Team Code: TC-19 P

1ST NATIONAL INSOLVENCY AND BANKRUPTCY MOOT COURT

COMEPTITION, 2022

Before

Hon’ble Apex Court of Bharat

WRIT PETITION NUMBER 11/2020

FILED UNDER ARTICLE 32 OF THE

CONSTITUTION OF BHARAT

IN THE MATTER BETWEEN:

MANU BHAI SHARMA [PETITIONER]

GOVERNMENT OF BHARAT versus [RESPONDENT]

MEMORIAL for PETITIONER

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TABLE OF CONTENTS

INDEX OF AUTHORITIES.........................................................................................................III

STATEMENT OF JURISDICTION...............................................................................................VI

STATEMENT OF FACTS..........................................................................................................VII

ISSUES RAISED........................................................................................................................IX

SUMMARY OF ARGUMENTS.....................................................................................................X

ARGUMENTS ADVANCED..........................................................................................................1

A. THE IMPUGNED AMENDMENT CLEARLY FALLS FOUL OF THE MANDATES OF ARTICLES 14,
19(1)(G) AND 21 OF THE CONSTITUTION OF BHARAT, 1950..................................................1

B. THE IMPUGNED AMENDMENT CREATES A HOSTILE DISCRIMINATION BETWEEN THE

HOMEBUYERS AS FINANCIAL CREDITORS, AND OTHER FINANCIAL CREDITORS.....................2

C. THE IMPUGNED AMENDMENT CREATES A CLASS WITHIN A CLASS, THUS FROWNED UPON

BY THE LAW............................................................................................................................5

D. THE IMPUGNED AMENDMENT CASTS AN OBLIGATION UPON THE ALREADY SUFFERING

HOME BUYER TO FIND 100 OR 10% MORE SUFFERERS LIKE HIM IN ORDER TO APPROACH

THE TRIBUNAL........................................................................................................................7

A. UNREASONABLE AND ARBITRARY..........................................................................8

B. CONSTITUTIONALITY................................................................................................9

E. THAT AS THERE EXISTS NO PLATFORM FOR THE PROCUREMENT OF INFORMATION OF THE

OTHER ALLOTTEES OF THE PROJECT, IT IS IMPRACTICABLE TO APPROACH THE NCLT TO A

CERTAIN EXTENT..................................................................................................................10

F. THE IMPUGNED AMENDMENT DISCRIMINATES BETWEEN A CLASS OF FINANCIAL

CREDITORS WITH THE OPERATIONAL CREDITORS (HAVING LESSER RIGHT AS COMPARED TO

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MEMORIAL for PETITIONER TABLE OF CONTENTS
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A FINANCIAL CREDITOR BY VIRTUE OF THE CODE).............................................................12

G. THAT MORE THAN 51,000 LITIGATIONS WOULD BE AFFECTED PAN BHARAT (FILED BY

SUCH REAL ESTATE ALLOTEES AGAINST THE CORPORATE DEBTOR) FURTHER

DETERIORATING THEIR RIGHTS, SHOULD THE IMPUGNED AMENDMENT BE ALLOWED TO

CONTINUE.............................................................................................................................15

A. THE RETROSPECTIVE APPLICABILITY TAKES AWAY THE VESTED RIGHT................15

B. AMENDMENT IS VIOLATIVE OF ARTICLE 14...........................................................16

C. IT CREATES NEW DISABILITIES OR OBLIGATIONS...................................................16

PRAYER FOR RELIEF...............................................................................................................17

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INDEX OF AUTHORITIES

Cases

Ambalal Sarabhai Enterprises Ltd. v. Amrit Lal & Co. and another, (2001) 8 SCC 397..15, 16

Ameerunnissa Begum and others v. Mahboob Begum and others, (1953) SCR 404..............10

Anwar Ali Sarkar v. State of West Bengal, (1951) SCC Online Cal 124..................................8

B.K. Educational Services (P) Ltd. v. Parag Gupta & Associates, (2019) 11 SCC 633..........10

Cauvery Water Disputes Tribunal, Re, (1993) Supp (1) SCC 96 (2)........................................6

Chitra Sharma and others v Union of India, (2017) WP (C) 744..............................................2

E.V. Chinnaiah v. State of A.P., (2005) 1 SCC 394..................................................................6

Hitendra Vishnu Thakur and others v. State of Maharashtra and others, (1994) 4 SCC 602. .16

Indra Sawhney and others v. Union of India and others, (2000) 1 SCC 168.............................8

Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407...............................................12

K. Nagaraj v. State of A.P., (1985) 1 SCC 523.........................................................................4

K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150...................................................13

N.M. Thomas v. State of Kerala, (2012) SCC OnLine Ker 29108............................................8

Nagpur Improvement Trust v. Vithal Rao, (1973) 1 SCC 500..................................................9

Pioneer Urban & Anr v Union of India and Ors, (2019) SCC OnLine SC 1005..............passim

S. Sundaram Pillai v. V.R. Pattabiraman, (1985) 1 SCC 591....................................................3

Sansar Chand Atri v. State of Punjab, (2002) 4 SCC 154.........................................................6

State of H.P. v. Narain Singh, (2009) 13 SCC 165....................................................................4

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State of U.P v. Committee of Management, Mata Tapeshwari Saraswathi Vidya Mandir,

(2008) SLP (C) Nos. 17236 and 19261..................................................................................6

Swiss Ribbons v Union of India, (2019) 4 SCC 17.................................................3, 10, 12, 13

The State of Karnataka v. The Karnataka Pawn Brokers Assn, (2006) SCC OnLine Kar 105. 6

Vasant Ganpat Padvave (D) by LRs & Ors. v. Anant Mahadev Sawant (D) Through LRs. &
Ors, (2019) 19 SCC 577.......................................................................................................10

Statutes

Consumer Protection Act, No. 68 of 1986, § 11......................................................................11

INDIA CONST. art. 14..............................................................................................................1, 7

INDIA CONST. art. 19..............................................................................................................1, 7

INDIA CONST. Art. 21.............................................................................................................1, 7

INDIA CONST. art. 300, cl. a.......................................................................................................7

Insolvency and Bankruptcy Code, No. 37 of 2016, § 60.........................................................11

The Insolvency and Bankruptcy Code (Amendment) Act, No. 1 of 2020, § 11......................12

The Insolvency and Bankruptcy Code (Amendment) Act, No. 1 of 2020, § 3....................1, 12

The Insolvency and Bankruptcy Code (Amendment) Act, No. 1 of 2020, § 7..................1, 7, 8

The Limitation Act, No. 36 of 1963.........................................................................................11

Other Authorities

UNICITRAL, UNCITRAL Legislative Guide on Insolvency Law, UNITED NATIONS (2005),

https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/05-
80722_ebook.pdf..................................................................................................................14

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LIST OF ABBREVIATIONS

AIR All India Reporter

SC Supreme Court
SCC Supreme Court Cases
Ltd Limited
Co Company
Hon’ble Honourable
Ors Others
UOI Union of India
Ed Edition
V Versus
Art Article
S Section
Pvt Private
HC High Court
CONST Constitution
Anr Another
UNCITRAL United Nations Commission on International
Trade Law
SCR Supreme Court Reports

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STATEMENT OF JURISDICTION

The Petitioner, Manu Bhai Sharma, along with several other such allotees approached the
Hon’ble Apex Court of Bharat, through a Writ Petition (Civil) bearing No. 11 of 2020 under
Article 32 inter-alia challenging the said amendment to be violative of the Constitution of
Bharat.

