TMI Blog2021 (1) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... An argument sought to be addressed by the petitioner is that the purport of the said provision is that it prohibits not only a corporate debtor, which is undergoing a CIRP, from initiating a CIRP against itself, which, but for the fact, it is undergoing a CIRP, would be maintainable under Section 10 of the Code, but it also proscribes an application by a corporate debtor for initiating a CIRP against another corporate debtor. It appears to be clear to us, and this will be corroborated by the further provisions as well, that the real intention of the Legislature was that the prohibition was only against the corporate debtor, which is already faced with the CIRP filed by either a financial creditor or operational creditor, jumping into the fray with an application under Section 10. Finally, coming to Section 11(d), it disentitles the making of an application to initiate CIRP by a corporate debtor in respect of whom a liquidation order has been made. We have already noticed the scheme of the Code. The Legislature intends to have a two-stages approach to the problem of insolvency as regards the corporate debtor. On the basis of an application by the eligible person, a CIRP is initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is prevented from invoking the provisions of the Code either by itself or through his resolution professional, who at later stage, may, don the mantle of its liquidator. The provisions of the impugned Explanation, thus, clearly amount to a clarificatory amendment. A clarificatory amendment, it is not even in dispute, is retrospective in nature. The Explanation merely makes the intention of the Legislature clear beyond the pale of doubt. The argument of the petitioners that the amendment came into force only on 28.12.2019 and, therefore, in respect to applications filed under Sections 7, 9 or 10, it will not have any bearing, cannot be accepted. The Explanation, in the facts of these cases, is clearly clarificatory in nature and it will certainly apply to all pending applications also. We must record our understanding of the efforts of the petitioner in the light of the application which is pending and the appeal also which is preferred by the petitioner in NCLAT. We are really concerned and can be called upon only to pronounce on the vires of the Statute on the score that it is unconstitutional on any ground known to law. The only ground which is urged before us is the violati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisos. In other words, the legislative intention 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 Legislature intended that in every application, filed under Section 7, by the creditors covered by the first proviso and by the allottees governed by the second proviso, should also be embraced by the newly imposed threshold requirement for which, it was intended, should be complied within 30 days from the date of the Ordinance. However, this restriction was not to apply to those applications which stood admitted as on the date of the Ordinance. It is also clear that the consequence of failure to comply with the threshold requirement, in regard to applications, which have been filed earlier, was that they would stand withdrawn. Whether the right under the unamended Section 7 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action even if it be pertaining to the period of limitation - The right to sue clearly could be said to arise, immediately upon the condition being broken. We may, in this context also, notice that one of the five characteristics for a legal right to exist, is that every legal right has a title. It is further stated, in Salmond on Jurisprudence that every legal right has a title, which are apparently the facts or events by reason of which the right has become vested in its owner. Now, it must be noticed also, at this stage that the Limitation Act, in fact, contemplates the time, within which the suit must be brought, beginning necessarily on the supposition, that at least, on the very first day of the period of time, from which a plaintiff can sue, the right is already vested in him. This would reinforce us in our view that a vested right to sue could be said to accrue, and it would always precede the institution of the suit. At any rate, it could be said to exist from the very first day, on which the time begins to run, under the Limitation Act. Thus, a vested right to sue could be tested with reference not to the date on which the suit is filed as would be the case where a questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the repealed Statute, the right would remain an accrued right. When a Statute made by the sovereign Legislature is found to have retrospective operation and the challenge is made under Article 14 of the Constitution, (i) the Court must consider whether the law, in its retrospectivity, manifests forbidden classification. (ii) Whether the law, in its retrospectivity, produces manifests arbitrariness, (iii) if a law is alleged to be violative of Article 19(1)(g), firstly, the Court, in an action by a citizen, would, in the first place, find whether the right claimed, falls, within the ambit of Article 19(1)(g). The Court will further enquire as to whether such a law is made, inter alia, by way of placing reasonable restrictions by looking into the public interest. In the case of law, which is found to be not unfair, it would also not fall foul of Article 21 - Where the law is challenged on the ground that it is violative of Fundamental Rights under Article 14, necessarily the Court must enquire whether it is a capricious, irrational, disproportionate, excessive and, finally, without any determining principle. As far as the nature of the right in question is concerned, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three years from the date of the default is barred - the other way of looking at these issues is that Order XXIII(1) applies only in the case of a civil suit. In regard to the application under Article 137 which is what an application under Section 7 of the Code is, it could it be said that Order XXIII(1) is inapplicable. Secondly, could it not be said that it is not a case of a voluntary withdrawal by the applicant and the withdrawal of the application is declared by the Legislature, and therefore, Order XXIII(1) would not apply. The application made under Rule 4 is the application under Section 7 by the financial creditor. However, rule 8 is silent as to any similar prohibition as is contained in Order XXIII(1)4(b). Unless the principle of Order XXIII Rule 1 which is based on public policy, is applied, a fresh application, compliant with the first two provisos in Section 7, may not be barred. In this regard, since under the Explanation in Section 7(1), default occurs when default qua any financial creditor is made out, the cause of action can become different, in which case, even the principle of Order XXIII Rule 1, may not apply - since withdrawal is ordained by the third pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also seen the presence of plural remedies. No doubt, calculation of one-tenth in a case, may, undoubtedly, require the quantification of total number of creditors. This would be necessary, no doubt, only if hundred creditors cannot be found to support the application. The withdrawal under the third proviso, will not stand in the way of the applicant, invoking the same default and filing the application and even the principle of Order XXIII Rule 1 of the CPC will not apply and will not bar such application. As far as limitation is concerned, we have explained as to what is to be the impact. The nature of the vested right and the impact of the law, the public interest, the sublime objects, which would be fulfilled, would, in the facts of this case, constrain us from interfering, even though, this Court may have a different view about the period of time, which is allowed to the applicant. Court fees - HELD THAT:- The time limit of two months is fixed only for conferring the benefits of exemption from court fees and for condonation of the delay caused by the applications pending before the Adjudicating Authority. In other words, it is always open to the petitioners to file app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, AOR Mr. Parshuram A.L., Adv. Mr. Rohit R. Saboo, Adv. Mr. Kumar Vaibhav, Adv. Mr. Ankit Agrawal, Adv. Mr. Rahat Bansal, Adv. Mr. Annam Venkatesh, AOR Mr. S.K. Gandhi, Adv. Ms. Manjula Gandhi, Adv. Mr. Shiv Kumar Pandey, Adv. Mr. Shivanshu Kumar, Adv. Mr. Chandrashekhar A. Chakalabbi, Adv. Mr. Himanshu, Adv. Mr. Awanish Kumar, Adv. Mr. Anshul Rai, Adv. for M/S. Dharmaprabhas Law Associates, AOR Mr. Mayank Pandey, AOR Ms. Misha Rohatgi, AOR Mr. Pallav Mongia, AOR For Respondent(s) Mr. Arvind Kumar Sharma, AOR Ms. Charu Ambwani, AOR Mr. Sajan Poovayya, Sr. Adv. Mr. Amar Gupta, Adv. Mr. Divyam Agarwal, AOR Mr. Daksh Ahluwalia, Adv. Ms. Pallavi Kumar, Adv. Mr. Adhiraj Gupta, Adv. Mr. Pratibhanu Singh, Adv. Mr. Shikhar Maniar, Adv. Ms. Raksha Aggarwal, Adv. Mr. Hirendranath, Adv. Mr. Santanam Swaminadhan, Adv Ms. Prakruti Golechha, Adv Ms. Abhilasha Shrawat, Adv Mrs. Aarthi Rajan, AOR Mr. Keshav Mohan, Adv. Mr. Prashant Kumar, Adv. Mr. R.K Awasthi, Adv. Mr. Piyush Vatsa, Adv. Ms. Ritu Arora, Adv. Mr. Santosh Kumar - I, AOR Mr. Rajesh P., AOR Mr. Manoranjan Sharma, Adv. Mr. Prabhakar Tiwari, Adv. Mr. Krishna Dev Jagarlamudi, AOR Respondent-in-person Mr. Vikram Hegde, AOR Mr. Rahul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication for initiating the corporate insolvency resolution process against a corporate debtor has been filed by a financial creditor referred to in the first and second provisos and has not been admitted by the Adjudicating Authority before the commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2020, such application shall be modified to comply with the requirements of the first or second proviso within thirty days of the commencement of the said Act, failing which the application shall be deemed to be withdrawn before its admission. 3. Section 11 before the amendment read as follows: 11. Persons not entitled to make application. - The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this Chapter, namely: - (a) a corporate debtor undergoing a corporate insolvency resolution process; or (b) a corporate debtor having completed corporate insolvency resolution process twelve months preceding the date of making of the application; or (c) a corporate debtor or a financial creditor who has violated any of the terms of resolution plan which was approved twelve months befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any manner and who was directly or indirectly involved in the commission of such offence as per the report submitted or complaint filed by the investigating authority, shall continue to be liable to be prosecuted and punished for such an offence committed by the corporate debtor notwithstanding that the corporate debtor's liability has ceased under this sub-section. (2) No action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the corporate insolvency resolution process of the corporate debtor, where such property is covered under a resolution plan approved by the Adjudicating Authority under section 31, which results in the change in control of the corporate debtor to a person, or sale of liquidation assets under the provisions of Chapter III of Part II of this Code to a person, who was not- (i) a promoter or in the management or control of the corporate debtor or a related party of such a person; or (ii) a person with regard to whom the relevant investigating authority has, on the basis of material in its possession reason to believe that he had abetted or conspired for the commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llottees or 10 per cent of the allottee whichever is lower was not garnered by the applicant/applicants. 7. In some of the petitions, the petitioners are money lenders, that is, they have stepped in to provide finance for the real estate projects. They are also visited with the requirement which is imposed upon them under the first impugned proviso which is on similar lines as those comprised in the second proviso. 8. Then, there is, no doubt, Section 32A, which stands impugned by the creditors and allottees. THE CODE 9. The Code was enacted in the year 2016. It is one of the most important economic measures contemplated by the State to prevent insolvency, to provide last mile funding to revive ailing businesses, maximise value of assets of the entrepreneurs, balance the interest of all the stakeholders and even to alter the order of priority of payment of Government dues. The Code is divided into five parts. The first part is shortest portion. Part II deals with what we are concerned with in these cases and it purports to deal with insolvency resolution and liquidation for corporate persons. Corporate person has been defined in Section 3(7) as follows: 3(7). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foul of the mandate of Articles 14, 19 (1)(g), 21 and 300A 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 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, he would submit that 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. Yet another argument addressed by Shri Krishna Mohan Menon, learned counsel is that the amendment has the legally pernicious effect of creating a class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Sections 397, 398 read with 399 of the Companies Act, 1956 and Section 241 and 244 of the Companies Act, 2013, he would submit that there are significant distinctions. 16. Firstly, he would submit that in the case of shareholders approaching the Tribunal under the Companies Act, they would be armed with the details regarding shareholding which are always available having regard to the scheme of the Companies Act. On the other hand, he points that in regard to home buyers who have sunk their hard-earned money in real estate projects there is no system under which they could obtain data or information regarding the persons similarly circumstanced and whose co-operation and support is necessary under the impugned amendment to activise the Code. 17. Secondly, he would submit that having regard to the explanation in Section 244 of the companies Act, 2013, it brings about clarity in regard to the situation where there is a joint holding. The absence of any such similar provision in Section 7 of the Code is emphasised in an attempt at persuading the court to overturn the law. He would further point out the practical difficulties in the working of the amended law. He submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioners would submit that once the right is conferred to make an application, then it cannot come conditioned with threshold limit as is provided in the impugned provisos. Secondly, he would point out that there is manifest arbitrariness. That apart, he would also contend that there is hostile discrimination qua other corporate debtor. The builder who is a corporate debtor, in other words, is given a more favourable treatment than other corporate debtors which is afflicted with the vice of hostile discrimination. He also complained of both under and over inclusiveness in the impugned provisions. Next, learned counsel submits that the very object is discriminatory. Drawing our attention to both Chitra Sharma and others v. Union of India and others (2018) 18 SCC 575 and Pioneer (supra) , he would highlight that having regard to the background in which the rights of the home buyer was recognised as being one of that of a financial creditor, the amendment is clearly impermissible. He would also submit that having regard to the stand taken by the Government in the case before this Court, in particular, Pioneer (supra), the principles of promissory estoppel will apply and pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that in law there can only be one default. 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. He would also point out that the dates of the agreements of different home buyers would be different. Depending on the dates of the agreements being different, it is incontrovertible, he points out that the date of default would be different. He would pose the question as to how in such circumstances the law could insist upon a home buyer assembling together other homebuyers and that too one hundred in number or one-tenth of the total number of allottees. Allottees are spread all over the world. It is inconceivable as to how the provision can be worked in a reasonable and fair manner. 21. Shri Rahul Rathore, learned Counsel for the petitioners in some of the writ petition would apart adopting the contentions, contend that insolvency has been predicated project wise. He would submit that under the impugned amendment, the allottees are to be culled out from among a particular project. In o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are acquired could be attached but that is preempted by Section 32A. The civil remedies open are taken away in regard to acts of crime. Section 14 of the Act which deals with Moratorium is referred to in this regard. 25. Shri A.D.N. Rao, learned Counsel would submit that a substantive right cannot be taken away by a procedural requirement. The home buyers have been conferred the substantive right to invoke the code by moving an application under Section 7. This right cannot be taken away by providing for a procedure and what is more which is impossible to attain. He drew our attention to the decision of this Court in Garikapati Veeraya v. N. Subbiah Choudhry AIR 1957 SC 540 / 1957 SCR 488 . He would submit that the law as on the date of initiation should prevail and it cannot be taken away by the amendment which is made subsequently. Apparently, the learned counsel is making his submission qua the 3rd proviso inserted in Section 7(1) of the Code. He seeks to drawn support from judgment of this court in Thirumalai Chemicals Limited v. Union of India and others (2011) 6 SCC 739. He also contends that a proviso cannot override the main provision. In this regard, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As regards information relating to allottees he would make the point that the Code itself does not provide for a mechanism for a home buyer to glean information. He is being called upon to collect information with reference to another enactment namely RERA. This should be treated as fatal to the constitutionality of the impugned amendments. He would further submit that the provision is bad for it being vague. The argument of vagueness is addressed with reference to the following: 1. The date of default. 2. The court fee payable when there is more than one applicant. 3. The threshold amount of default stipulated under section 4 namely Rs. One crore at present. 4. He also would complain against the retrospectivity involved. 29. Shri Rana Mukherjee, learned Senior Counsel appears in writ petition where first proviso is called in question, he represents the cause of money lenders. He drew our attention to paragraph-43 of the Pioneer (supra). He pointed out that the requirement that the applicants must be of the same class and there must be 100 of them rendered the provisions unachievable. He drew our attention to Sections 244 and 245 of the Companies Act, 2013. