The Supreme Court has ruled that speculative investors cannot use Section 7 of the Insolvency and Bankruptcy Code (IBC) to initiate insolvency proceedings against real estate developers. Affirming the National Company Law Appellate Tribunal’s decision, a Bench of Justices J.B. Pardiwala and R. Mahadevan held that the IBC’s objective is to revive distressed companies and protect genuine homebuyers, not speculative actors seeking assured returns. The Court identified indicators of speculation such as buyback clauses, refusal of possession, high-interest refund demands, and deviations from the RERA Model Agreement, directing such investors to approach RERA, consumer fora, or civil courts instead.