The Hon’ble Apex Court upon hearing the submissions, directing both the parties to be ready
with their final arguments, by filing their written submissions before the Hon’ble Court.

The matter has been listed for final arguments from 25-27th March, 2022.

The present memorial on behalf of the respondent sets forth the facts, contentions and
arguments in the present case

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MEMORIAL for PETITIONER STATEMENT OF JURISDICTION
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STATEMENT OF FACTS

Bharat, its constitution and the legislative framework on corporate laws

Bharat, a Sovereign, Democratic, Republic had its first set of laws on Insolvency and
Bankruptcy as early as in 1909 and 1920 and Bankruptcy and Insolvency is a concurrent list
subject under the Constitution. Several laws were passed by the government over the course
of several years like Companies Act, 1956, Sick Industrial Companies (Special Provisions)
Act, 1985, Recovery of Debt due to Banks and Financial Institutions Act, 1993,
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (SARFAESI), Companies Act, 2013.

The Bhartiya market and issues incidental thereto

The late 90’s era witnessed the development of wide and varied number of businesses and
birth of new market concepts and strategies ranging from Builders and Realtors. a series of
financial institutions and housing finance companies were set up in Bharat, which led to the
increased avidity amongst such institutions to outrun the competitors, leading to these
institutions now financing individual home/unit buyer at cut throat rates of interest through
mortgaging the un-built property, virtually on papers. With the passage of time, the situation
became worse, to the extent that out of every 10 builders/realtors having proposed to build a
project, 6 of them turned out to be noncompliant in payment of their Equated Monthly
Installments (EMI) and in certain cases siphoning off the entire funds lent to them for
building the project, in their personal accounts and, abandoning the project’s construction at a
slab and base stage, compelling certain banks, financial institutions, Housing Finance
Companies and NBFC’s to launch a series of litigation to procure the lent money to such
builders/ realtors. The Government of Bharat on 8th November, 2016, in order to curb the
menace of the corruption and black money, banned the two most prominent denominations in
its currency system which accounted for around 86% of the Bharat’s circulating ca sh
authorized by the Reserve Bank of Bharat (Commonly known as Demonetization) and
declared to print new currencies inter-alia issuing directions to be followed to return back the
legitimate cash any individual possessed, post the announcement.

The code and its application

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MEMORIAL for PETITIONER STATEMENT OF FACTS
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The Code commenced with the National Company Law Tribunal (NCLT) benches being
overloaded with Applications/ Petitions against the Corporate Debtor in red, by the financial
institutions leading to commencement of Corporate Insolvency Resolution Process (CIRP)
against some of the big names in the market, During the time of the provisions of the Code
being subject to judicial review, what came to be known as a landmark judgment governing
the rights and remedies of the individual home/ unit buyer was the judgment passed by the
Hon’ble Apex Court of Bharat in the Pioneer Urban matter , wherein the individual
home/unit buyer was accredited with the right of being a financial creditor in terms of the
Code for reasons of the money invested by such homebuyer to have the commercial effect of
borrowing. Soon thereafter, the National Company Law Tribunals across Bharat witnessed a
number of Petitions/ Applications being filed under the Code. Consequently, the National
Company Law Tribunal benches started taking cognizance of the defaults being made by the
Builders/ Realtors and initiated the CIRP against several such defaulters.

The Insolvency and Bankruptcy Code (amendment) ordinance, 2019 and the Insolvency
and Bankruptcy Code (amendment) act, 2020

The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019 was promulgated
making amendments to the existing Code, the most important of which was the amendment
to Section 7 which regulated the rights of individual home/unit buyers towards initiation of
CIRP against the Corporate Debtor by fixing a threshold of 100 or 10% of real estate allottees
(whichever is lesser) in the same project to approach the National Company Law Tribunals as
co-applicants. The passing of the Ordinance was criticized by real estate allottees whose
applications were pending adjudication at various stages before the NCLT benches and a
group of such individual home/ unit buyers/ real estate allottees approached the Hon’ble
Apex Court through a Writ Petition (Civil), challenging the vires of the Ordinance as being
violative of Article 14 of the Constitution of Bharat. The Hon’ble Apex Court inter-alia
directed status quo to be maintained upon the applications pending adjudication before the
respective benches and posted the matter for final hearing. In the interim, the Government
passed the Insolvency and Bankruptcy Code (Amendment) Act, 2020 amending several
provisions of the Code and negating the effect of the Ordinance and notifying the same in the
official Gazette of Bharat before the expiry of the Ordinance. The relevant portion pertaining
to the rights of the real estate allotees/ home buyers as amended by the Ordinance was
verbatim in the amendment as well.

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MEMORIAL for PETITIONER STATEMENT OF FACTS
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ISSUES RAISED

ISSUE A - That the impugned amendment clearly falls foul of the mandates of Articles 14,
19(1)(g) and 21 of the Constitution of Bharat, 1950.

ISSUE B - That the impugned amendment creates a hostile discrimination between the
Homebuyers as financial creditors, and other financial creditors.

ISSUE C - That the impugned amendment creates a class within a class, thus frowned upon
by the law.

ISSUE D - That the impugned amendment casts an obligation upon the already suffering
home buyer to find 100 or 10% more sufferers like him in order to approach the Tribunal.

ISSUE E - That as there exists no platform for the procurement of information of the other
allottees of the Project, it is impracticable to approach the NCLT to a certain extent.

ISSUE F - That the impugned amendment discriminates between a class of financial

creditors with the Operational Creditors (having lesser right as compared to a Financial
Creditor by virtue of the Code).

ISSUE G - That more than 51,000 litigations would be affected Pan Bharat (filed by such
real estate allotees against the Corporate Debtor) further deteriorating their rights, should the
impugned amendment be allowed to continue.