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutional validity of Sections 21(6A) and 25A of the Code, was upheld by this Court in Pioneer (supra). In this regard, attention is also drawn to the observations of this Court in paragraph-43 of Pioneer (supra). On the strength of the said observations, it is contended that this court has recognized that allottees/home buyers are not a homogenous group. This Court also recognized, it is pointed out, that the deposit-holders and security-holders form a sub-class/class of financial creditors, who are treated a little differently, on account of the sheer number of such creditors coupled with the heterogeneity within the group that may cause difficulties in the decision-making process. The provisions were introduced for ironing out the logistical/procedural complications that may arise on account of the peculiar nature of these groups. The provisions impugned in the present litigation merely supplement Sections 21(6A) and Section 25A of the Code. The rationale in the said judgment should be applied in this case also. It is further pointed out that the challenge in Pioneer (supra) was mounted by the developers and the home buyers accepted the provisions, as being necessary to iron out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of Objects and Reasons recognizes the heterogeneity within the class and the need to streamline, smoothen and facilitate the process so as to avoid unnecessary delay. There is also a concern about extensive litigation causing delays and hampering the maximization of value, it is pointed out. Multiple applications by members of this large class of financial creditors, in such a class, would also add to the burden of the Adjudicating Authority, choke-up its docket and delay the process. This would be counterproductive to the object of the Code which seeks to ensure time-bound Resolution Process for the maximization of total value of assets. Reference is made to the Report of the Insolvency Law Committee, dated February, 2020, which recommended the insertion of a minimum number of financial creditors in a class. It reads as follows: ii. Application for Initiation of CIRP by Class of Creditors- As CIRP can be initiated by a single financial creditor, such as a homebuyer or a deposit holder, that belongs to a certain class of creditors following a minor dispute, it might exert undue pressure on the corporate debtor and might jeopardize the interests of the other credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a collective process of resolution under the Code. 4.4. In this regard, and specific to the interests of homebuyers, the Committee also noted that in cases where a homebuyer cannot file an application for initiation of CIRP for having failed to reach the aforesaid critical mass, she would still have access to alternative fora under the RERA and under consumer protection laws. For instance, as recognised by the Supreme Court in the case of Pioneer Urban Land and Infrastructure Limited and Ors. v Union of India, the remedies under the Code and under the RERA operate in completely different spheres. The Code deals with proceedings in rem, under which homebuyers may want the corporate debtor s management to be removed and replaced so that the corporate debtor can be rehabilitated. On the other hand, the RERA protects the interests of the individual investor in real estate projects by ensuring that homebuyers are not left in the lurch, and get either compensation or delivery of their homes. Thus, if there is a failure to reach a critical mass for initiation of CIRP, it may indicate that in such cases another remedy may be more suitable. 4.5. Accordingly, it was agreed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Amendment Bill, 2019, promulgated as an Ordinance, and thereafter, as the impugned Act, it was, inter alia, stated that it was necessitated to prevent potential abuse of the Code by certain classes of financial creditors, inter alia. This was necessary to prevent the derailing of the time-bound CIRP, which was designed to secure the maximization of value of the assets. The provision only supplements the protection under Sections 65 and 75 of the Code. The intelligible differentia is projected as follows: i. Numerosity; ii. Heterogeneity; iii. Lack of special expertise and individuality in decision making. It is sought to be contrasted with institutional decision-making which is associated with banks and financial institutions; iv. Typicality in determination of default. In other words, in the case of banks and financial institutions, records of public utilities, would show a default. In the case of allottees, records must be accessed through data publicly available under RERA; 35. The object and rationale of the impugned provisions are stated to be as follows: i. Preventing multiple individual applications, which has the effect of not only crowding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merical threshold was felt necessary with experience and recommendations of an Expert Committee. There has been a manifold increase of claim petitions filed by single or handful of allottees resulting in an already overburdened Adjudicating Authorities being flooded with such petitions. The amendment is consistent with the Pioneer (supra) judgment. The uniqueness of the allottees as a class of financial creditors, has been recognized in Pioneer (supra). The fact that they constituted a distinct and separate class of financial creditors meriting distinct treatment, has been approved in Pioneer (supra). The minimum threshold requirement is a procedural requirement. There is no deviation from Pioneer (supra) in a manner which is irreconcilable with it. The legislation, being an economic measure, free play in the joints, must be accorded to the Legislature. The impugned amendment is reasonable, minimal and proportionate. The data gathered by the respondent discloses that between June, 2016 and 5th June, 2018, there were 253 cases filed by allottees in the N.C.L.T.. However, between 6th June, 2018 and 28th December, 2019, as many as 2201 cases were filed by the allottees. Thereafter, pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 721; iv. Kanaya Ram and others v. Rajender Kumar and others (1985) 1 SCC 436; 41. The third proviso is enacted to protect the collective interests of others in a class of creditors. Before admission of the application for insolvency, no vested right accrues in favour of the allottee. The amendment, therefore, cannot be said to have retrospective application in a manner that impairs vested rights. Prior to admission, there is no vested right. Insistence on compliance with the new provisos cannot be regarded as having retrospective operation taking away vested rights. It is done to avoid needless multiplicity and to ensure that no single allottee would be able to achieve admission and its consequences, without having a threshold of his compatriots on board. 42. Placing reliance on judgment of this Court, in Garikapati Veeraya(supra), it is contended that even a vested right can be taken away by the Legislature, if a subsequent enactment so expressly provides or if it so by necessary implication. A minimum threshold requirement is a common feature of class action litigation. There are several legislations which provide for a minimum threshold in order to initiate class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest from the inception under SEBI. 44. As far as absence of information, so far as debenture holders are concerned, necessary information regarding them is available in the public domain, under Section 88(1)(b) and Section 88(1)(c) of the Companies Act, 2013, which obliges every company to maintain a register of its debenture holders and security holders. A penalty for non-compliance is contemplated under Section 88(5). Section 95 of the Companies Act, 2013 provides that registers, required to be maintained by the Company under Section 88, shall be kept in the registered office. Without payment of fees, the register is open to inspection by any member, debenture holder or other security holder. Extracts and copies of such registered can be obtained. Reference is also made to Rule 4 of the Companies (Management and Administration) Rules, 2014, which contemplates a separate register in Form - FMG-II for debenture holders. It contains all details of the debenture holder, including the e-mail id, address, etc.. Thus, there is a reservoir of information available for complying with the requirement under the first proviso. 45. As regards the allottees are concerned, the submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in 1985 1 SCC 591 . As regards the information, he also pointed out Section 11 of RERA, pointing to the information which is available in public domain. Illustratively, he drew our attention to the Haryana Real Estate Regulatory Authority, (Gurugram, Quarterly Progress Report Regulations), 2018, under which the format provides various details which include the names of the allottees and the date of booking, inter alia. He also points out that there is no unfair discrimination. CHALLENGE TO PLENARY LEGISLATION; GROUNDS 47. The grounds on which plenary law can be challenged are well established. In the first two decades decisions of this Court unerringly point to three grounds which render legislation vulnerable. A law can be successfully challenged if contrary to the division of powers, either the Parliament or the State Legislature usurps power that does not fall within its domain thus, rendering it incompetent to make such law. Secondly, a law made contravening Fundamental Rights guaranteed under Part III of the Constitution of India would be visited with unconstitutionality and declared void to the extent of its contravention. Needless to say, a law within the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 into a concrete concept. Even in England, where Parliament is supreme, that is inevitable, for, as Dicey tells us in his Law of the Constitution: Parliament is the supreme legislator, but from, the moment Parliament has uttered its will as law-giver, that will becomes subject to the interpretation put upon it by the judges of the land, and the judges, who are influenced by the feelings of magistrates no less than by the general spirit of the common law, are disposed to construe statutory exceptions to common law principles in a mode which would not commend itself either to a body of officials, or the Houses of Parliament, if the Houses were called upon to interpret their own enactments. But the following caveat by the learned Judge is worth noticing: 83. This, however, does not mean that judges are to determine what is for the good of the people and substitute their individual and personal opinions for that of the government of the day, or that they may usurp the functions of the legislature. That is not their province and though there must always be a narrow margin within which judges, who are human, will always be influenced by subjective factors, their trai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 14. Manifest arbitrariness, therefore, must be something done by the legislature capriciously, irrationally and/or without adequate determining principle. Also, when something is done which is excessive and disproportionate, such legislation would be manifestly arbitrary. We are, therefore, of the view that arbitrariness in the sense of manifest arbitrariness as pointed out by us above would apply to negate legislation as well under Article 14. (Emphasis supplied) 50. This view, namely, that be it a plenary law if it is found to be manifestly arbitrary it become vulnerable has been followed in the following decisions, among other judgments: (1) Navtej Singh Johar and Others v. Union of India and Others (2018) 10 SCC 1; (2) Joseph Shine v. Union of India (2019) 3 SCC 39; (3) Justice K.S. Puttuswamy and Others v. Union of India and Others (2017) 10 SCC 1. (4) Hindustan Construction Company Ltd. and Others v. Union of India and Others AIR 2020 SC 122. 51. Yet another ground recognised by this Court is that a law, be it the offspring of a Legislature, it falls foul of Article 14 if it is found to be vague (see in this regard Shreya Singhal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promissory estoppel, on the one hand, has witnessed an incredible trajectory of growth but it is incontestable that it serves as an effective deterrent to prevent injustice from a Government or its agencies which seek to resile from a representation made by them, without just cause [See in this regard Union of India and others v. Godfrey Philips India Ltd. (1985) 4 SCC 369 Paragraph-13]. UNRAVELLING THE WORKING OF THE CODE AS REGARDS CORPORATE DEBTOR 55. The Code was passed by Parliament in the year 2016 however, under Section 1(3) provisions were to come into force on such day as the Central Government was to appoint. The provisions of the Code stand enforced from 2017. 56. Part II of the code applies to matters relating to Insolvency and Liquidation of Corporate Debtors where the minimum amount of default is Rupees One crore as it stands [Section 4]. Under Section 6 of the Code when any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself is permitted to initiate the corporate insolvency resolution process (hereinafter referred to as CIRP) in respect of the corporate debtor in the manner provided u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al contract, the application shall be accompanied with a copy of the assignment or transfer agreement and other relevant documentation to demonstrate the assignment or transfer. (3) The applicant shall dispatch forthwith, a copy of the application filed with the Adjudicating Authority, by registered post or speed post to the registered office of the corporate debtor. (4) In case the application is made jointly by financial creditors, they may nominate one amongst them to act on their behalf. 59. Rule 8 contemplates withdrawal of application. It reads as follows: 8. Withdrawal of application - The Adjudicating Authority may permit withdrawal of the application made under rules 4, 6 or 7, as the case may be, on a request made by the applicant before its admission. 60. It must be noticed that Rules 6 and 7 deal with applications by operational creditors and corporate applicants respectively. Rule 10 (1) (2) and (3) read as follows: 10. Filing of application and application fee - (1) Till such time the rules of procedure for conduct of proceedings under the Code are notified, the application made under sub-section (1) of section 7, sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HORISED TO ACCEPT THE SERVICE OF PROCESS ON ITS BEHALF (ENCLOSE AUTHORISATION) PART-II PARTICULARS OF THE CORPORATE DEBTOR 1. NAME OF THE CORPORATE DEBTOR 2. IDENTIFICATION NUMBER OF CORPORATE DEBTOR 3. DATE OF INCORPORATION OF CORPORATE DEBTOR 4. NOMINAL SHARE CAPITAL AND THE PAID-UP SHARE CAPITAL OF THE CORPORATE DEBTOR AND/OR DETAILS OF GUARANTEE CLAUSE AS PER MEMORANDUM OF ASSOCIATION (AS APPLICABLE) 5. ADDRESS OF THE REGISTERED OFFICE OF THE CORPORATE DEBTOR 6. DETAILS OF THE CORPORATE DEBTOR AS PER THE NOTIFICATION UNDER SECTION 55(2) OF THE CODE- (i) ASSETS AND INCOME (ii) CLASS OF CREDITORS OR AMOUNT OF DEBT (iii) CATEGORY OF CORPORATE PERSON (WHERE APPLICATION IS UNDER CHAPTER IV OF PART II OF THE CODE) Part-III PARTICULARS OF THE PROPOSED INTERIM RESOLUTION PROFESSIONAL 1. NAME, ADDRESS, EMAIL ADDRESS AND TH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough [state means of payment] on [date]. Yours sincerely, Signature of person authorised to act on behalf of the financial creditor Name in block letters Position with or in relation to the financial creditor Address of person signing Instructions Please attach the following to this application: Annex I Copies of all documents referred to in this application. Annex II Written communication by the proposed interim resolution professional as set out in Form 2. Annex III Proof that the specified application fee has been paid. Annex IV Where the application is made jointly, the particulars specified in this form shall be furnished in respect of all the joint applicants along with a copy of authorisation to the financial creditor to file and act on this application on behalf of all the applicants. 62. The schedule prescribes the fees which is contemplated under Rule 10(3). It, inter alia, provides that for an application by a financial creditor (whether solely or jointly a sum of Rupees Twenty-five thousand). Sub-section 3 of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Section 3(21), as a person who is registered with the Board as information utility under Section 210. The word Board has been defined in Section 3(1) to be the Insolvency and Bankruptcy Board of India which is established under sub-Section (1) of Section 188. 64. Section 7(6) declares that the CIRP shall commence from the date of admission of the application under sub-section (5). 65. Section 8 read with Section 9 deal with application for initiation of the CIRP by an operational creditor. Section 10 deals with an application by the corporate applicant. The word Corporate applicant is defined to refer to the corporate debtor and other entities associated with it. More about it at a later stage. It is thereafter that law giver has in Section 11 proscribed applications which should otherwise be maintainable. This is a provision in which we will devote more time later on in this judgement. Section 12 places the time limit. Section 12 has a marginal note which is to the following effect: 12. Time-limit for completion of insolvency resolution process.- (1) Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. With effect from 16.8.2019, two provisos have been inserted. The provisos were added in fact as noted in paragraph-74 of the Essar Steel (supra) to overcome what was laid down in ( 2019) 2 SCC 1 decided by this Court 04.10.2018 . In the latter decision in Arcellormittal(supra), this Court purported to hold that the time taken in legal proceedings must be excluded. Under the first proviso, the CIRP has to be mandatorily completed within a period of 330 days from the insolvency commencement date. This period of 330 days is to include any extension granted under sub-Section (3) by the Adjudicating Authority and also the time taken in legal proceedings in relation to the resolution process of the corporate debtor. However, in Committee Creditors of Essar Steel (supra), this Court struck down the word mandatorily as being manifestly arbitrary and in violation of Article 19 (1)(g) and proceeded to hold as follows: The effect of this declaration is that ordinarily the time taken in relation to the corporate resolution process of the corporate debtor must be completed within the outer limit of 330 days from the insolvency commencement date, including extensions and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appoint the proposed resolution professional. In fact, Section 16(2) of the Code contemplates such appointment. We may refer to Section 12A which was inserted with effect from 6.6.2018. Section 12A reads as follows: 12A. Withdrawal of application admitted under section 7, 9 or 10. The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent voting share of the committee of creditors, in such manner as may be specified. 