misuse of Insolvency Code by Speculative Investors, Calls Them ‘Slow Poison’ for Real Estate
Introduction In a significant ruling with far-reaching implications for India’s real estate sector, the Supreme Court of India has drawn a sharp line between speculative investors and genuine homebuyers , calling the former a “slow poison” to the sector. The Court emphasized that the Insolvency and Bankruptcy Code (IBC), 2016 , should not be exploited as a recovery tool by investors seeking quick profits without any intent of purchasing a home. Instead, the law must be a mechanism for protecting homebuyers and ensuring timely completion of projects. The Case Before the Court A bench of Justices JB Pardiwala and R Mahadevan was hearing a batch of appeals linked to insolvency proceedings initiated against two builders. The National Company Law Appellate Tribunal (NCLAT) had previously dismissed these cases, classifying the petitioners as “speculative investors.” The Supreme Court upheld the NCLAT’s decision, reiterating that speculative misuse of the IBC undermines the very stabil...