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MEMORIAL for PETITIONER ISSUES RAISED
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SUMMARY OF ARGUMENTS

A. THE IMPUGNED AMENDMENT CLEARLY FALLS FOUL OF THE MANDATES OF ARTICLES

14, 19(1)(G) AND 21 OF THE CONSTITUTION OF BHARAT, 1950.

It is humbly submitted before the Hon’ble Supreme Court that the the impugned amendment
clearly falls foul of the mandates of Articles 14, 19(1)(g) and 21 of the Constitution. The
section 3 introducing the second proviso in Section 7(1) of the Code makes a hostile
discrimination between financial creditors. The protection sought for the real estate developer
cannot be used to justify infringing on constitutionally guaranteed freedoms under Article
19(1)(g), just as it cannot be used to justify an unjustified invasion of the grand mission of
equality.

B. THE IMPUGNED AMENDMENT CREATES A HOSTILE DISCRIMINATION BETWEEN THE

HOMEBUYERS AS FINANCIAL CREDITORS, AND OTHER FINANCIAL CREDITORS.

It is humbly submitted that the amendment creates a hostile discrimination between the
Homebuyers as financial creditors, and other financial creditors. Homebuyers and other
financial creditors are treated as equals when they are, in fact, unequal. The new law was,
thus, a case of “distortion of the principle of equal rights guaranteed under the Constitution.
The provision to of the Code was unreasonable, arbitrary, irrational, ultra-vires the Indian
Constitution and violated basic fundamental rights.

C. THE IMPUGNED AMENDMENT CREATES A CLASS WITHIN A CLASS, THUS FROWNED

UPON BY THE LAW.

It is humbly submitted that the amendment creates a class within a class, thus frowned upon
by the law. The consequence of the amendment to the Code is that it seeks to alter the
decision of the Supreme Court in Pioneer Urban Land by providing for additional
qualifications for an allottee to seek relief under section 7 of the Code. The amendment is
against the fundamental rights enshrined in the Indian Constitution. Creation of a class within
a class was unconstitutional and arbitrary, thus making it ultra vires the Constitution.

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D. THE IMPUGNED AMENDMENT CASTS AN OBLIGATION UPON THE ALREADY SUFFERING

HOME BUYER TO FIND 100 OR 10% MORE SUFFERERS LIKE HIM IN ORDER TO APPROACH
THE TRIBUNAL

The council humbly submits that the impugned amendment does cast an obligation upon the
already suffering home buyer to find 100 or 10% more sufferers like him in order to approach
the Tribunal. This is argued because firstly that the impugned amendment is be inflicted with
the vice of vagueness and it is arbitrary and the threshold limit is unreasonable and arbitrary.
There exists no intelligible differentia and there exists an information asymmetry

E. THAT AS THERE EXISTS NO PLATFORM FOR THE PROCUREMENT OF INFORMATION OF

THE OTHER ALLOTTEES OF THE PROJECT, IT IS IMPRACTICABLE TO APPROACH THE
NCLT TO A CERTAIN EXTENT

It is humbly submitted that there exists no platform for the procurement of information of the
other allottees of the Project, it is impracticable to approach the NCLT to a certain extent.
Under the impugned amendment, the allottees are to be culled out from among a particular
project. In other words, the requirement under the provision is that the applicants must be 100
allottees or one-tenth of the allottees of a particular real estate project. Instead of providing
with safety, the homebuyer is faced with even more restrictive and difficult conditions.

F. THE IMPUGNED AMENDMENT DISCRIMINATES BETWEEN A CLASS OF FINANCIAL

CREDITORS WITH THE OPERATIONAL CREDITORS (HAVING LESSER RIGHT AS COMPARED
TO A FINANCIAL CREDITOR BY VIRTUE OF THE CODE)

It is humbly submitted that the amendment discriminates between a class of financial

creditors with the Operational Creditors. It is true that the allottee is not a secured creditor
and he is in the position of a bank or the financial institution, the contentions of the
petitioners that there is hostile discrimination forbidden (under) Article 14 is tenable.
Therefore, violate the aforesaid standards and become manifestly arbitrary.

G. MORE THAN 51,000 LITIGATIONS WOULD BE AFFECTED PAN BHARAT (FILED BY SUCH
REAL ESTATE ALLOTEES AGAINST THE CORPORATE DEBTOR) FURTHER DETERIORATING
THEIR RIGHTS, SHOULD THE IMPUGNED AMENDMENT BE ALLOWED TO CONTINUE.

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The council submits that the amendment cannot be used retrospectively because, firstly it
takes away the vested right. It impairs vested rights. Secondly it is violative of Article 14.
The entire object of the Code would stand jeopardized if applications already filed would not
be considered. Thirdly it is penal, arbitrary, unjust and unfair.

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MEMORIAL for PETITIONER SUMMARY OF ARGUMENTS
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ARGUMENTS ADVANCED

A. THE IMPUGNED AMENDMENT CLEARLY FALLS FOUL OF THE MANDATES OF ARTICLES

14, 19(1)(G) AND 21 OF THE CONSTITUTION OF BHARAT, 1950.

 It is humbly submitted that the impugned amendment clearly falls foul of the mandates of
Articles 141, 19(1)(g)2 and 213 of the Constitution of Bharat, 1950.

• The impugned amendment clearly falls foul of the mandate of Articles 14, 19 (1)(g), and of
the Constitution. The amendment by virtue of section 34 of the Amendment Act introducing
the second proviso in Section 7(1)5 of the Code makes a hostile discrimination between
financial creditors, the category, to which the petitioners belong and the other financial
creditors.

• It is contended that the amendment imposing a threshold restriction is afflicted with the
vice of palpable and hostile discrimination qua operational creditors. The purported
protection sought to be accorded to the real estate developer, cannot form the premise for
inflicting violation of constitutionally protected freedom under Article 19(1)(g) just as much
as it also constitutes an insupportable invasion of the grand mandate of equality. There are
inherent leakages in the impugned provisions which would make it unworkable. Thereafter,
learned counsel would submit that the impugned amendment is also bad in law for the reason
that it is manifestly arbitrary. The amendment has the legally pernicious effect of creating a
class within a class, a result, which is frowned upon by the law.

• Impugned amendment is arbitrary being in the teeth of the principles laid down in Pioneer
case6. The object of the law would stand defeated he contends. The Ordinance not only
deprives the petitioner of his right under Section 7, 7 but it also violates Article 14 of the
Constitution of India. The threshold limit is unreasonable, arbitrary, excessive irrational, and
public interest. There exists adequate shield against a single allottee misusing the Code.