69. The above provision dealing with withdrawal of application after admission may be contrasted with Rule (8) which apparently deals with withdrawal before admission. 70. Section 16 of the Code, however, indicates that the adjudicating authority shall appoint an interim resolution professional within 14 days from the insolvency commencement date. We have already noted the definition of the words insolvency commencement date as the date of admission. Section 13 contemplates steps to be taken upon admission under Section 7, inter alia. 1. A moratorium contemplated under Section 14 is to be declared. 2. A Pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m period. (2A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period or in such circumstances as may be specified. (3) The provisions of sub-section (1) shall not apply to (a) such transactions, agreements or other arrangement as may be notified by the Central Government in consultation with any financial sector regulator or any other authority; (b) a surety in a contract of guarantee to a corporate debtor. (4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process: Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified; and (e) 2 [be responsible for complying with the requirements under any law for the time being in force on behalf of the corporate debtor. 73. Section 17 contemplates that the management of the affairs of the corporate debtor will vest with the IRP. This takes effect from the date of the appointment of the interim resolution professional. Furthermore, the powers of the Board of Directors who are partners of the corporate debtors shall stand suspended. 74. Virtually, the entire control of the management including all the acts and authority indicated in subsection 2 is to be carried out by interim resolution professional and authority exercised by him. Section 18 details the duties of the IRP. It reads as follows: 18. Duties of interim resolution professional. The interim resolution professional shall perform the following duties, namely: - (a) collect all information relating to the assets, finances and operations of the corporate debtor for determining the financial position of the corporate debtor, including information relating to (i) business operations for the previous two years; (ii) financial and operational payments for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determination of the financial position of the corporate debtor, constitute a committee of creditors. (2) The committee of creditors shall comprise all financial creditors of the corporate debtor: Provided that a financial creditor or the authorised representative of the financial creditor referred to in subsection (6) or sub-section (6A) or subsection (5) of section 24, if it is a related party of the corporate debtor, shall not have any right of representation, participation or voting in a meeting of the committee of creditors: Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares or completion of such transactions as may be prescribed], prior to the insolvency commencement date. (3) Subject to sub-sections (6) and (6A), where the corporate debtor owes financial debts to two or more financial creditors as part of a consortium or agreement, each such financial creditor shall be part of the committee of creditors and their vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the committee of creditors; (c) is represented by a guardian, executor or administrator, such person shall act as authorised representative on behalf of such financial creditors, and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of the committee of creditors, and vote on behalf of each financial creditor to the extent of his voting share. (6B) The remuneration payable to the authorised representative- (i) under clauses (a) and (c) of subsection (6A), if any, shall be as per the terms of the financial debt or the relevant documentation; and (ii) under clause (b) of sub-section (6A) shall be as specified which shall be form part of the insolvency resolution process costs. (7) The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub-sections (6) and (6A). (8) Save as otherwise provided in this Code, all decisions of the committee of creditors shall be taken by a vote of not less than fifty-one per cent. of voting share of the financial creditors: Provided that where a corporate debtor does not have any financial cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditors. Now that resolution professional has been appointed, as contemplated under Section 22, Section 24(2) declares that all the meetings of the committee of creditors shall be convened by resolution professional. Section 25 speaks about the duties of the resolution professional. Section 25(2),(h) and (i) read as follows: 25(2) (h) invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of committee of creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified by the Board, to submit a resolution plan or plans. (i) present all resolution plans at the meetings of the committee of creditors. 77. Section 25A, which was inserted with effect from 06.06.2018 will be separately dealt with. No doubt, Section 27 contemplates that a committee of creditors may at any time during the CIRP replace the resolution professional as provided in the section. Section 28, no doubt, constrains the resolution professional in regard to the matters provided therein. The approval of the committee of creditors is required in such matters. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan: Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation. The scope of these provisions have been dealt with in the decision of this Court in Essar Steel India Limited vs. Satish Kumar Gupta and Ors. and (2019) 2 SCC 1 among other decisions authored by one of us (Justice R.F. Nariman). 79. Sub-section (2) of Section 31 enables the adjudicating authority to reject the resolution plan. Section 31 (3) contemplates that after the approval of the resolution plan that the moratorium order passed by the adjudicating authority under Section 14 shall cease to have effect. Section 32A will be separately dealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te sector. The Bill was passed by both the Houses of Parliament and received the assent of the President of India on the 25.03.2016. By 01.05.2017, the provisions of the Act came into force, even though, certain Sections have come into force earlier on 01.05.2016. 82. We may advert to the following definition clauses. Section 2(b) defines advertisement , as follows: 2(b) advertisement means any document described or issued as advertisement through any medium and includes any notice, circular or other documents or publicity in any form, informing persons about a real estate project, or offering for sale of a plot, building or apartment or inviting persons to purchase in any manner such plot, building or apartment or to make advances or deposits for such purposes; 83. Section 2(c) defines agreement for sale , as follows: 2(c) agreement for sale means an agreement entered into between the promoter and the allottee; 84. Section 2(d), which is at the centerstage of the controversy, defines the word allottee , which reads as follows: 2(d) allottee in relation to a real estate project, means the person to whom a plot, apartment or building, as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and includes his assignees; or (ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or (iii) any development authority or any other public body in respect of allottees of- (a) buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or (b) plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots; or (iv) an apex State level cooperative housing finance society and a primary cooperative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; or (v) any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project. Explanation .-For the purpose of this section, where the real estate project is to be developed in phases, every such phase shall be considered a stand alone real estate project, and the promoter shall obtain registration under this Act for each phase separately. Section 7 contemplates revocation of registration. It is relevant to note Section 7(1), which reads as follows: 7(1) The Authority may, on receipt of a complaint or suomotu in this behalf or on the recommendation of the competent authority, revoke the registration granted under section 5, after being satisfied that- (a) the promoter makes default in doing anything required by or under this Act or the rules or the regulations made thereunder; (b) the promoter violates any of the terms or conditions of the approval given by the competent authority; (c) the promoter is involved in any kind of unfair practice or irregularities. Explanation .-For the purposes of this clause, the term unfair practice means a practice which, for the purpose of promoting the sale or development of any real estate project adopts any unfair method or unfair or deceptive practice including any of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 4, in all the fields as provided, for public viewing, including- (a) details of the registration granted by the Authority; (b) quarterly up-to-date the list of number and types of apartments or plots, as the case may be, booked; (c) quarterly up-to-date the list of number of garages booked; (d) quarterly up-to-date the list of approvals taken and the approvals which are pending subsequent to commencement certificate; (e) quarterly up-to-date status of the project; and (f) such other information and documents as may be specified by the regulations made by the Authority. (2) The advertisement or prospectus issued or published by the promoter shall mention prominently the website address of the Authority, wherein all details of the registered project have been entered and include the registration number obtained from the Authority and such other matters incidental thereto. (3) The promoter, at the time of the booking and issue of allotment letter shall be responsible to make available to the allottee, the following information, namely:- (a) sanctioned plans, layout plans, along with specifications, approved by the competent authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed of the apartment, plot or building, as the case may be, in favour of the allottee along with the undivided proportionate title in the common areas to the association of allottees or competent authority, as the case may be, as provided under section 17 of this Act; (g) pay all outgoings until he transfers the physical possession of the real estate project to the allottee or the associations of allottees, as the case may be, which he has collected from the allottees, for the payment of outgoings (including land cost, ground rent, municipal or other local taxes, charges for water or electricity, maintenance charges, including mortgage loan and interest on mortgages or other encumbrances and such other liabilities payable to competent authorities, banks and financial institutions, which are related to the project): Provided that where any promoter fails to pay all or any of the outgoings collected by him from the allottees or any liability, mortgage loan and interest thereon before transferring the real estate project to such allottees, or the association of the allottees, as the case may be, the promoter shall continue to be liable, even after the transfer of the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to architectural and structural reasons duly recommended and verified by an authorised Architect or Engineer after proper declaration and intimation to the allottee. Explanation .-For the purpose of this clause, minor additions or alterations excludes structural change including an addition to the area or change in height, or the removal of part of a building, or any change to the structure, such as the construction or removal or cutting into of any wall or a part of a wall, partition, column, beam, joist, floor including a mezzanine floor or other support, or a change to or closing of any required means of access ingress or egress or a change to the fixtures or equipment, etc. (ii) any other alterations or additions in the sanctioned plans, layout plans and specifications of the buildings or the common areas within the project without the previous written consent of at least two thirds of the allottees, other than the promoter, who have agreed to take apartments in such building. Explanation .-For the purpose of this clause, the allottee, irrespective of the number of apartments or plots, as the case may be, booked by him or booked in the name of his famil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, plot or building,- (a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or (b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act: Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed. (2) The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act, and the claim for compensation unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale to take an apartment, plot or building as the case may be, under section 13, shall be responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale and shall pay at the proper time and place, the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges, if any. (7) The allottee shall be liable to pay interest, at such rate as may be prescribed, for any delay in payment towards any amount or charges to be paid under sub-section (6). (8) The obligations of the allottee under sub-section (6) and the liability towards interest under sub-section (7) may be reduced when mutually agreed to between the promoter and such allottee. (9) Every allottee of the apartment, plot or building as the case may be, shall participate towards the formation of an association or society or cooperative society of the allottees, or a federation of the same. (10) Every allottee shall take physical possession of the apartment, plot or building as the case may be, within a period of two months of the occupancy certificate issued for the said apartment, plot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re in addition to and not in derogation of the provisions of any other law for the time being in force. At the same time, Section 89 provides that the RERA will prevail over any other inconsistent law. The result is that while all cognate laws, which are not inconsistent with RERA will continue to operate within their own sphere, the provisions, which are, however, inconsistent with RERA, will not survive after RERA has come into force. 97. In this regard, we may notice, the Delhi Apartment Ownership Act, 1986. Section 2 deals with the application of the Act and it reads as follows: 2. Application - The provisions of this Act shall apply to every apartment in a multi-storeyed building which was constructed mainly for residential or commercial or such other purposes as may be prescribed, by- (a) any group housing co-operative society; or (b) any other person or authority, before or after the commencement of this Act and on a free hold land, or a lease hold land, if the lease for such land is for a period of thirty years or more: Provided that, where a building constructed, whether before or after the commencement of this Act, on any land contains only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, be entitled to the exclusive ownership and possession of the apartment so allotted, sold or otherwise transferred to him. (2) Every person to whom any apartment was allotted, sold or otherwise transferred by the promoter before the commencement of this Act shall, save as otherwise provided under section 6 and subject to the other provisions of this Act, be entitled, on and from such commencement, to the exclusive ownership and possession of the apartment so allotted, sold or otherwise transferred to him. (3) Every person who becomes entitled to the exclusive ownership and possession of an apartment under sub-section (1) or sub-section (2) shall be entitled to such percentage of undivided interest in the common areas and facilities as may be specified in the Deed of Apartment and such percentage shall be computed by taking, as a basis, the value of the apartment in relation to the value of the property. xxx xxx xxx 103. Section 5 provides that subject to the provisions of Section 6, the apartment owner may transfer his apartment and his right is heritable. 104. Section 14 provides for registration for the deed of apartment, which is to be executed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f multiple ownership of the same property. The provision, 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 of or even legally settled. This will necessitate fresh filing. FINDINGS 111. We have referred to the definition of the word allottee and real estate project and Section 3 of the Act which requires prior registration. We have also referred to the definition of real estate project. In all these definition clauses, the words as the case may be is found after the words plot, apartment or building. Thus, the Act is meant to regulate the dealings in plots, apartments and buildings. A real estate project, in other words, as defined, is the development of a building or apartments or the development of land into plots or apartments. The development is contemplated as being towards selling apartments, plots or buildings. It would also necessarily include common areas. The expression apartment , as defined in RERA, is a very comprehensive one. It takes in, blocks, chamber, dwelling unit, flat, office, showroom, shop, godown, premises, suite, tenement, unit or by any other name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncorporates the definition of the word allottee in RERA, for the purpose of the provisos in question, we must necessarily seek light only from the expression allottee defined in Section 2(d) of RERA. 115. If we breakdown Section 2(d), it yields the following component parts: i. An allottee may be an allottee of a plot or an apartment or a building. A real estate project may relate to plots or apartments or buildings; or plots/buildings or plots/apartments. ii. An allottee, in the case of an apartment, which expression includes flats, among other structures, would include the following categories of persons. It would include a person to whom the apartment is allotted. It would also include a person to whom the apartment is sold, whether as freehold or leasehold. iii. Thirdly, it would include a person to whom the promoter has transferred the apartment, otherwise than by way of a sale; iv. Lastly, it would include persons who have acquired the allotment through sale, transfer or otherwise, with the caveat that it will not include a person to whom the apartment is given on rent. Whatever we have mentioned about apartments, is equally true qua allotment of pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther understood in the light of the definition of the real estate project in Section 2 (zn). It defines as meaning the various activities. It consists of the following: 1. Development of the building 2. A building which consists of apartments 3. Converting an existing building or a part thereof into apartment 4. The development of land into plots or apartments as the case may be. 117. The aforesaid activities must be for the purpose of sale of all or some of the apartments, plot or building along with the common areas and other work and rights. The task of ascertaining who will be an allottee as also the question as to what will be the total number of allottees and therefore what would constitute one-tenth of total number of allottees must depend upon the nature of the real estate project in question. It will depend on what is offered by the promoter under the project. It may be real estate project which seeks to develop a building and sale of the building. It may be a project for the construction of apartments with the agreements to convey the undivided interest of land also. It may be a project which envisages converting an existing building or a part int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er requirement of one-tenth of total number of allottees is meant to apply in a situation only if one-tenth of the total number of allottees is less than 100. This is for the reason that the word whichever has been used. No doubt in the context of one-tenth of the allottees, the greater the number of total number of allottees, the greater will be the number of one-tenth. In other words, if the total number of allottees is less, then, one-tenth of the total number will be less, and if in such circumstances, it is lesser than hundred, such number of allottees can make application under Section 7 under the impugned provisos. Therefore, in calculating the total number of allottees in one sense is a double-edged sword as the more is the numerator, the more will be the resultant figure required under the proviso. 