SC Transfers Plea Against IBC Ordinance From HC To Itself

The Supreme Court has allowed the transfer of a petition challenging the constitutional validity of IBC (Amendment) Ordinance, 2019, from the Delhi High Court to itself.

Earlier, a petition titled KIC Food Products Pvt Ltd vs Union of India & Anr was pending before the Delhi High Court, had challenged the constitutional validity of IBC ordinance, wherein additional condition of minimum 100 allottees or 10% of the total number of allottees under any real estate project for approaching NCLT was imposed.

The petitioner had sought its transfer to the Supreme Court in light of a similar petition pending before the Supreme Court, titled Manish Kumar v. Union Of India & Anr, WP (C) No. 26/2020.

Significantly, Article 139A(1) of the constitution stipulates that where cases involving the same or substantially the same questions of law are pending before the Supreme Court and one or more high courts, the Supreme Court may withdraw the case or cases pending before the high court and dispose of all the cases itself.

The petitioner has also asserted that in any case, the high court will not take up his case on merits and will keep in abeyance till the time the petition before the Supreme Court decides the challenge to the 2019 ordinance.

As per the ordinance, there should be at least 100 real estate allottees or 10% of the total number of allottees, whichever is lesser, to maintain an insolvency petition in respect of a real estate project. Further, any petition which did not comply with the said requirement was to be considered dismissed on January 28, 2020.

The petitioners, who are home buyers, had approached the NCLT under Section 7 of the IBC, stating that their cases would be adversely affected by the 2019 ordinance.