1
INDIA CONST. art. 14.
2
INDIA CONST. art. 19
3
INDIA CONST. Art. 21
4
The Insolvency and Bankruptcy Code (Amendment) Act, No. 1 of 2020, § 3.
5
The Insolvency and Bankruptcy Code (Amendment) Act, No. 1 of 2020, § 7.
6
Pioneer Urban & Anr v Union of India and Ors, (2019) SCC OnLine SC 1005.
7
The Insolvency and Bankruptcy Code (Amendment) Act, No. 1 of 2020, § 7.

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MEMORIAL for PETITIONER ARGUMENTS ADVANCED
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• The threshold is thrust upon only on the home buyer and is not applicable across the board
for other financial creditors. It is discriminatory with no rationale. It treats equals unequally
and unequal as equals. There is no intelligible differentia. The law does not permit classes
among financial creditors. There is breach of the guarantee of equal protection of law.

• Once the right is conferred to make an application, then it cannot come conditioned with
threshold limit as is provided in the impugned provisos. there is manifest arbitrariness. The
counsel also contends that there is hostile discrimination qua other corporate debtor. The
builder who is a corporate debtor, in other words, is given a more favorable treatment than
other corporate debtors which is afflicted with the vice of hostile discrimination there is both
under and over inclusiveness in the impugned provisions.

• The very object is discriminatory. Drawing our attention to both Chitra Sharma and others
v Union of India8 and others and Pioneer case, we highlight that having regard to the
background in which the rights of the home buyer was recognized as being one of that of a
financial creditor, the amendment is clearly impermissible. We also submit that having regard
to the stand taken by the Government in the case before this Court, in particular, Pioneer
case, the principles of promissory estoppel will apply and prevent enactment of the impugned
provisions.

• What is emphasized before us by the petitioners is the principle that the object itself cannot
be discriminate. It is pointed out that the object in the case of impugned provisos between
different sections of financial creditors is such discrimination. Further the corporate debtors
are discriminated again in that builder are accorded special treatment qua other corporate
debtors.

B. THE IMPUGNED AMENDMENT CREATES A HOSTILE DISCRIMINATION BETWEEN THE

HOMEBUYERS AS FINANCIAL CREDITORS, AND OTHER FINANCIAL CREDITORS.

Homebuyers and other financial creditors are treated as equals when they are, in fact,
unequal. Also, Homebuyers are discriminated against when compared with other entities
supplying goods or services. The amendments made are, therefore, excessive and
disproportionate being manifestly arbitrary.

8
Chitra Sharma and others v Union of India, (2017) WP (C) 744.

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A square peg is fitted into a round hole as none of the identifying traits of financial creditors
as explained in Swiss Ribbons9 are present insofar as allottees are concerned.

Referring to the judgment S. Sundaram Pillai v. V.R. Pattabiraman10, that an explanation

cannot enlarge the scope of the original provision. Even if allottees are not permitted to
trigger the Code, they may still be protected by making suitable amendments for their
inclusion in the Committee of Creditors, so that they may have a voice in the future of the
corporate debtor, which will impact the flats/apartments to be given to them or refunds to be
made, as the case may be.

The treatment of allottees as financial creditors violates two facets of Article 14. One, that the
amendment is discriminatory inasmuch as it treats unequal equally, and equals unequally,
having no intelligible differentia; and two, that there is no nexus with the objects sought to be
achieved by the Code.

The amendment flies in the face of the objects sought to be achieved by the Code, i.e. to
maximize value of assets so that the shareholders of a corporate debtor do not suffer from bad
management or poor management.

In the facts of the present cases the Amendment is arbitrary being in the teeth of the
principles laid down in Pioneer Urban Land and Infrastructure Ltd. and Anr. v. Union of
India11. It was contended that the object of the law would stand defeated and the Amendment
also violates the fundamental rights of the petitioner as the same resulted in a hostile
discrimination between the petitioners and the other financial creditors, lacking any
intelligible differentia.

It was also argued that there existed no platform for the exchange and availability of
information with details pertaining to the allottees. If the aforesaid proviso is upheld, the
petitioners would for all practical purposes fall outside the purview of a financial creditor and
their status would be worse than that of an operational creditor.

An explanation cannot alter or modify the main provision to which it is an explanation as it

amounts to arbitrary and irrational exercise of power.

9
Swiss Ribbons v Union of India, (2019) 4 SCC 17.
10
S. Sundaram Pillai v. V.R. Pattabiraman, (1985) 1 SCC 591.
11
Pioneer Urban Land and Infrastructure Ltd. and Anr. v. Union of India and Ors, (2019) 8 SCC 416.

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The law was created by way of pandering to the real estate lobby and succumbing to their
pressure or by way of placating their vested interests.

“While malice may furnish a ground in an appropriate case to veto administrative

action it is trite that malice does not furnish a ground to attack a plenary law.”
 Reliance has been placed on the earlier Supreme Court decisions in K. Nagaraj v. State of
A.P.12 and State of H.P. v. Narain Singh13.

The amendment denies homebuyers of their relevant rights. The entire amendment is
completely illogical and is against the very principle of the Insolvency Code.

No relief had been offered to homebuyers from repayment of bank loans if the developer
failed to deliver. He also wondered how was a homebuyer expected to calculate the 10%
threshold, if there was no law to mandate display of the list of buyers on a web portal.

The law undermines the Supreme Court ruling that gave rights to homebuyers “by turning an
individual remedy into a class action”. “It ignores the ticket size of a homebuyer’s investment
into a real estate project and reduces him to a numerical as opposed to a creditor”. The
amendment violated the right of millions of voiceless homebuyers who found their life
savings ripped and misappropriated by unscrupulous builders and real estate developers

The demand of homebuyers to be treated at par with financial creditors was a justified
demand. The new law was, thus, a case of “distortion of the principle of equal rights
guaranteed under the Constitution.

The provision to of the Code was unreasonable, arbitrary, irrational, ultra-vires the Indian
Constitution and violated basic fundamental rights. It was contended that the amendments
resulted in a hostile discrimination between the Petitioners and the other financial creditors,
lacking any intelligible differentia. The 1st Amendment was impractical as there was an
information asymmetry. It was also argued that there existed no platform for the exchange
and availability of information with details pertaining to the allottees. If the aforesaid proviso
were upheld, they would for all practical purposes fall outside the purview of a financial
creditor and their status would be worse than that of an operational creditor.

12
K. Nagaraj v. State of A.P., (1985) 1 SCC 523.
13
State of H.P. v. Narain Singh, (2009) 13 SCC 165.

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MEMORIAL for PETITIONER ARGUMENTS ADVANCED
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C. THE IMPUGNED AMENDMENT CREATES A CLASS WITHIN A CLASS, THUS FROWNED

UPON BY THE LAW.