120. Be that as it may, as we have noticed the question must be decided with reference to real nature of the real estate project in which the applicant is an allottee. If it is in the case of an apartment, then necessarily all persons to whom allotment had been made would be treated as allottees for calculating the figure mentioned in the impugned proviso. The word allotme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clude flat . It can be residential or commercial. Assume that the Promoter has constructed and completed construction, five out of the fifteen floors (which constitutes the project), on the basis of the occupation certificate, as different from the completion certificate, as the latter certificate is given only on the completion of the project. He assigns and transfers the apartment to those allottees to whom he allotted the apartment when he has completed the construction. Such transferees would be allottees under the RERA. The question, however, may arise from the point of view of the impugned proviso as to what is the common feature between such an allottee to whom the constructed apartment is already handed over after sale and the allottee of the remaining floors where there is no construction or only construction which is pronouncedly lagging behind the schedule. The question may arise whether banding together such allottees under the definition clause make out the case of over inclusive classification. Are unequals being treated equally? 121. A mere charge of either under inclusiveness or over inclusiveness which is not difficult to make hardly suffices to persuade the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made thereunder is the booking of apartments or plots. What is allotted or booked may be more than what is constructed if there is a mismatch at any given point of time. It is the number of units allotted. Now, the allotment and the agreement to sell are not irreconcilable with each other and may signify the same. 124. The further contention that 10 percent is dynamic and what is 1/10 in the morning may fall short by night if more allotment is made, is untenable in law. The provisions of the Companies Act, 1913 (Section 153-C), Section 399 of the Companies Act, 1956 and Section 244 of the Companies Act, 2013 contain similar provisions. The mere difficulties in given cases, to comply with a law can hardly furnish a ground to strike it down. As to what would constitute the real estate project, it must depend on the terms conditions and scope of a particular real estate project in which allottees are a part of. These are factual matters to be considered in the facts of each case. THE PROBLEM OF DEFAULT AND LIMITATION 125. It is urged on behalf of the petitioners that the provisos requiring support of one hundred persons or one-tenth of the allottees, whichever is lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not repaid by the debtor or the corporate debtor, as the case may be; 131. Interpreting these provisions and the Rules as well, this Court in Innoventive (supra), held as follows: 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the Explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor - it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under subsection (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application. 133. In fact, the Court, in the said case, in the course of its judgment, gives an example of a debt which is due since 1990 and which has become barred but which is sought to be revived through the medium of Section 7 of the Code which law came into being in 2016. It is to avoid such situations that this Court noted that even if Section 238A was inserted after the original enactment, the Limitation Act, 1963, would, indeed apply, right from the inception of the Code. It is to be noticed that this Court has applied Article 137, and also, at the same time, countenanced the applicability of Section 5 of the Limitation Act, providing for condonation of delay in appropriate cases. 134. It is, therefore, clear that the requirement of the Code in regard to an application by a financial creditor does not mandate that the financial debt is owed to the applicant in terms of the Explanation. This is for the reason that apparently that the CIRP and which, if unsuccessful, is followed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Explanation in sub-Section 7(1), a financial debt need not be owed to the applicant and as joint application by more than one applicant was and is contemplated, the resultant position would be that any number of applicants, without any amount being due to them, could move an application under Section 7, provided that they are financial creditors and there is a default in a sum of ₹ 1 crore even if the said amount is owed to none of the applicants but to any another financial creditor. This position has not undergone any change even with the insertion of the provisos. In other words, even though the provisos require that in the case of a real estate project, being conducted by a corporate debtor, an application can be filed by either one hundred allottees or allottees constituting one-tenth of the allottees, whichever is less, if they are able to establish a default in regard to a financial creditor and it is not necessary that there must be default qua any of the applicants. We have taken an extreme example to illustrate how the Code can possibly be worked. 136. In practice, it may be unlikely, however, that persons would come together as applicants under the Code, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspect in particular. Even before the amendment, and what is more also, after the amendment, a joint application is permissible (though not mandated) in respect of all classes of financial creditors. This means, even in the case of any application filed by more than one applicant, if the requirements of the Code are otherwise fulfilled, there can be cases where the applicants can file a single application by giving the details which we have adverted to. Secondly, we must bear in mind again, that the application is contemplated to be an application in rem. One or more financial creditors activises the Code with reference to the threshold figure of ₹ 1 crore, being in default. The Authority is alerted. He verifies this aspect, finding that the debt is established under Section 7(5), and further that it is not barred by limitation or if he invokes the power under Section 5 of the Limitation Act, to condone the delay [as contemplated in B.K. Educational Services Private Limited (supra)], the curtains are raised for the Code to be applied since the default in the sum may be owed to any financial creditor. It suffices that the said sum can be claimed as a sum in default in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition of allottee would be entitled to be treated as allottees, for the purpose of Section 5(8)(f) (Explanation) and also, for the purpose of the impugned provisos. All that is required is that the allottees must relate to same real estate project. In other words, if a Promoter has a different real estate project, be it in relation to apartments, in the case an application under Section7, those would not be reckoned in computing one-tenth as well as the total allotments. 140. The rationale behind, confining allottees to the same real estate project, is to promote the object of the Code. 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. The connection with the same real estate project is crucial to the determination of the critical mass, which Legislature has in mind, as a part of its scheme, to streamline the working of the Code. If it is to embrace the total number of allottees of all projects, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 956, read as follows: 399(3) Where any members of a company are entitled to make an application in virtue of sub-section (1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them. 142. In the decision of this Court in Rajahmundry Electric Supply Corporation Ltd. v. A. Nageshwara Rao and others AIR 1956 SC 213, the provision in question, viz., Section 153-C of Companies Act, 1913 dealt with the power of the Court to Act, when the Company acts in a prejudicial manner or oppresses any part of its members. It, inter alia, provided that no application could be made by any member, in the case of a company having a share capital unless the member has obtained consent, in writing, of not less than one hundred in number of the members of the company or not less than one-tenth in number of the members, whichever is less. There was also an alternate requirement, to which, resort could be made in regard to company, not having share capital. There was another mode of fulfilling the threshold requirement. In the facts of the said case, the number of the members of the company were 603. Sixt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore than one person. It will be of interest to note that in Section 14 of the RERA, the Promoter is forbidden from making any additions and alterations in the sanctioned plans, layout plans and specifications, the nature of the fixtures, fittings and amenities, which are agreed to be undertaken, without the consent of that person. Of course, minor additions or alterations, in circumstances provided in the proviso, can be carried out. 145. Thereafter, Section 14(2)(ii) contemplates that any other alterations in the sanctioned plans, layout plans and specifications or the common area within the project, cannot be carried out except with the previous written consent of at least two-thirds of the allottees, other than the Promoter, who had agreed to take the apartments in such building. In this context, there is an Explanation. The Explanation purports to declare that if an allottee has taken more than one apartment or plot in his name or in the name of his family, it will be treated as a single allotment. In the case of persons, such as companies or firms or association of individuals, bookings in its name or in the name of associated entities or related enterprises, are to be trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a joint allotment of an apartment to more than one person, is it to be taken as only one allottee or as many allottees as there are joint allottees, it would appear to us, on a proper understanding of the definition of the word allottee in Section 2(d) and the object, for which the requirement of hundred allottees or one-tenth has been put, and also, not being oblivious to Section 399(2) of the Companies Act, 1956, as also the Explanation in Section 244(1) of the Companies Act, 2013, in the case of a joint allotment of an apartment, plot or a building to more than one person, the allotment can only be treated as a single allotment. This for the reason that the object of the Statute, admittedly, is to ensure that there is a critical mass of persons (allottees), who agree that the time is ripe to invoke the Code and to submit to the inexorable processes under the Code, with all its attendant perils. The object of maintaining speed in the CIRP and also the balancing of interest of all the stakeholders, would be promoted by the view that as in the case of the Companies Acts, 1956 and 2013, that for the purpose of complying with the impugned provisos in Section 7(1), while the al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide for situations where without complying with threshold requirement, a single allottee could move the application. In this regard, we should also bear in mind the scope of an application under Sections 397 and 398. 151. The Central Government, having regard to the scheme of Companies Act, is intricately interconnected with the management of the companies. It had powers of investigation into the affairs of the companies under Section 235 and Section 237. The purport of Sections 397 and 398 include the conduct of the affairs of the company in any manner prejudicial to the public interest or also, no doubt, prejudicial to member or members. In such circumstances, clothing the Central Government with the power to waive the requirement and permitting the application to be presented by even a single member, is in sync with the scheme of the Companies Act. The role of the Central Government is different under the Code. In fact, the Central Government does not have any role, as such under the Code. It acts only through the designated Authorities under the Code. The Code is about insolvency resolution and on failure liquidation. The scheme of the Code is unique and its objects are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do so. Should he wish to, on the other hand, support the Plaintiff, it is equally open to him to adopt such a course. At the end of the proceedings, when the Decree is passed, it shall be binding on all the persons, for whose benefit or on whose behalf, the suit is laid even by a single person. On the other hand, for reasons, which are entirely arbitrary, it is pointed out that a most cumbersome and unachievable threshold requirement is thrust upon a class of the financial creditors alone, by requiring that should an allottee wish to invoke Section 7 of the Code, he should muster the support of at least 99 other allottees or one-tenth of the total number of allottees, whichever is lower. Again, it is emphasized that matters are made worse by insisting that the allottees must be drawn from the same project. It is, similarly, submitted that the Consumer Protection Act also has embraced the principle of Order I Rule 8 of the CPC, as can be seen from Section 12 of the Consumer Protection Act. The definition of the word complainant , in Section 2(b)(iv) of the Consumer Protection Act, 1986, includes one or more consumer, where there are numerous persons having the same interest. Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Order I Rule 8 is made applicable, a single plaintiff or a consumer, in a civil suit or a consumer complaint respectively, can set the ball rolling. All the persons, having the same interest, are free to join in the proceedings. Irrespective of whether they join or not, a Decree or order, which is pronounced, will bind all the persons having the same interest. The procedure, under Order I Rule 8, if it had been made applicable in regard to an application by the allottee of a real estate project, would indeed have made it very easy for a single allottee to invoke Section 7 of the Code and it would also have countenanced the participation of the other allottees, should they wished to be made parties upon the publication of the Notice contemplated in Order I Rule 8(2). 157. So far so good. Now, we will examine the other side of the story and that is the object of the Code and the scheme of the Code. Under the Code, once an application is moved and is admitted under Section 7, the stage is set for resolving the insolvency. The Resolution of the Insolvency may be attained by replacing the existing management. The Law Giver has contemplated last mile funding. It has, however, fixe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court may be induced to conclude, as a better arrangement or a more wise and even fairer system, is constitutionally impermissible. If, the impugned provisions are otherwise not infirm, they must pass muster. 158. Are the Amendments violative of the `Pioneer Judgment in Pioneer Urban Land and Infrastructure Ltd. and another v. Union of India and others (2019) 8 SCC 416, certain amendments to the Code were challenged. The challenged provisions included the Explanation added to Section 5(8)(f). 