A comprehensive bankruptcy law with a clear legislative objective is the Insolvency and Bankruptcy Code (IBC). Home buyers are now subject to financial creditors under the IBC and must thus be a member of the Council of Creditors thanks to the amendment made by the Ordinance published in June 2018 (CoC). The case describes the process of instituting a new resolution plan as well as the CIRP that is started. In the current instance, further consideration is given to the eligibility requirements for bidders and the asset disposal process in light of safeguarding homebuyers' interests.
In the instant case titled Chitra Sharma and Ors. v. Union of India and Ors. The issue raised for clarification before the Supreme Court was
Should the Respondent be subject to the Corporate Insolvency Resolution Process in the current case in order to safeguard the interests of the homebuyers?
With regard to this issue, the Court decided that, in order to ensure justice, the Corporate Insolvency Resolution Process should be restarted and the Council of Creditors should be recreated in accordance with the updated laws in order to include homebuyers. The Court barred JIL/JAL from taking part in the CIRP and enabled the IRP to solicit new expressions of interest for submission of resolution proposals. Relying on the authority granted by Article 142 is now permitted, but only for the specific purpose of starting the resolution process over from the point of IRP appointment and lengthening the time allotted for its completion. The Court determined that it would not be appropriate for the Court to designate a Committee outside of the IBC to supervise the CIRP and take on these duties.
The Court categorically stated that,
“This is an extraordinary situation when the law was silent and there was no guideline, which caused difference of opinion between the two Hon’ble Members and finally decided by the Third Hon’ble Member. In ‘Quinn Logistics India P. Ltd. vs. Macksoft Tech P. Ltd.’ Taking into consideration different situations including extraordinary situation, this Appellate Tribunal held that certain periods can be excluded while counting the total period of 270 days. The aforesaid principle has also been followed by the Hon’ble Supreme Court in the case of ‘Arcelormittal India Private Limited vs. Satish Kumar Gupta &” Ors.’ – (2019) 2 SCC 1 as also in the case of ‘Chitra Sharma’ (Supra)".