The Insolvency and Bankruptcy (Amendment) Act,2020 (‘Amendment’), added certain

provisos to the Insolvency and Bankruptcy Code, 2016 (‘Code’) whereby special conditions
were added for real estate allottees to qualify as a financial creditor under the Code. The
Amended Code provides that for a real estate allottee to qualify as a financial creditor, the
application needs to be filed jointly by “not less than one hundred of such allottees under the
same real estate project or not less than ten per cent of the total number of such allottees
under the same real estate project.” The amendment to the Code comes in conflict with
settled positions of law and certain fundamental rights guaranteed under the Indian
Constitution by creating a “class within a class.”

The Supreme Court had in Pioneer Urban Land and Infrastructure v. Union of
India14 concluded that the debt owed to allottees under real estate projects constitutes
financial debt within the meaning of the Code and effectively brings them in the ambit of
“creditors”. The Court relied on the reasoning that so long as an amount was raised with an
aim to bring profit to both the parties, i.e., the home buyer in the form of an apartment/flat
and the real estate developer in the form of monetary benefit, such a transaction would be of a
commercial nature and would be subsumed within the Code. However, post the amendment
to the Code, irrespective of their claim amount, a home buyer will have to unnecessarily
comply with the condition, i.e., to bring 100 real estate allottees or 10% of the total allottees
under a real estate project in order to approach the Adjudicating Authority.

The essential implication of this amendment is that it dissects financial creditors into two
classes i.e., real estate allottees, and other financial creditors. This is because while other
financial creditors will have to satisfy only the claim amount under the Code to file an
application, real estate allottees will also have to find the requisite number of applicants and
ensure that the said number remain intact until the filing of the Petition and final adjudication
of the Petition. 

14
Pioneer Urban Land and Infrastructure Ltd. and Anr. v. Union of India and Ors, (2019) 8 SCC 416.

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The Supreme Court has in State of U.P v. Committee of Management, Mata Tapeshwari
Saraswathi Vidya Mandir15, Sansar Chand Atri v. State of Punjab16, and E. V. Chinnaiah v.
State of Andhra Pradesh17  frowned upon such legislative instruments that seek to create a
“class within a class.” For instance, in the case of Mata Tapeshwari Saraswathi Vidya
Mandir, while adjudicating upon the validity of a notification that created a class within a
class of Junior High Schools that would disentitle them from receiving any aid, the Court
ruled that “creation of a class within a class was unconstitutional and arbitrary, thus making
it ultra vires the Constitution.

The consequence of the amendment to the Code is that it seeks to alter the decision of the
Supreme Court in Pioneer Urban Land18  by providing for additional qualifications for an
allottee to seek relief under section 7 of the Code. A Constitution Bench of the Supreme
Court in Cauvery Water Disputes Tribunal19, re had ruled that “the legislature can change
the basis on which a decision is given by the Court and thus change the law in general,
which will affect a class of persons and events at large. It cannot, however, set aside an
individual decision inter parties and affect their rights and liabilities alone.” 

Thus, it is a well-settled principle of law that a binding judicial pronouncement between the
parties cannot be made ineffective with the aid of any legislative power by enacting a
provision which in substance overrules such judgment. The same has been most effectively
reiterated in The State of Karnataka v. The Karnataka Pawn Brokers Assn 20., wherein it was
observed that “the Legislature cannot set at naught the judgments which have been
pronounced by amending the law, not for the purpose of making corrections or removing
anomalies but to bring in new provisions which did not exist earlier.”

The practice of the legislature making amendments to the law to invalidate the effect of the
decisions pronounced by the courts has already been frowned upon in Karnataka Pawn
Brokers Assn. Therefore, the amendment to the Code comes at loggerheads with settled
decisions of the Supreme Court and is also against the fundamental rights enshrined in the
Indian Constitution.

15
State of U.P v. Committee of Management, Mata Tapeshwari Saraswathi Vidya Mandir, (2008) SLP (C) Nos.
17236 and 19261.
16
Sansar Chand Atri v. State of Punjab, (2002) 4 SCC 154.
17
E.V. Chinnaiah v. State of A.P., (2005) 1 SCC 394.
18
Pioneer Urban Land and Infrastructure Ltd. and Anr. v. Union of India and Ors, (2019) 8 SCC 416.
19
Cauvery Water Disputes Tribunal, Re, (1993) Supp (1) SCC 96 (2).
20
The State of Karnataka v. The Karnataka Pawn Brokers Assn, (2006) SCC OnLine Kar 105.

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Therefore prior to the amendment "Home buyers" were treated as an orphan meaning
thereby, they were considered to be neither financial creditors nor operational creditors as
they haven't lent out money against the payment of interest nor were they operational
creditors as that the code does not contemplate immovable property and refers to the
provision of "goods and services". Therefore, the homebuyers were getting only limited
reliefs/benefits as they were treated under a third class of creditors created by the Insolvency
and Bankruptcy Board of India.

The impugned amendment clearly falls foul of the mandate of Articles 14 21, 19 (1)22(g), 2123
and 300A24 of the Constitution. The amendment by virtue of section 3 of the Amendment Act
introducing the second proviso in Section 7(1) of the Code 25 makes a hostile discrimination
between financial creditors, the category, to which the petitioners belong and the other
financial creditors. Secondly, it is contended that the amendment imposing a threshold
restriction is afflicted with the vice of palpable and hostile discrimination qua operational
creditors. The purported protection sought to be accorded to the real estate developer, cannot
form the premise for inflicting violation of constitutionally protected freedom under Article
19(1)(g) just as much as it also constitutes an insupportable invasion of the grand mandate of
equality. Next, there are inherent leakages in the impugned provisions which would make it
unworkable. Thereafter, the impugned amendment is also bad in law for the reason that it is
manifestly arbitrary. The amendment has the legally pernicious effect of creating a class
within a class, a result, which is frowned upon by the law.

D. THE IMPUGNED AMENDMENT CASTS AN OBLIGATION UPON THE ALREADY SUFFERING

HOME BUYER TO FIND 100 OR 10% MORE SUFFERERS LIKE HIM IN ORDER TO APPROACH
THE TRIBUNAL

A. Unreasonable And Arbitrary

The contention which is raised is that under the impugned provisos inserted in Section 7(1) of
the Code26, an application by an allottee can be made only if there are a hundred allottees or a
21
INDIA CONST. art. 14.
22
INDIA CONST. art. 19.
23
INDIA CONST. art. 21.
24
INDIA CONST. art. 300, cl. a.
25
The Insolvency and Bankruptcy Code (Amendment) Act, No. 1 of 2020, § 7.
26
The Insolvency and Bankruptcy Code (Amendment) Act, No. 1 of 2020, § 7.