159. The challenge was made in a batch of Writ Petitions filed by a group of Real Estate Developers. This Court was invited to adjudicate upon the constitutionality on a wide range of grounds. It is important to cull out the findings rendered by the Court in the said decision as much reliance has been placed by the Petitioners on the decision: i. The Code is a Legislation which deals with economic matters and, therefore, the Legislature must be given free play in the joints; ii. The legislative judgment in economic choices must be given a certain degree of deference by the Courts; iii. The amendment by which the explanation was inserted in Section 5(8) was clarificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund of amounts paid together with interest at the very least comes their way. If, however, the allottee wants that the corporate debtor's management itself be removed and replaced, so that the corporate debtor can be rehabilitated, he may prefer a Section 7 application under the Code. That another parallel remedy is available is recognised by RERA itself in the proviso to Section 71(1), by which an allottee may continue with an application already filed before the Consumer Protection Fora, he being given the choice to withdraw such complaint and file an application before the adjudicating officer under RERA read with Section 88. In similar circumstances, this Court in Swaraj Infrastructure (P) Ltd. v. Kotak Mahindra Bank Ltd. [Swaraj Infrastructure (P) Ltd. v. Kotak Mahindra Bank Ltd., (2019) 3 SCC 620 : (2019) 2 SCC (Civ) 136] has held that the Debts Recovery Tribunal proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and winding-up proceedings under the Companies Act, 1956 can carry on in parallel streams (see paras 21 and 22 therein). [para 30] vii. It is apposite to advert to paragraph-41 in the nature of the contentions rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... real estate sector in this country has not been encouraging, in that huge amounts are advanced by ordinary people to finance housing projects which end up in massive delays on the part of the developer or even worse i.e. failure of the project itself, and given the state of facts which was existing at the time of the legislation, as adverted to by the Insolvency Committee Report, it is clear that any alleged discrimination has to meet the tests laid down in Ram Krishna Dalmia [ Ram Krishna Dalmia v. S.R. Tendolkar, 1959 SCR 279 : AIR 1958 SC 538] , V.C. Shukla [V.C. Shukla v. State (Delhi Admn.), 1980 Supp SCC 249 : 1980 SCC (Cri) 849] , Shri Ambica Mills Ltd. [State of Gujarat v. Shri Ambica Mills Ltd., (1974) 4 SCC 656 : 1974 SCC (L S) 381], Venkateshwara Theatre [Venkateshwara Theatre v. State of A.P., (1993) 3 SCC 677] and Mardia Chemicals [Mardia Chemicals Ltd. v. Union of India, (2004) 4 SCC 311]. [para 41] viii. On the possibility of the Code being misused by a single allottee, we may notice the following: 51. One other argument that is made on behalf of the counsel for the petitioners is that allottees of flats/apartments who do not want refunds, but who want t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 161. The contention on behalf of the petitioner s both in regard to the debenture holders and security holders as also the allottees is that the provisos are unworkable. This is for the reason that information relating to allottees in respect of real estate projects and the debenture holders and security holders in regard to the first proviso is not available. In regard to shareholders with respect to Section 399 of the Companies Act, 1956 and section 244 of the Companies Act 2013, it is pointed out that the threshold requirements can be fulfilled having regard to the documented information regarding the shareholding available in law. This is not the position it is pointed out in regard to the categories covered by provisos one and two. This renders the provisions manifestly arbitrary. 162. Per contra, the stand of the union is as follows. As far as allottees in a real estate project is concerned, there is information available under the provisions of Real Estate Regulation Act. Firstly, it is pointed out that the said act contemplates an association of allottees. The association plays an important role. The promoter has to take a lead in the formation of the Association. The al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, Gurugram (Quarterly Progress Report) Regulations 2018. Regulation 4 provides inter alia that the promoter shall upload on the webpage which he has to create for the project within 15 days from the expiry of each quarter, namely, the list of number and types of apartments/plots booked. Our attention has also been drawn to the format for Quarterly Progress Report to be submitted under Haryana Regulations. A perusal of the report would show that the promoter is obliged to submit the names of the allottees. Obviously, if there is change in the allotment the changed name should be reflected in the Report. This must undoubtedly be ensured by the authorities stringently. We also find merit in the contention of the Union that the Association of allottees has to be formed under the mandate of the law it is expected to play an important role. Information will certainly be forthcoming in regard to allotments upon the allottees becoming members of the Association as required. We cannot ignore the role of the association in the matter of becoming the transferee of the common areas, being clothed with the right of first refusal within the meaning of section 7 of the Act and also the right t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitution. Even in the first decade of the Republic, this Court has, in a large number of cases, settled the principles in regard to what constitutes hostile discrimination and what is reasonable classification. Since, we would be in the region of platitude, if we were to chronicle the principles laid down in each of those cases, we think it suffices to refer to some of the decisions of this Court alone. 168. In Ameerunnissa Begum (supra), which involved the challenge to law made by the Nizam as Raj Pramukh of the former State of Hyderabad, we need notice the following: 11. The nature and scope of the guarantee that is implied in the equal protection clause of the Constitution have been explained and discussed in more than one decision of this court and do not require repetition. It is well settled that a legislature which has to deal with diverse problems arising out of an infinite variety of human relations must, of necessity, have the power of making special laws to attain particulars objects; and for that purpose it must have large powers of selection or classification of persons and things upon which such laws are to operate. Mere differentiation or inequality of trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a hospital land will be acquired at 50% of the market value, for a school at 60% of the value and for a Government building at 70% of the market value? All three objects are public purposes and as far as the owner is concerned it does not matter to him whether it is one public purpose or the other. Article 14 confers an individual right and in order to justify a classification there should be something which justifies a different treatment to this individual right. It seems to us that ordinarily a classification based on the public purpose is not permissible under Article 14 for the purpose of determining compensation. The position is different when the owner of the land himself is the recipient of benefits from an improvement scheme, and the benefit to him is taken into consideration in fixing compensation. Can classification be made on the basis of the authority acquiring the land? In other words can different principles of compensation be laid if the land is acquired for or by an Improvement Trust or Municipal Corporation or the Government? It seems to us that the answer is in the negative because as far as the owner is concerned it does not matter to him whether the land is ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o show by pleading the necessary material before the Court that the said classification is unreasonable and violative of Article 16 of the Constitution . 19. Thus, it is no part of the appellants' burden to justify the classification or to establish its constitutionality. Discrimination is the essence of classification and does violence to the constitutional guarantee of equality only if it rests on an unreasonable basis. 31.Classification, however, is fraught with the danger that it may produce artificial inequalities and therefore, the right to classify is hedged in with salient restraints; or else, the guarantee of equality will be submerged in class legislation masquerading as laws meant to govern well marked classes characterized by different and distinct attainments. Classification, therefore, must be truly founded on substantial differences which distinguish persons grouped together from those left out of the group and such differential attributes must bear a just and rational relation to the object sought to be achieved. 32. Judicial scrutiny can therefore extend only to the consideration whether the classification rests on a reasonable basis and whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on may be mentioned here. It is true that a State may classify persons and objects for the purpose of legislation and pass laws for the purpose of obtaining revenue or other objects. Every differentiation is not a discrimination. But classification can be sustained only it is founded on pertinent and real differences as distinguished from irrelevant and artificial ones. The constitutional standard by which the sufficiency of the differentia which form a valid basis for classification may be measured, has been repeatedly stated by the Courts. If it rests on a difference which bears a fair and just relation to the object for which it is proposed, it is constitutional. To put it differently, the means must have nexus with the ends. Even so, a large latitude is allowed to the State for classification upon a reasonable basis and what is reasonable is a question of practical details and a variety of factors which the Court will be reluctant and perhaps ill-equipped to investigate. In this imperfect world perfection even in grouping is an ambition hardly ever accomplished. In this context, we have to remember the relationship between the legislative and judicial departments of Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the classification does not include. In other words, a classification is bad as underinclusive when a State benefits or burdens persons in a manner that furthers a legitimate purpose but does not confer the same benefit or place the same burden on others who are similarly situated. A classification is over-inclusive when it includes not only those who are similarly situated with respect to the purpose but others who are not so situated as well. In other words, this type of classification imposes a burden upon a wider range of individuals than are included in the class of those attended with mischief at which the law aims. Herod ordering the death of all male children born on a particular day because one of them would some day bring about his downfall employed such a classification. 58. The piecemeal approach to a general problem permitted by underinclusive classifications, appears justified when it is considered that legislative dealing with such problems is usually an experimental matter. It is impossible to tell how successful a particular approach may be, what dislocations might occur, what evasions might develop, what new evils might be generated in the attempt. Adminis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (1979) 1 SCC 380, a bench of seven learned judges of this Court laid down certain propositions. We need only allude to those propositions which are apposite for deciding the fate of these cases before us: (1) The first part of Article 14, which was adopted from the Irish Constitution, is a declaration of equality of the civil rights of all persons within the territories of India. It enshrines a basic principle of republicanism. The second part, which is a corollary of the first and is based on the last clause of the first section of the Fourteenth Amendment of the American Constitution, enjoins that equal protection shall be secured to all such persons in the enjoyment of their rights and liberties without discrimination of favouritism. It is a pledge of the protection of equal laws, that is, laws that operate alike on all persons under like circumstances. (2) The State, in the exercise of its governmental power, has of necessity to make laws operating differently on different groups or classes of persons within its territory to attain particular ends in giving effect to its policies, and it must possess for that purpose large powers of distinguishing and classifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or characteristics must have a reasonable relation to the object of the legislation. In order to pass the test, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others and (2) that that differentia must have a rational relation to the object sought to be achieved by the Act. (8) The differentia which is the basis of the classification and the object of the Act are distinct things and what is necessary is that there must be a nexus between them. In short, while Article 14 forbids class discrimination by conferring privileges or imposing liabilities upon persons arbitrarily selected out of a large number of other persons similarly situated in relation to the privileges sought to be conferred or the liabilities proposed to be imposed, it does not forbid classification for the purpose of legislation, provided such classification is not arbitrary in the sense abovementioned. xxx xxx xxx (11) Classification necessarily implies the making of a distinction or discrimination between persons classified and those who are not members of that class. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the judgment of this Court in the Special Courts case (supra) that it is well settled that the Courts do not substitute their views as to what the policy is. It held as follows: 49. Where there is challenge to the constitutional validity of a law enacted by the legislature, the Court must keep in view that there is always a presumption of constitutionality of an enactment, and a clear transgression of constitutional principles must be shown. The fundamental nature and importance of the legislative process needs to be recognised by the Court and due regard and deference must be accorded to the legislative process. Where the legislation is sought to be challenged as being unconstitutional and violative of Article 14 of the Constitution, the Court must remind itself to the principles relating to the applicability of Article 14 in relation to invalidation of legislation. The two dimensions of Article 14 in its application to legislation and rendering legislation invalid are now well recognised and these are: (i) discrimination, based on an impermissible or invalid classification, and (ii) excessive delegation of powers; conferment of uncanalised and unguided powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properly, not disputed. It is, thus, plain that the object of the Act is in the public interest. If we are to exist as a progressive nation, it is very necessary that we carve out a place for ourselves in the International market. The beginning has to be made, and many a time, it is at a great loss. That the Central Government has selected the sugar industry for an export programme does not mean that it cannot make a classification of the commodities, bearing in mind which commodity will have an easy market abroad for the purpose of earning foreign exchange. During the Suez crisis, sugar was exported in large quantities from this country, and earned 12.4 crores as foreign exchange. There is nothing on the record to show that export of other commodities was not also undertaken, though it was pointed out in arguments that manganese ore was also exported in a similar manner to earn foreign exchange. It is quite obvious that the Central Government cannot order the export of all and sundry manufactured commodities from the country, without being assured of a market in foreign countries. Necessarily, the Government can only embark upon an export policy in relation to those products, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992 Supp 3 SCC 217 , this Court held, This merely sees goes to show that even among backward classes, there can be sub-classification on a reasonable basis. 184. In State of West Bengal and ors. v. Rash Bihari Sarkar and ors. (1993) 1 SCC 479, exemption was granted under Bengal Amusements Act, 1922 as amended in 1981 from Entertainment Tax for theatre groups which were bonafide and which performed not for monetary gain which tax exemption was not given to theatre groups which performed for monetary gains. Both were theatre groups. Noticing however, the distinction between the theatre groups, this Court went on to hold as follows: 4. Equality means equality in similar circumstances between same class of persons for same purpose and objective. It cannot operate amongst unequals. Only likes can be treated alike. But even amongst likes the legislature or executive may classify on distinction which are real. A classification amongst groups performing shows for monetary gains and cultural activities cannot be said to be arbitrary. May be that both the groups carry out the legislative objective of promoting social and educational activities and, therefore, they ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmy at his own request, he cannot be treated as an ex-serviceman, is accepted then it will create a class within a class without rational basis and, therefore, becomes arbitrary and discriminatory. It will also defeat the purpose for which the provision for reservation has been made. 187. We have already adverted to the decision of this Court in relation to the taboo, which is alleged by the petitioners against creating a class within a class. 188. We are of the view that the principles, which governed the legitimacy of the sub-class within a class, is based, essentially, on the very principles, which are discernible in regard to reasonable classification under Article 14. It is clear that the law does not interdict the creation of a class within a class absolutely. Should there be a rational basis for creating a sub-class within a class, then, it is not impermissible. This is the inevitable result of an analysis of the judgments relied upon by the petitioner themselves, viz., Sansar Chand Atri v. State of Punjab and another (supra). The decisions, which have been relied upon by the Union and which we have adverted to, clearly indicate that a class within a sub-class, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd vote in meetings of the committee of creditors on behalf of the financial creditor he represents in accordance with the prior voting instructions of such creditors obtained through physical or electronic means. (2) It shall be the duty of the authorised representative to circulate the agenda and minutes of the meeting of the committee of creditors to the financial creditor he represents. (3) The authorised representative shall not act against the interest of the financial creditor he represents and shall always act in accordance with their prior instructions: Provided that if the authorised representative represents several financial creditors, then he shall cast his vote in respect of each financial creditor in accordance with instructions received from each financial creditor, to the extent of his voting share: Provided further that if any financial creditor does not give prior instructions through physical or electronic means, the authorised representative shall abstain from voting on behalf of such creditor. (3A) Notwithstanding anything to the contrary contained in sub-section (3), the authorised representative under subsection (6A) of section 21 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... characteristics of numerosity, then, it is not for this Court to sit in judgment over the wisdom of such a measure. 