The Supreme court of India on Monday gave a status quo order regarding the amendment of section 3 of the Insolvency and Bankruptcy Code that homebuyers set stringent conditions for individual financial creditors to approach the bankruptcy court. The Monday's order by the SC has exempted the petitions that were filed before December 28th from the amendment.
"SC has granted a partial stay on the 3rd proviso of Section 3 today and issued notice to the Union of India. This means that all the petitions that were filed before the Amendment shall not be bound by the 30 day- period given to satisfy the amendment," said advocate Srijan Sinha, who is representing the association of Karvy investors.
The order also gives relief to over 100 individual homebuyers and investors who had filed petitions for recovery in several NCLTs.
Last week the association of investors in a Karvy Group scheme had challenged the constitutional validity of Section 3 of the Insolvency and Bankruptcy Code that said that the courts will accept an insolvency petition in case of real estate bankruptcy only if 100 home buyers or 10% of the total home buyers came together to file a petition. The amendment for this had come up on December 28th. The Karvy Investors group had appealed for a modification of this amendment that said the retrospective application of this rule will impact the investors.
“This amendment is a discrimination between financial institutions and individual investors. Our prayer is that we should be treated in parity with financial institutions.” Sinha added.
The petitioner association comprises members who have made several investments on the aid and advice of Karvy group of companies, in various types of investment schemes that were floated by private companies. The association claims that its members were financial creditors as per the definition provided by the Insolvency and Bankruptcy Code.
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