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number representing one-tenth of the total number of allottees, whichever is less, with a
further rider that the allottees must be part of the same real estate project. It is contended that
the word ‘allottee’ is to be understood in the sense in which the word has been defined in the
RERA. If that is so, it is contended that the impugned amendment would be inflicted with the
vice of vagueness and it is arbitrary.

The threshold limit is unreasonable and arbitrary. It is excessive and irrational. It is not in
public interest. There exists adequate shield against a single allottee misusing the Code. The
threshold is thrust upon only on the home buyer and is not applicable across the board for
other financial creditors. It is discriminatory. There is no rationale. It treats equals unequally
and unequal as equals. There is no intelligible differentia bearing a nexus with the object
and purpose of the Act. In State of West Bengal v. Anwar Ali Sarkar27 the differentia or
classification must have a rational nexus with the object sought to be achieved by the statute
in question in the present case the law does not permit classes among financial creditors.
There is breach of the guarantee of equal protection of law there are the practical difficulties
involved in arranging the necessary numerical strength under the impugned provision.

Any of the applicants, and even a person, who is not an applicant, and the action is, one
which is understood to be in rem, in that, the procedures, under IBC, bind the entire set of
stakeholders, including the whole of the allottees, the sees no merit in the contention of the
petitioner based on the theory of default, rendering the provisions unworkable and
arbitrary.28 (Indra Sawhney and others v. Union of India and others).

There exist practical difficulties in the working of the amended law. It is submitted that the
date of default of various home buyers may be different. Therefore, to forge a common
complaint impelling a group of home buyers to come together is impracticable and not
workable.29

There is an information asymmetry. There is no published data available on the status of

allotted units. No builder shares the information. It is impossible for the buyers to obtain the
information. Ten percent of allotted units, even it is assumed to be qua letter of allotment, is a
dynamic figure and keeps changing. A buyer may calculate ten percent of the hundred units
allotted by morning and it may become 110 by night rendering the filing impossible.

27
Anwar Ali Sarkar v. State of West Bengal, (1951) SCC Online Cal 124.
28
Indra Sawhney and others v. Union of India and others, (2000) 1 SCC 168.
29
N.M. Thomas v. State of Kerala, (2012) SCC OnLine Ker 29108.

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Further, it has complained that it is not clear as to whether in determining allottees, in a

real estate project, whether it is a tower? the entire colonization? Or an SPV? Ten percent of a
real estate allottees could mean ten percent of the allotted units or ten percent of the total
legal persons, who have bought into the project, particularly, in cases of multiple owners of
the same property. The provision, 134 in fact, renders group members prone to corruption by
cash settlement by the builder. The Coram will be disrupted if one or two members are
bought off or even legally settled. This will necessitate fresh filing.

B. Constitutionality 

The rationale behind confining allottees to the same real estate project is to promote the
object of IBC. Once the threshold requirement can pass muster when tested in the anvil of a
challenge based on Articles 14, 19, and 21, then, there is both logic and reason behind the
legislative value judgment that the allottees who must join the application under the
impugned provisos must be related to the same real estate project. If it is to embrace the total
number of allottees of all projects, which a Promoter of a real estate project, may be having, it
will make the task of the applicant himself more cumbersome.

In Nagpur Investment Trust and others v. Vithal Rao30 and others the principle of hostile
discrimination has been highlighted.

A home buyer who before the amendment could by himself set the law into motion, is now
left at the mercy of similarly circumstanced persons which itself is rendered impossible by
the absence of an information generating mechanism which is accessible.

The home buyer is a person who invests his life time savings. He is in a weak position
already. Instead of conferring protection on him, the homebuyer is being saddled with more
oppressive and burdensome conditions in B.K. Educational Services (P) Ltd. v. Parag Gupta
& Associates.31 lays store by the principles laid down by this Court in Swiss Ribbon Pvt. Ltd.
& Ors. v. Union of India & Ors.32and also in The Pioneer33

30
Nagpur Improvement Trust v. Vithal Rao, (1973) 1 SCC 500.
31
B.K. Educational Services (P) Ltd. v. Parag Gupta & Associates, (2019) 11 SCC 633.
32
Swiss Ribbons v Union of India, (2019) 4 SCC 17.
33
Pioneer Urban Land and Infrastructure Ltd. and Anr. V. Union of India and Ors, (2019) 8 SCC 416.

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In Vasant Ganpat Padvave (D) by LRs & Ors. v. Anant Mahadev Sawant (D) Through LRs.
& Ors.34 of his compilation it is recommended for acceptance the principle that the law must
be considered having regard to consequences it produces.

They, in fact, have been discriminated against from the rest of the community, in respect
of a valuable right which the law secures to them all and the question is, on what basis this
apparently hostile and discriminatory legislation can be supported. It is not suggested that it
was for serving a public purpose or securing some advantage to the community as a whole
that the legislature chose in this case to interfere with private rights. The only purpose of the
legislation, as appears from the preamble, was to end certain private disputes (Ameerunnissa
Begum and others v. Mahboob Begum and others)35.

E. THAT AS THERE EXISTS NO PLATFORM FOR THE PROCUREMENT OF INFORMATION OF

THE OTHER ALLOTTEES OF THE PROJECT, IT IS IMPRACTICABLE TO APPROACH THE
NCLT TO A CERTAIN EXTENT

That as there exists no platform for the procurement of information of the other allottees of
the Project, it is impracticable to approach the NCLT to a certain extent.

Under the impugned amendment, the allottees are to be culled out from among a particular
project. In other words, the requirement under the provision is that the applicants must be 100
allottees or one-tenth of the allottees of a particular real estate project.

A corporate body may be having different projects. If that be so, there is no rationale in
insisting that the said corporate body has become insolvent, qua the particular project in
which the applicants are interested. Insolvency, in other words, would be a financial malaise,
which afflicts the corporate body as a whole, qua all its projects. If the allottees can be drawn
from other projects undertaken by the company then maybe it may have rendered the
provisions more reasonable appears to be the argument of the petitioner. But this is not so.

The provisions are irrational. The home buyer is a person who invests his life time savings.
He is in a weak position already. Instead of conferring protection on him, the homebuyer is
being saddled with more oppressive and burdensome conditions. There is no platform for the

34
Vasant Ganpat Padvave (D) by LRs & Ors. v. Anant Mahadev Sawant (D) Through LRs. & Ors, (2019) 19
SCC 577.
35
Ameerunnissa Begum and others v. Mahboob Begum and others, (1953) SCR 404.

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exchange and availability of information with details regarding the allottees. The Limitation
Act36 applies as held by this Court. The home buyer is being shut out at the very threshold.