193. The enquiry, we realize, must not end with finding that there is an intelligible differentia, to be found in the numerosity, heterogeneity and individuality in decision-making of the allottees. The law further requires that the differentia must have bear a rational nexus with the object of the law. 194. The object of the law is clear. A radical departure was contemplated from the erstwhile regime, which was essentially contained in The Sick Industrial Companies (Special Provisions) Act, 1985, and which manifested a deep malaise, which impacted the economy itself. To put it shortly, the procedures involved under the Act, simply meant procrastination in matters, where speed and dynamic decisions were the crying need of the hour. The value of the assets of the Company in distress, was wasted away both by the inexorable and swift passage of time and tardy rate at which the forums responded to the problem of financial distress. The Code was an imperative need for the nation to try and catch up with the rest of the world, be it in the matter of ease of doing bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally, depreciation will claim its victim in the form of diminution of value of the assets. Should insolvency pass into the stage of liquidation, the loss is not only of the concerned businesses, but it also would represent a loss for the Nation. This is, undoubtedly, apart from the impairment of the interests of all stakeholders. The stakeholders would include the financial creditors and the operational creditors, as well. Employees of the failed business, would take a direct hit. Therefore, the Code accords the highest importance to speed in the matter of undergoing the process of insolvency. 195. Section 12 contemplates, in short, a maximum period of 330 days from the date of the insolvency commencement date, which we have already explained. Though, the word mandatorily has been struck down by this Court in the decision in Committee of Creditors of Essar Steel India Limited(supra), this Court has only balanced the interest of all concerned, by permitting an enlargement of the time, only in those cases, where the delay occurs not on account of the fault of the players concerned and it is based on the principle actus curiae nemiem gravabit, which means that the act of Court sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... real estate project with a new management, this Court took notice of the fact that should Insolvency Resolution reach a stage of liquidation, being unsecured creditors, the allottees would not even get the amount, which he has invested. In fact, after insertion of the explanation to section 33 (2) at any time after a committee of creditors is constituted such an eventuality is possible. In short, numerosity of the allottees of a real estate project, necessitated, in the view of the Legislature, as gleaned from the provisions, to condition an absolute right, which does have a clear rational nexus with the object sought to be achieved. We have noticed, one of the objects is the balancing of the interests of all stakeholders. By imposing a threshold limit of either hundred allottees or if the number of allottees going by the criteria of one-tenth of the allottees is, even less than hundred, then, the said number of allottees must agree to invoke the Code. This is again, based on the intelligible differentia of heterogeneity. By heterogeneity, is meant, differences between a seemingly homogenous group. All allottees of a real estate project form a class. All of them have stakes in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eated. To recapitulate, the individual allottee, with a high-level of subjectivity in decision-making, may take a plunge at invoking the Code, without having a more global view of the consequences, which will follow. Any such attempt would only be dubbed as frivolous. This attempt by individual allottees would have the following consequences: i. It would crowd an already heavy docket; ii. It would consequently slow down the processes under the Code, even with respect to matters, which may be more genuine and require greater and more timely attention; iii. It will defeat the object of the balancing the interests of all stakeholders. We must indicate that the aspect about delaying of the processes, when allottees are pulling at each other, having conflicting views about the appropriateness of the Code being invoked, is the clear prospect of allottees coming into collision in the Fora by way of opposing the application, would be an undeniable reality. This is despite the fact that it could always be argued by the individual allottee that what the law mandates in Section 4, is only the proving of the fact of default in a sum of ₹ 1 crore, as thing stand. It is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , would indeed require a good deal of experimentation, as long as it passes muster in law. It is no part of a court s function to probe into what it considers to be more wise or a better way to deal with a problem. In economic matters, the wider latitude given to the Law Giver is based on sound principle and tested logic over time. In fact, though there is no rigid separation of powers in India, as it obtains in the United States, there is broadly separation of powers, which in fact, has been recognized as a basic feature of the Constitution (see His Holiness Kesavananda Bharti Sripadagalvaru v. State of Kerala and another (1973) 4 SCC 225 ). In any case, the Court errs in the judicial veto of legislation, in a manner of speaking, it is usurping the power, which is earmarked to another organ of the State, viz., the Legislature. The large number of validating acts would produce undeniable proof of the same. ALLOTTEES VS. OPERATIONAL CREDITORS 200. One of the contentions raised by petitioners is as regards the hostile discrimination between petitioner (allottees) and operational creditors. The advantages which, financial creditor have over operational creditors is referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the default, contemplated under the Code, has occurred and the application, filed by the financial creditor, must be admitted and the matter proceeded with. 204. In Swiss Ribbons (supra) the classification in controversy was between operational and financial creditor. Apart from dealing with the policy behind the Code and the reasons which led to it, this Court inter alia held as follows: 42. A perusal of the definition of financial creditor and financial debt makes it clear that a financial debt is a debt together with interest, if any, which is disbursed against the consideration for time value of money. It may further be money that is borrowed or raised in any of the manners prescribed in Section 5(8) or otherwise, as Section 5(8) is an inclusive definition. On the other hand, an operational debt would include a claim in respect of the provision of goods or services, including employment, or a debt in respect of payment of dues arising under any law and payable to the Government or any local authority. 43. A financial creditor may trigger the Code either by itself or jointly with other financial creditors or such persons as may be notified by the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for working capital that enables the corporate debtor to either set up and/or operate its business. On the other hand, contracts with operational creditors are relatable to supply of goods and services in the operation of business. Financial contracts generally involve large sums of money. By way of contrast, operational contracts have dues whose quantum is generally less. In the running of a business, operational creditors can be many as opposed to financial creditors, who lend finance for the set-up or working of business. Also, financial creditors have specified repayment schedules, and defaults entitle financial creditors to recall a loan in totality. Contracts with operational creditors do not have any such stipulations. Also, the forum in which dispute resolution takes place is completely different. Contracts with operational creditors can and do have arbitration clauses where dispute resolution is done privately. Operational debts also tend to be recurring in nature and the possibility of genuine disputes in case of operational debts is much higher when compared to financial debts. A simple example will suffice. Goods that are supplied may be substandard. Services that are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 insofar as the classification between operational creditor and financial creditor was alleged to be contrary to Article 14. 206. In Pioneer (supra) the case and the decision is closer to the facts before us. The challenge was to the amendments to the Code including the explanation added to Section 5(8) to the Code. As we have noted the explanation purports to clarify that any loan raised from an allottee under the real estate project is to be deemed to be an amount having commercial effect of borrowing. Apart from the said provision, there were other provisions also called in question. This Court proceeded to find inter alia as follows: The amendment by way of insertion of explanation in 5(8)(f) was only clarificatory of the existing law. The allottees of flats and apartments were subsumed within the provisions of Section 5(8)(f). In other words, an allottee was a financial creditor. After a conspectus of the provisions the Code and the RERA, this Court also held that the RERA and the Code co-exist and in the event of the confrontation, the Code will hold sway. RERA was thus found to be not a special statute which will override the general statute namely the Code. Dealing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods and services are not made to fund manufacture of such goods or provision of such services. Examples given of advance payments being made for turnkey projects and capital goods, where customisation and uniqueness of such goods are important by reason of which advance payments are made, are wholly inapposite as examples vis- -vis advance payments made by allottees. In real estate projects, money is raised from the allottee, being raised against consideration for the time value of money. Even the total consideration agreed at a time when the flat/apartment is non-existent or incomplete, is significantly less than the price the buyer would have to pay for a ready/complete flat/apartment, and therefore, he gains the time value of money. Likewise, the developer who benefits from the amounts disbursed also gains from the time value of money. The fact that the allottee makes such payments in instalments which are co-terminus with phases of completion of the real estate project does not any the less make such payments as payments involving exchange i.e. advances paid only in order to obtain a flat/apartment. What is predominant, insofar as the real estate developer is concerned, is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned, homebuyers/allottees can be assimilated with other individual financial creditors like debenture holders and fixed-deposit holders, who have advanced certain amounts to the corporate debtor. For example, fixed-deposit holders, though financial creditors, would be like real estate allottees in that they are unsecured creditors. Financial contracts in the case of these individuals need not involve large sums of money. Debenture holders and fixed-deposit holders, unlike real estate holders, are involved in seeing that they recover the amounts that are lent and are thus not directly involved or interested in assessing the viability of the corporate debtors. Though not having the expertise or information to be in a position to evaluate feasibility and viability of resolution plans, such individuals, by virtue of being financial creditors, have a right to be on the Committee of Creditors to safeguard their interest. Also, the question that is to be asked when a debenture holder or fixed deposit holder prefers a Section 7 application under the Code will be asked in the case of allottees of real estate developers - is a debt due in fact or in law? Thus, allottees, being indivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the object to the object which is to be achieved by the Code. This Court further noticed in the context of challenge to Section 53 of the Code which deals with the manner of distribution of assets of corporate debtor in liquidation proceedings, that there is difference in relative importance between financial debt which are secured and operational debts which are unsecured. The distinction was found in the relative importance of two types of debts when it comes to the objects sought to be achieved. This Court was of the view when repayment takes place in regard to financial creditors it leads to fresh infusion of capital into the economy which results in the money being available to be lent to other businessmen. 208. In Swiss Ribbons (supra), dealing with the challenge to the provisions based on Article 14 of the Constitution of India, this Court adopted the following reasoning. Financial creditors were essentially identified as being banks and other financial institutions. Banks and financial institutions, are generally secured creditors. The procedure adopted by these institutions, right from the time the loan is applied for, and it being processed, the largeness of the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h around for kindred souls. After the amendment, however, the advantageous position which was occupied by the allottee as a financial creditor, has been extinguished and the allottee is worse off than even an operational creditor. This is for the reason that a single operational creditor could all by himself, activise the Code whereas the allottee is left far behind. This amounts to treating the allottee with discrimination. 212. While it may be true that the allottee is not a secured creditor and he is not in the position of a bank or the financial institution, the contentions of the petitioners that there is hostile discrimination forbidden Article 14 is untenable. There cannot be any doubt that intrinsically a financial creditor and an operational creditor are distinct. An operational creditor is one to whom money is due on account of goods or services supplied to the debtor. The financial creditor on the other hand, is so described, on account of there being the element of borrowing. This distinction is indisputable. The other distinctions are articulated with clarity in paragraph-42 of the judgment of this Court in Pioneer (supra) which we have already adverted to. As notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Pioneer (supra), this Court has painted the rather dismal but realistic picture of the fruits of litigation launched under Section 7 by an allottee of a real estate project. This Court has gone on to hold that only such allottee who has completely lost faith in management would come under Section 7 in hope that some other developer will take over and complete the project. At the same time, this Court noticed that such an adventure would be in the teeth of an impending peril, that should things do not go as planned, corporate demise follows and the allottee would stand reduced to receiving whatever little may remain and found on the basis that he is a mere unsecured creditor in the order of priority prescribed under Section 53 of the Code. This Court has painted a more rosy picture for an allottee approaching under the RERA, as there is a great likelihood, it is noted that the project could be completed or the full amount of refund together with penalty is awarded. Thus, the vires of the impugned provisions must be judged without turning a blind eye to the distinction between the wisdom and the legislative value judgment behind the Statute being immune from judicial scrutiny on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant under Section 7 being visited with payment out of the liquidation value, the amounts which are only due to the unsecured creditor. It must be remembered that, the point of distinction, between a financial creditor in this case, the allottees of a real estate project and the operational creditors, as contained in Section 7 on the one hand and Sections 8 and 9 are preserved. In other words, the operational creditor still has to cross the threshold of not being shut off from the application not being processed in the teeth of the defense allowed to the corporate debtor in regard to an operational creditor. All that has happened is the Legislature in its wisdom has found that the greater good lies in conditioning an absolute right which existed in favour of an allottee by requirements which would ensure some certain element of consensus among the allottees. It must be remembered that the requirement is a mere onetenth of the allottees. This is a number which goes to policy and lies exclusively within the wisdom of the Legislature. Hence, we have no hesitation in repelling the contentions in this regard. DEBENTURE HOLDERS/SECURITY HOLDERS: THE CHALLENGE TO THE FIRST IMPUGNED P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 21 (6A)(a). In regard to both these categories, in other words, the feature which stands out is the large number of the creditors as also the large number of allottees. No doubt, in the case of allottees there are other distinguishing features as well. The interplay of the Consumer Protection Act, the provisions of the Real Estate Regulation Act, the balancing of the interests of the allottees in the sense of the optimal securing of the stake of the allottees in the continuance of the real estate project itself would only strengthen the classification further in regard to allottees. However, that is not to say that in regard to the debentures and security holders they can individually be permitted to set in motion CIRP. In regard to the question of availability of information with respect to similarly placed debenture holders or security holders, the contention of the Union is that under section 88 of the Companies Act information is generated regarding debenture holders and security holders. Anyone can inspect the records of the company and glean information with which application can be moved under the first proviso to Section 7(1). In regard to them also it is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough physical or electronic means, the authorised representative shall abstain from voting on behalf of such creditor. (3A) Notwithstanding anything to the contrary contained in sub-section (3), the authorised representative under sub-section (6A) of section 21 shall cast his vote on behalf of all the financial creditors he represents in accordance with the decision taken by a vote of more than fifty per cent. of the voting share of the financial creditors he represents, who have cast their vote: Provided that for a vote to be cast in respect of an application under section 12A, the authorised representative shall cast his vote in accordance with the provisions of sub-section (3). 