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The Supreme Court has delivered a significant judgment affirming that the Insolvency and Bankruptcy Code (IBC), 2016 cannot be misused as a shield by defaulting developers to obstruct redevelopment projects. The ruling underscores that insolvency protection cannot supersede the constitutional right of residents to live in safe and habitable conditions. Background of the Dispute: Redevelopment of Kher Nagar Sukhsadan Society The case arose from the redevelopment of the Kher Nagar Sukhsadan Co-operative Housing Society in Bandra (East), Mumbai. The society had entered into a redevelopment agreement with AA Estates Private Limited in 2005, followed by a supplementary agreement in 2014. Despite more than a decade passing, no substantial redevelopment work had commenced. In 2017, the Municipal Corporation of Greater Mumbai (MCGM) issued notices declaring the structure unsafe for habitation, forcing residents to continue living in hazardous conditions. After continued delay, the society...

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...