The legislature failed to appreciate the hardship in consolidating all or some of the allottees to
meet the requisite threshold from different jurisdictions. For example, Section 11 of the
Consumer Protection Act, 198637 provides for the institution of complaint in a district forum
at a place of business of opposite party or where the cause of action wholly or in part arose.
However, Section 60 of the Insolvency and Bankruptcy Code, 2016 38 mandates the
proceedings to be initiated only at the place where the corporate person has its registered
office. Thus, the proceedings against the same real estate developer for the same project may
be pending in different forums at different stages and in different jurisdictions. In such
cases, bona fide applicants will fail to consolidate all allottees under one umbrella application
or provide the number of pending disputes against the same real estate developer.

The above hardship in consolidation is further elevated due to non-existence of any public
record along with particular details of the allottees who have availed different remedies
against the same project. There is no law which mandated the real estate developers to
maintain the list of allottees of a project on a public platform. Until the real estate developers
had complied with this requirement or until the time to comply expired, the right of the
allottees to apply for initiating the CIRP should not have been curtailed.

The legislature failed to realize that deemed withdrawal of applications filed but not admitted
by the Tribunal within a period of one month will deny the applicants fruits of their already
incurred litigation costs i.e., court fee and advocate fee. It will further encumber the allottees
with afresh litigation costs for initiating de novo proceedings before other available forums.
In many cases, the parties will have to also go through the hassles of agreeing to a common
lawyer. This will be setting the clock backwards. It is pertinent to note that the Code provides
summary proceedings and averting undue delay and a timely resolution was one of the prime
objectives behind the enactment of the Code. However, the wholesome effect of Section 3 39
of the Amendment Ordinance, 2019 is contrary to the said objects of the Code.

36
The Limitation Act, No. 36 of 1963.
37
Consumer Protection Act, No. 68 of 1986, § 11.
38
Insolvency and Bankruptcy Code, No. 37 of 2016, § 60.
39
The Insolvency and Bankruptcy Code (Amendment) Act, No. 1 of 2020, § 3.

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Section 11(4)(e)40 mandates the promoter to enable the formation of the association of
allottees (association) within three months of the majority of units being allotted, in the
absence of local laws, allowing the allottee to be privy to the details of fellow the allottees in
the project. However, there is no obligation on the promoter to form an association, in case
the majority of units are not booked. Additionally, local laws of States like U.P. and Haryana
require the formation of such association only after obtaining the completion certificate, thus
slyly providing a loophole in favors of the promoters.

F. THE IMPUGNED AMENDMENT DISCRIMINATES BETWEEN A CLASS OF FINANCIAL

CREDITORS WITH THE OPERATIONAL CREDITORS (HAVING LESSER RIGHT AS COMPARED
TO A FINANCIAL CREDITOR BY VIRTUE OF THE CODE)

As far as the argument relating to violation of Article 14 qua operational creditor was
concerned, there is no merit in the same. Quite apart from the fact that under IBC they are
dealt with under different provisions and a different procedure is entailed thereunder, even
the earlier decisions have treated the financial creditor differently from the operational
creditor. Reliance was placed on Innoventive Industries Ltd. v. ICICI Bank 41; Swiss Ribbons
(P) Ltd. v. Union of India 42, and Pioneer Urban Land and Infrastructure Ltd. v. Union of
India43.

It was observed “While it is true that the allottee is not a secured creditor and he is in the
position of a bank or the financial institution, the contentions of the petitioners that there is
hostile discrimination forbidden (under) Article 14 is tenable. There can be a doubt that
intrinsically a financial creditor and an operational creditor are distinct.”

It was noted that it is not a case where the right of the allottee is completely taken away. All
that has happened is a half-way house is built between extreme positions, viz., denying the
right altogether to the allottee to move the application under IBC and giving an unbridled
license to a single person to hold the real estate project and all the stakeholders thereunder
hostage to a proceeding under IBC which must certainly pass inexorably within a stipulated
period of time should circumstances exists into corporate death with the unavoidable
consequence of all allottees and not merely the applicant being visited with payment out of
the liquidation value, the amounts which are only due to the unsecured creditor.
40
The Insolvency and Bankruptcy Code (Amendment) Act, No. 1 of 2020, § 11.
41
Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407.
42
Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17.
43
Pioneer Urban Land and Infrastructure Ltd. v. Union of India, (2019) 8 SCC 416.

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It was complained that the label of an Explanation has been used to substantially amend,
which is an arbitrary and irrational exercise of power.

The intention of the Legislature was always to target the corporate debtor only insofar as it
purported to prohibit application by the corporate debtor against itself, to prevent abuse of the
provisions of IBC. It could never had been the intention of the Legislature to create an
obstacle in the path of the corporate debtor, in any of the circumstances, from maximizing its
assets by trying to recover the liabilities due to it from others.

The financial and operational creditors deserve equal treatment under a resolution plan and
accordingly, redistributed the proceeds payable under the Resolution Plan. The Impugned
Order further holds that the financial creditors cannot be classified basis their security interest
for the purpose of distribution of resolution proceeds.

The amendment has discriminated between the financial creditors and operational creditors as
well as amongst themselves on the basis of security interest and that all creditors have to be
treated at par in serious error of interpretation of law and misreading of judgements in Swiss
Ribbons44 (“Swiss Ribbons”) & K. Sashidhar45.

The financial creditors can neither be treated differentially on the basis of being secured or
unsecured creditors nor can there be classification within the secured financial creditors on
the basis of nature, quality, value and extent of security interest.

The impugned order is without jurisdiction and incomplete contravention of the law laid
down by the honorable court in K. Sashidhar wherein this Hon’ble Court has held as follows:
There is an intrinsic assumption that financial creditors are fully informed about the viability
of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis
of thorough examination of the proposed resolution plan and assessment made by their team
of experts. The opinion on the subject matter expressed by them after due deliberations in the
CoC meetings through voting, as per voting shares, is a collective business decision. The
legislature, consciously, has not provided any ground to challenge the “commercial wisdom”
of the individual financial creditors or their collective decision before the adjudicating
authority. That is made nonjusticiable.

44
Swiss Ribbons (P) Ltd. v Union of India, (2019) 4 SCC 17.
45
K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150.

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The ‘UNCITRAL Legislative Guide on Insolvency Law’ 46 (2005) (hereinafter referred to as

the “UNCITRAL Legislative Guide”), which forms the basis of the Code, and the
Bankruptcy Law Reforms Committee Report (2015), argued that the impugned amendments
went against several features of this UNCITRAL Legislative Guide.