220. These provisions were unsuccessfully challenged before this Court as evident from the decision in the Pioneer (supra). As pointed out on behalf of the Union, in the said case the challenge was mounted by the promoters of real estate projects. These provisions have been accepted by creditors like the petitioners covered by sub-section 6A. The impact of the insertion of sub-section 3A in Section 25A is to be noticed. As already seen section 25A, inter alia, deals with the exercise of rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions. Allowing what is described as lone Ranger applications beset with extremely serious ramifications which are at cross purposes with the objects of the code. This is apart from it in particular spelling avoidable doom for the interest of the creditors falling in the same categories. The object of speed in deciding CIRP proceedings would also be achieved by applying the threshold to debenture holders and security holders. The dividing line between wisdom or policy of the legislature and limitation placed by the Constitution must not be overlooked. 221. The contention based on the applicability of the Absurdity Doctrine on the Principle that the result which, `all mankind without speculation would unite in rejecting can have no application to the provision. The Code and object of the Code and the unique features which set apart the creditors involved in this case from the generality of the creditors, the challenge being to an economic measure and the consequential latitude that is owed to the legislature renders the Principle of Absurdity wholly inapposite. 222. There is no scope also having regard to their identification in paragraph-49 of Pioneer (supra) with referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the impugned, amending Act on similar lines. 227. The contention of the Petitioner can be summed-up as follows: An Explanation cannot modify the main provision to which it is an Explanation. Section 11(a) and Section 11(b) unequivocally bar a Corporate Debtor from filing a CIRP Application qua another Corporate Debtor under Section 7 and Section 9 of the Code. Support is sought to be drawn from the exposition of the law qua an explanation laid down in S. Sundaram Pillai and others v. R. Pattabiraman and others (1985) 1 SCC 591 and Sonia Bhatia v. State of U.P. and others (1981) 2 SCC 585. It is complained that the label of an Explanation has been used to substantially amend, which is an arbitrary and irrational exercise of power. 228. It was pointed out that the word includes in Explanation-I to Section 11 would indicate that an Application for CIRP is barred not only against itself but also against any other Corporate Debtor when the applicant-Corporate Debtor is found placed in circumstances expressed in Section 11. It is further contended that the impugned Amendment, effectively repeals Sections 11(a) and 11(d). If the purport of the Explanation, which is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. ELIGIBILITY OF A CORPORATE DEBTOR TO INITIATE CIRP AGAINST OTHER PERSONS 6.1. Under Section 11(a) and (d) of the Code, corporate debtors undergoing a corporate insolvency resolution process and in respect of whom a liquidation order has been made are not permitted to file an application to initiate CIRP. It was brought to the Committee that this has created confusion over whether a corporate debtor which is undergoing CIRP or liquidation process, may file an application to initiate CIRP against other corporate persons who are its debtors. 6.2. The Committee noted that different Adjudicating Authorities had taken different approaches regarding the right of a resolution professional to initiate CIRP against other corporate debtors. On the one hand, the right of the resolution professional to initiate CIRP against other corporate debtors was upheld by relying on the statutory duty of the resolution professional to recover outstanding dues of the corporate debtor under Section 25(2)(b). On the other hand, the resolution professional had been prevented from doing so, on the basis of a literal interpretation of Section 11(a). While the Appellate Authority had dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e interpreted according to its own tenor, and it is meant to explain clause (1)(fl) of the Article and not vice versa. It is an error to explain the Explanation with the aid of the Article, because this reverses their roles. 50. In Bihta Cooperative Development Cane Marketing Union Ltd. v. Bank of Bihar [(1967) 1 SCR 848 : AIR 1967 SC 389 : 37 Com Cas 98] this Court observed thus: The Explanation must be read so as to harmonise with and clear up any ambiguity in the main section. It should not be so construed as to widen the ambit of the section. 52. In Dattatraya Govind Mahajan v. State of Maharashtra [(1977) 2 SCR 790 : (1977) 2 SCC 548 : AIR 1977 SC 915] Bhagwati, J. observed thus: (SCC p. 563, para 9) It is true that the orthodox function of an Explanation is to explain the meaning and effect of the main provision to which it is an Explanation and to clear up any doubt or ambiguity in it.... Therefore, even though the provision in question has been called an Explanation, we must construe it according to its plain language and not on any a priori considerations. 53. Thus, from a conspectus of the authorities referred to above, it is manifest that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utes are called into aid only when the legislative intention is not clear. Ordinarily a proviso to a section is intended to take out a part of the main section for special treatment. It is not expected to enlarge the scope of the main section. But cases have arisen in which this Court has held that despite the fact that a provision is called proviso, it is really a separate provision and the so-called proviso has substantially altered the main section. In CIT v. Bipinchandra Maganlal Co. Ltd., Bombay [AIR 1961 SC 1040 : (1961) 2 SCR 493 : (1961) 41 ITR 290] this Court held that by the fiction in Section 10(2)(vii) second proviso read with Section 2(6-C) of the Indian Income Tax Act, 1922 what is really not income is, for the purpose of computation of assessable income, made taxable income. 25. On the basis of the language of the Explanation this Court held that it did not widen the scope of clause (c). But from what has been said in the case, it is clear that if on a true reading of an Explanation it appears that it has widened the scope of the main section, effect be given to legislative intent notwithstanding the fact that the Legislature named that provision as an Expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vented from making payment on account of circumstances which prevented him from doing so. We may also notice a still later judgment of this Court in Sonia Bhatia (supra). In the said case, the question fell for consideration under the law relating to land reforms. Sub-Section (6) of Section 5 of the U.P. Imposition of Ceiling on Land Holdings Act, 1960 provided that the transfer made by a person, after a certain date, was to be ignored. There was a proviso, which, however, excepted certain transfers. One of the conditions to be met before a case could fall within the proviso was that the transfer must have been made for valuable consideration. To the said proviso, there was again an Explanation I followed by Explanation II. It reads as follows: Explanation I.- For the purposes of this sub-section, the expression transfer of land made after the twenty-fourth day of January, 1971 , includes- (a) a declaration of a person as a cotenure-holder made after the twenty-fourth day of January, 1971 in a suit or proceeding irrespective of whether such suit or proceeding was pending on or was instituted after the twenty-fourth day of January, 1971; (b) any admission, ackn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debtor. It appears to be clear to us, and this will be corroborated by the further provisions as well, that the real intention of the Legislature was that the prohibition was only against the corporate debtor, which is already faced with the CIRP filed by either a financial creditor or operational creditor, jumping into the fray with an application under Section 10. This appears to be clear from the reports which have been placed before us. 239. Coming to Section 11(b), it again disables a corporate debtor which has completed CIRP twelve months preceding the date of the making of the application from invoking the Code. It may be demystified as follows: On the strength of the application made under Sections 7, 9 or 10, CIRP is initiated and it is completed at a certain point of time. This Section is aimed at preventing a further application not eternally but for a period of twelve months after the expiry of the insolvency resolution process. Quite apart from the fact that even the petitioners do not lay store by Section 11(b) and their case is premised on Section 11(a) and 11(d), the importance of Section 11(b) is that it sheds light regarding the intention of the Legislature t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIRP, putting under the carpet, as it were, a whole process in the recent past. In fact, to use the words recent past may not be correct for unlike Section 11(b) and 11(c), in a case, where there is an order for liquidation under Section 33, then, an application under Section 10, would not be maintainable. The person disentitled under Section 11(d) would be the corporate debtor and the disentitlement is qua itself. 241. Now, let us turn to the first Explanation. The Explanation declares that for the purpose of Section 11, a corporate debtor includes a corporate applicant in respect of such corporate debtor. There is an argument raised on behalf of the petitioners which surrounds the word included . The contention appears to be that before the insertion of Explanation II, which is challenged before us, under Section 11, not only was an application for initiating CIRP by a corporate debtor against itself prohibited in the circumstances referred to in Section 11 but it also contemplated that the CIRP could not be filed by the corporate debtor in circumstances covered by Section 11 against another corporate debtor. Otherwise, there was no meaning in using the word includes . In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the provisions of the Code. 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 contained in Section 11, from maximizing its assets by trying to recover the liabilities due to it from others. Not only does it go against the basic common sense view but it would frustrate the very object of the Code, if a corporate debtor is prevented from invoking the provisions of the Code either by itself or through his resolution professional, who at later stage, may, don the mantle of its liquidator. The provisions of the impugned Explanation, thus, clearly amount to a clarificatory amendment. A clarificatory amendment, it is not even in dispute, is retrospective in nature. The Explanation merely makes the intention of the Legislature clear beyond the pale of doubt. The argument of the petitioners that the amendment came into force only on 28.12.2019 and, therefore, in respect to applications filed under Sections 7, 9 or 10, it will not have any bearing, cannot be accepted. The Explanation, in the facts of these cases, is clearly clarificatory in nature and it will certainly apply to all pending applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t will cause huge losses which is sought to be prevented under the provisions of the Prevention of Money Laundering Act, 2002. 248. Section 32A is arbitrary, ultra vires and violative of Article 300A and Articles 14, 19 and 21. 249. The stand of the Union, on the other hand, is as follows: Section 32A provides immunity to the corporate debtor and its property when there is approval of the resolution plan resulting in the change of management of control of corporate debtor. This is subject to the successful resolution applicant being not involved in the commission of the offence. Statutory basis has now given under Section 32A to the law laid down by this Court in the decision of Committee of Creditors of Essar Steel(supra). This Court took the view therein that successful resolution applicant cannot be faced with undecided claim after its resolution plan has been accepted. The object is to ensure that a successful resolution applicant starts of on a fresh slate. The relevant extracts of the Statement of Objects and Reasons relied upon by the Union of India are as follows: STATEMENT OF OBJECTS AND REASONS xxx 2. A need was felt to give the highest priority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be continued by any person who is required to provide such assistance under the applicable law. xxx Chapter 1: Recommendations regarding the Corporate Insolvency Resolution Process xxx 17. LIABILITY OF CORPORATE DEBTOR FOR OFFENCES COMMITTED PRIOR TO INITIATION OF CIRP* 17.1. Section 17 of the Code provides that on commencement of the CIRP, the powers of management of the corporate debtor vest with the interim resolution professional. Further, the powers of the Board of Directors or partners of the corporate debtor stand suspended, and are to be exercised by the interim resolution professional. Thereafter, Section 29A, read with Section 35(1)(f), places restrictions on related parties of the corporate debtor from proposing a resolution plan and purchasing the property of the corporate debtor in the CIRP and liquidation process, respectively. Thus, in most cases, the provisions of the Code effectuate a change in control of the corporate debtor that results in a clean break of the corporate debtor from its erstwhile management. However, the legal form of the corporate debtor continues in the CIRP, and may be preserved in the resolution plan. Addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced. 17.5. The Committee noted that the proceedings under the Code, which are designed to ensure maximization of value, generally require transfer of the corporate debtor to bona fide persons. In fact, Section 29A casts a wide net that disallows any undesirable person, related party or defaulting entity from acquiring a corporate debtor. Further, the Code provides for an open process, in which transfers either require approval of the Adjudicating Authority, or can be challenged before it. Thus, the CIRP typically culminates in a change of control to 72 resolution applicants who are unrelated to the old management of the corporate debtor and step in to resolve the insolvency of the corporate debtor following the approval of a resolution plan by the Adjudicating Authority. 17.6. Given this, the Committee felt that a distinction must be drawn between the corporate debtor which may have committed offences under the control of its previous management, prior to the CIRP, and the corporate debtor that is resolved, and taken over by an unconnected resolution applicant. While the corporate debtor s actions prior to the commencement of the CIRP must be investigated and penalised, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17.10. Thus, the Committee agreed that the property of a corporate debtor, when taken over by a successful resolution applicant, or when sold to a bona fide bidder in liquidation under the Code, should be protected from such enforcement action, and the new Section discussed in paragraph 17.7 should provide for the same. Here too, the Committee agreed that the protection given to the corporate debtor s assets should in no way prevent the relevant investigating authorities from taking action against the property of persons in the erstwhile management of the corporate debtor, that may have been involved in the commission of such criminal offence. 17.11. By way of abundant caution, the Committee also recognised and agreed that in all such cases where the resolution plan is approved, or where the assets of the corporate debtor are sold under liquidation, such approved resolution plan or liquidation sale of the assets of the corporate debtor s assets would have to result in a change in control of the corporate debtor to a person who was not a related party of the corporate debtor at the time of commission of the offence, and was not involved in the commission of such criminal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n change in the management or control of the corporate debtor to a person who was not a promotor or in the management control of the corporate debtor or related party of such person, or to a person against whom there are material evidence and pending complaint or report by the investigating authority filed in relation to the criminal offence. The Committee agree that this provision is essential to provide the Resolution Applicant(s) a fair chance to revive the unit which otherwise would directly go into liquidation, which may not be as beneficial to the economy. The Committee believe that this ringfencing is essential to achieve revival or resolution without imposing additional liabilities on the Resolution Applicant, arising from malafide acts of the previous promoter or management. 251. Apart from the fact that it is intended to give a clean break to the successful resolution applicant, it is pointed out that it is hedged in with ample safeguards to avoid any exploitation. The same are as follows: 106. Section 32A was inserted to give a clean break to successful resolution applicants from the erstwhile management by shielding them and immunizing them from prosecution an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii. The Resolution Plan, so approved, must result in the change in the management or control of the corporate debtor; iii. The change in the management or control, under the approved Resolution Plan, must not be in favour of a person, who was a promoter, or in the management and control of the corporate debtor, or in favour of a related party of the corporate debtor; iv. The change in the management or control of the corporate debtor must not be in favour of a person, with regard to whom the relevant Investigating Authority has material which leads it to entertain the reason to believe that he had abetted or conspired for the commission of the offence and has submitted or filed a Report before the relevant Authority or the Court. This last limb may require a little more demystification. The person, who comes to acquire the management and control of the corporate person, must not be a person who has abetted or conspired for the commission of the offence committed by the corporate debtor prior to the commencement of the CIRP. Therefore, abetting or conspiracy by the person, who acquires management and control of the corporate debtor, under a Resolution Plan, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined reading of the various limbs of sub-Section (1) would show that while, on the one hand, the corporate debtor is freed from the liability for any offence committed before the commencement of the CIRP, the statutory immunity from the consequences of the commission of the offence by the corporate debtor is not available and the criminal liability will continue to haunt the persons, who were in in-charge of the assets of the corporate debtor, or who were responsible for the conduct of its business or those who were associated with the corporate debtor in any manner, and who were directly or indirectly involved in the commission of the offence, and they will continue to be liable. 