First and foremost, the fundamental difference between financial and operational creditors
was ignored. Secondly, by treating home buyers, who are in substance operational creditors,
as financial creditors, infracts the principle of equitable treatment of similarly situated
creditors. Further, the UNCITRAL Legislative Guide states that recognition of existing
creditor’s rights before the commencement of the insolvency proceedings by the insolvency
law is important.

By involving such persons in the negotiation process by putting them on the Committee of
Creditors would infract the principle that, given their number and the diverse interests that
they have, coupled with no knowledge or any commercial expertise of the corporate debtor,
they should not and ought not to be allowed to participate in the Committee of Creditors.
Also, insolvency law and other laws should be harmoniously construed, which harmony is
disrupted when the Code is applied to cases which should really fall under RERA.

Accounting standards in which it became clear that advances received from home buyers by
developers cannot, from an accounting perspective, be treated as financial liabilities and the
amendments in doing so, therefore, violate the aforesaid standards and become manifestly
arbitrary. Also, after going into the definition of “claim”, “financial debt” and “operational
debt”, a financial debt is a crystallized claim which is due, as opposed to an operational debt
which may simply be a claim upon breach of contract that may be disputed and therefore not
due.

G. THAT MORE THAN 51,000 LITIGATIONS WOULD BE AFFECTED PAN BHARAT (FILED BY
SUCH REAL ESTATE ALLOTEES AGAINST THE CORPORATE DEBTOR) FURTHER
DETERIORATING THEIR RIGHTS, SHOULD THE IMPUGNED AMENDMENT BE ALLOWED TO

CONTINUE.

46
UNICITRAL, UNCITRAL Legislative Guide on Insolvency Law, UNITED NATIONS (2005),
https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/05-80722_ebook.pdf.

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The proviso is a one-time affair. It is intended only to deal with those applications, under
Section 7, which were filed prior to 28.12.201947. In other words, the legislative intent was to
ensure that no application under Section 7 could be filed after 28.12.2019, except upon
complying with the requirements in the first and second provisos. The Legislature did not
stop there. It has clearly intended that the threshold requirement it imposed, will apply to all
those applications, which were filed, prior to 28.12.2019 as well, subject to the exception that
the applications, so filed, had not been admitted, under Section 7(5).
The council submits that the amendment cannot be used retrospectively because, firstly it
takes away the vested right, secondly it is violative of Article 14 and thirdly it creates new
disabilities or obligations.

A. The retrospective applicability takes away the vested right

The council argues that there is a right which is vested in the cases where, the petitioners
have filed applications, fulfilling the requirements under unamended Section 7 of IBC. The
very act of filing the application even satisfies the apparent test propounded by the Additional
Solicitor General, that the right under Section 7 is only one to take advantage of the statute
and unless advantage is actually availed it does not create an accrued right. When
applications were filed under the unamended provisions of Section 7, at any rate, it would
transform into a vested right. The vested right is to proceed with the action till its logical and
legal conclusion.
It must be noted that imposing the threshold requirement under proviso, is not a mere matter
of procedure. It impairs vested rights. It has conditioned the right instead, in the manner
provided in the first and the second proviso. The Legislature has purported to equate persons
who had not filed applications with persons like the petitioners who had filed the applications
under the unamended law. This applicability of law is retrospective and impugn the vested
rights which is why the amendment should not be allowed to be continued.48

B. Amendment is violative of Article 14.

It was further contended that the law has been settled by National Company Law Tribunal
(NCLT) and National Company Law Appellate Tribunal (NCLAT) that a Corporate Debtor,
covered by Section 11(a) and 11(d), cannot file an application for CIPR against another
47
Moot Proposition, ¶ 26.
48
Ambalal Sarabhai Enterprises Ltd. v. Amrit Lal & Co. and another, (2001) 8 SCC 397.

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Corporate Debtor. The impugned amendment cannot be used retrospectively in cases

instituted before 28.12.2019, which is the day on which the impugned amendment came into
force. It is submitted that the amendment is violative of Article 14. It flows from the
Doctrine that the action of the State must be fair and reasonable. The question, as to validity
of the retrospective law, is a matter to be judged on a consideration of the facts, the period of
time, over which the retrospective law operates, the impact of the law on the vested rights,
the public interest, the nature of the right, which is the subject matter of the law and the terms
of the law. The entire object of the Code would stand jeopardized if applications already filed
would not be considered.

C. It creates new disabilities or obligations

The petitioners have spent substantial sums towards court fee, legal and other expenses, in
addition to considerable time. Withdrawals and fresh filing would derail the insolvency
process. In the judgement of Hitendra Vishnu Thakur and others v. State of Maharashtra and
others49, wherein the Court laid down that Statute, which affects substantive right, is
presumed to be prospective, unless made retrospective expressly or by necessary intendment.
In the present case the retrospective applicability of the amendment would add to the woes of
the petitioner making the already lengthy process more cumbersome and troublesome. A
procedural Statute should not, generally speak, be applied retrospectively, where the result
would be to create new disabilities or obligations or to impose new duties in respect of
accomplished transactions.50. The council thereby submits that the proviso cannot be applied
retrospectively as it is is penal, arbitrary, unjust and unfair.

49
Hitendra Vishnu Thakur and others v. State of Maharashtra and others, (1994) 4 SCC 602.
50
Ambalal Sarabhai Enterprises Ltd. v. Amrit Lal & Co. and another, (2001) 8 SCC 397.

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PRAYER FOR RELIEF

Wherefore, in the light of the issues raised, arguments advanced, reasons given and
authorities cited, it is most humbly prayed before this Hon’ble Court, that it may be pleased
to adjudge and declare that:

a. That the impugned amendment clearly falls foul of the mandates of Articles 14, 19(1)(g)
and 21 of the Constitution of Bharat, 1950.

b. That the impugned amendment creates a hostile discrimination between the Homebuyers
as financial creditors, and other financial creditors.

c. That the impugned amendment creates a class within a class, thus frowned upon by the
law.

d. That the impugned amendment casts an obligation upon the already suffering home buyer
to find 100 or 10% more sufferers like him in order to approach the Tribunal.

e. That as there exists no platform for the procurement of information of the other allottees of
the Project, it is impracticable to approach the NCLT to a certain extent.

f. That the impugned amendment discriminates between a class of financial creditors with the
Operational Creditors (having lesser right as compared to a Financial Creditor by virtue of the
Code).

g. That more than 51,000 litigations would be affected Pan Bharat (filed by such real estate
allotees against the Corporate Debtor) further deteriorating their rights, should the impugned
amendment be allowed to continue.

And for this act of kindness the respondents as are duty bound shall ever pray.

Date – 20/03/2022 (S/d)

Place - Hon’ble Apex Court of Bharat Counsel for the Petitioner/Respondent

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