254. Coming to sub-Section (2) of Section 32A, it declares a bar against taking any action against property of the corporate debtor. This bar also contemplates the connection between the offence committed by the corporate debtor before the commencement of the CIRP and the property of the corporate debtor. This bar is conditional to the property being covered under the Resolution Plan. The further requirement is that a Resolution Plan must be approved by the Adjudicating Authority and, finally, the appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under the CIRP, will cease; (ii) The property of the corporate debtor is protected from any legal action again subject to the safeguards, which we have indicated. The bar against action against the property, is available, not only to the corporate debtor but also to any person who acquires property of the corporate debtor under the CIRP or the liquidation process. The bar against action against the property of the corporate debtor is also available in the case of a person subject to the same limitation as prescribed in sub-Section (1) and also in sub-Section (2), if he has purchased the property of the corporate debtor in the proceedings for the liquidation of the corporate debtor. 255. The last segment of Section 32A makes it obligatory on the part of the corporate debtor or any person, to whom immunity is provided under Section 32A, to provide all assistance to the Investigating Officer qua any offence committed prior to the commencement of the CIRP. 256. The contentions of the petitioners appear to be that this provision is constitutionally anathema as it confers an undeserved immunity for the property which would be acquired with the proceeds of a crime. The pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im Resolution Professional and thereafter into the hands of the Resolution Professional subject undoubtedly to the control by the Committee of Creditors. As far as protection afforded to the property is concerned there is clearly a rationale behind it. Having regard to the object of the statute we hardly see any manifest arbitrariness in the provision. 258. It must be remembered that the immunity is premised on various conditions being fulfilled. There must be a resolution plan. It must be approved. There must be a change in the control of the corporate debtor. The new management cannot be the disguised avatar of the old management. It cannot even be the related party of the corporate debtor. The new management cannot be the subject matter of an investigation which has resulted in material showing abetment or conspiracy for the commission of the offence and the report or complaint filed thereto. These ingredients are also insisted upon for claiming exemption of the bar from actions against the property. Significantly every person who was associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of the offence in terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirements came to be introduced by the first and the second impugned provisos. In other words, the legislative intention 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). In other words, the Legislature intended that in every application, filed under Section 7, by the creditors covered by the first proviso and by the allottees governed by the second proviso, should also be embraced by the newly imposed threshold requirement for which, it was intended, should be complied within 30 days from the date of the Ordinance. However, this restriction was not to apply to those applications which stood admitted as on the date of the Ordinance. It is also clear that the consequence of failure to comply with the threshold requirement, in regard to applications, which have been filed earlier, was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally speaking, be applied retrospectively, where the result would be to create new disabilities or obligations or to impose new duties in respect of accomplished transactions. Reliance is placed similarly on the judgment of this Court in Ambalal Sarabhai Enterprises Ltd. v. Amrit Lal Co. and another (2001) 8 SCC 397. The period of 30 days is far too short and that too, under an amendment, which is itself impossible to comply with. In this regard, also judgment of this Court in B.K. Educational Services Private Ltd. v. Parag Gupta and Associates (2019) 11 SCC 633/ 2018 1 IBJ (JP) 649 SC, is referred to. The proviso cannot be applied retrospectively. The proviso is penal, arbitrary, unjust and unfair. Reliance is placed on In Re: Pulborough Parish School Board Election, Bourke v. Nutt (1894) 1 QB 725. 263. Per contra, the stand of the respondents in this regard, is as follows: The third proviso does not affect any rights of the creditors in question. By merely filing an application under Section 7, no absolute right is created. In this regard, reliance is placed on judgments of this Court in (2004) 1 SCC 663, (2019) 2 SCC 1, (2019) 4 SCC 17, (2015) 3 SCC 206, (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. Duty is the correlative of a right, while, no rights correspond to liberties. Liabilities have a nexus with the power exercised by another person, with regard to whom, the liability exists in another party. When somebody has an immunity against another, it disables the latter, and thus, it constitutes a disability for him. Salmond notes further that the term right is often used in the wide sense to include liberty by which it is meant to have one left free to do as he pleases. 266. We may notice the following discussion relating to powers and liabilities: 2. Powers and liabilities. Yet another class of legal rights consists of those which are termed powers. Examples of such are the following: the right to make a will, or to alienate property; the power of sale vested in a mortgagee; a landlord s right of reentry; the right to marry one s deceased wife s sister; the power to sue and to prosecute; the right to rescind a contract for fraud; a power of appointment; a power of appointment; the right of issuing execution on a judgment; the various powers vested in judges and other officials for the due fulfilment of their functions. All these are legal rights-they are legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000, in terms of the clause 39 of the Letters Patent, 1865, an appeal was maintainable before the Supreme Court. No doubt this involved the argument that the appeal in fact lay to the Federal Court as all appeals would lie to the Federal Court in view of the abolition of the Privy Council in 1949. Since, the Federal Court was replaced by Supreme Court, the appeal lay before this Court. 270. After consideration of the case law we notice the following principles which have been laid down by this Court. 23(i) That the legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding. (ii) The right of appeal is not a mere matter of procedure but is a substantive right. (iii) The institution of the suit carries with it the implication that all rights of appeal then in force are preserved to the parties thereto till the rest of the career of the suit. (iv) The right of appeal is a vested right and such a right to enter the superior court accrues to the litigant and exists as on and from the date the lis commences and although it may be actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holders sought a fresh transfer of the decree to the very same court as earlier namely Morena which had become part of State of Madhya Pradesh to which CPC applied. The High Court upheld the contention of the judgment debtor that the decree could not be executed as being of the foreign court. This Court reversed the High Court judgment. The argument which was raised, was based on Section 20 of the Code of Civil Procedure (Amendment) Act, 1951, by which the Code was extended to Madhya Bharat. There was a repeal of the law that prevailed in the State when the amendment to the CPC in 1951 was made applicable. There was, however, also a proviso which saved rights privileges, obligations and liabilities acquired, accrued or incurred. The contention therefore of the judgment debtor was that the judgment debtor s right to resist was preserved under the saving clause. It was found by this Court that the provisions of CPC enforced in Madhya Bharat did not confer the right claimed by the judgment debtor. All that happened as a result of the extension of the Code to the whole of India in 1951, was that the decrees which could have been executed in the British India could now be executed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take advantage of an enactment may without impropriety be termed a right . But the question is whether it is a right accrued within the meaning of the enactment which has to be construed. Their Lordships think not, and they are confirmed in this opinion by the fact that the words relied on are found in conjunction with the words obligations incurred or imposed . They think that the mere right (assuming it to be properly so called existing in the members of the community or any class of them to take advantage of an enactment, without any act done by an individual towards availing himself of that right, cannot properly be deemed a right accrued within the meaning of the enactment. 276. In Hamilton Gell v. White (1922) 2 K.B. 422, upon a quit notice given by the landlord, the tenant sought to avail the benefit of Section 11 of the Agricultural Holdings Act, 1914 by successfully complying with one out of the two conditions for seeking the compensation. Before the tenant could comply with the further condition, which was that he should move the action within two months, after quitting the holding, Section 11 was repealed. He subsequently made his claim within three m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for disturbance conferred upon tenants generally under the Act of 1908, for if it were the repealing Act would be altogether inoperative. It only applies to the specific rights given to an individual upon the happening of one or other of the events specified in the statute. Here the necessary event has happened, because the landlord has, in view of a sale of the property, given the tenant notice to quit. Under those circumstances the tenant has acquired a right, which would accrue when he has quitted his holding, to receive compensation. 279. In Odgen Industries Pty. Ltd. v. Haider Doreen Lucas 3 WLR 75 / (1969) (1) All England Reports 121, the following facts in a case which originated in Australia may be noticed. An employee of the appellant died on 7th July, 1965. His death was materially contributed by injuries, which, in turn, arose out of and in the course of his employment with the appellants. The employee was hospitalized in March, 1965 for treatment and he again came to be hospitalized in 19th June, 1965 and, thereafter, he died on 07.07.1965. He left behind him the respondent, his widow and two children under the age of 16, who were wholly dependent on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties. . But in the view that their Lordships take there is for the purposes of the Interpretation Act no right in the dependants and no correlative liability upon the worker's employers until the moment of death. Therefore apart altogether from authority their Lordships are of opinion that the Acts Interpretation Act has no application and the rights of the dependants and the corresponding liability of the employer must be tested and ascertained at the date of the death; at that time there was an obligation upon the employer under and by virtue of the Act of 1958 as amended by the Amendment Act to compensate the dependants in accordance with its provisions. That was the ground of decision of the majority of the High Court in their very careful judgments with which their Lordships agree. (Emphasis supplied) 280. It will be, at once, noticed that the saving clause in the repealing Act, was not the basis for the judgment rendered in favour of the employee. The compensation was ordered based on the law prevalent at the time of death. 281. Now, it is necessary to refer to the judgment of this Court in Isha Valimohamed v. Haji Gulam Mohamad Haji Dada Trust (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under any of the provisions of the Transfer of Property Act to determine the tenancy, as the contract of tenancy did not prohibit sub-letting by the tenant. To put it, differently, under the Transfer of Property Act, it is only if the contract of tenancy prohibits sub-letting by tenant that a landlord can forfeit the tenancy on the ground that the tenant has sub-let the premises and recover possession of the same after issuing a notice. Section 111 of the Transfer of Property Act provides that a lease may be determined by forfeiture if the tenant commits breach of any of the conditions of the contract of tenancy which entails a forfeiture of the tenancy. If sub-letting is not prohibited under the contract of tenancy, sub-letting would not be a breach of any condition in the contract of tenancy which would enable the land- lord to forfeit the tenancy on that score by issuing a notice. If that be so, there was no question of the respondent landlord terminating the tenancy under the Transfer of Property Act on the ground that the tenant had sub-let the premises. It is only under Section 13(1)(e) of the Saurashtra Act that a landlord was entitled to recover possession of the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving clause in (1989) 2 SCC 557 as will be noticed later on. 287. What is further significant to be noticed is that the decision involved a case where, though styled as a suit, the proceeding under the Saurashtra Act was a proceeding under a Statute and the right was one created by the statute and what gave the right to the landlord was an act of subletting. The said right was what was not wiped out by the repeal. As already noticed the suit itself was filed after the repeal. The discussion on the distinction between a privilege and an accrued right in the said decision has been relied upon recently in a judgement by one of us (Justice R.F. Nariman) in Bombay Stock Exchange v. V.S. Kandalgaonkar (2015) 2 SCC 1. 288. In New India Assurance Co. Ltd. v. Shanti Misra (1975) 2 SCC 840, the husband of the first respondent died as a result of a motor accident. The suit could be brought under Article 82 of the Limitation Act 1963 within two years of the accident. On 18.03.1867, the Government of Uttar Pradesh constituted the claim Tribunal under Section 110 of the Motor Vehicle Act. The application of the respondents before the Tribunal was objected to by the appellant i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enkins, C.J. delivering the judgment on behalf of the majority of the Full Bench said at p. 1141: Here the plaintiff at the time when the amending Act was passed had a vested right of suit, and we see nothing in the Act as amended that demands the construction that the plaintiff was thereby deprived of a right of suit vested in him at the date of the passing of the amending Act. It is not (in our opinion) even a fair reading of Section 184 and the third Schedule of the Bengal Tenancy Act, as amended, to hold that it was intended to impose an impossible condition under pain of the forfeiture of a vested right, and we can only construe the amendment as not applying to cases where its provisions cannot be obeyed. The majority of the Full Bench of the Madras High Court in Rajah Sahib Meharban-i-Doston Sri Raja Row V.K.M. Surya Row Bahadur, Sirdar, Rajahmundry Sircar and Rajah of Pittapur v. G. Venkata Subba Row [ILR 34 Mad 645] has taken the same view following the Full Bench decision in Gopeshwar Pal case at p. 650. Amendment of the law of limitation could not destroy the plaintiff's right of action which was in existence when the Act came into force. We are consciou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Act, that cannot be taken even after the Act is repealed. (Emphasis supplied) 294. In Mst. Bibi Sayeeda Ors. v. State of Bihar and Others (1996) 9 SCC 516/AIR 1996 SC 1936, the Court was to dealing with the meaning of the word `Bazar in the Bihar Land Reforms Act, 1950 (Bihar Act 30 of 1950). In the course, of the said judgement the Court went on to hold that the right of the proprietor of a State to hold a `Mela on its own land is a right in the estate being appurtenant to the ownership of his land. In the context, of property rights undoubtedly the Court went on to make the following observations: 17. The word vested is defined in Black's Law Dictionary (6th Edn.) at p. 1563 as: Vested; fixed; accrued; settled; absolute; complete. Having the character or given the rights of absolute ownership; not contingent; not subject to be defeated by a condition precedent. Rights are vested when right to enjoyment, present or prospective, has become property of some particular person or persons as present interest; mere expectancy of future benefits, or contingent interest in property founded on anticipated continuance of existing laws, does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain conditions. The ratio was provided. The ordinance was replaced by an Act. The ratio, however, stood altered. This affected the chances of absorption of the workers. This led to writ petitions. The question which fell to be decided with reference to the effect of repeal and what constituted a right. The court held inter-alia as follows: 15. The distinction between what is, and what is not a right preserved by the provisions of Section 6 of the General clauses Act is often one of great fineness. What is unaffected by the repeal of a statute is a right acquired or accrued under it and not a mere hope or expectation of , or liberty to apply for, acquiring a right. In Director of Public Works v. Ho Po Sang [(1961) 2 All ER 721, 731 (PC)] Lord Morris speaking for the Privy Council, observed: It may be, therefore, that under some repealed enactment, a right has been given but that, in respect of it, some investigation or legal proceeding is necessary. The right is then unaffected and preserved. It will be preserved even if a process of quantification is necessary. But there is a manifest distinction between an investigation in respect of a right and an investigation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or being competent on the date it was filed, the rights of the parties had to be adjudicated on that basis. The learned Single Judge of the High Court took the view, however, that the changed situation brought about by the death of the big land owner had to be taken into account in determining the right of the tenant. Respondents 3 to 14 who were the legal heirs of the landlord instituted a suit against the transferees from the landlord on the basis that they were mere benmaidars of the land owner and no title passed to them as the alleged sales were not effected by registered instruments under section 54 which had been extended by the Government of Punjab with effect from 1st April 1955 to the State. The suit came to be decreed. They sought impleadment before the High Court on the ground that the Collector had in determining the surplus area of the land of the land owners held that the sales in favour of respondents 1 and 2 were benami. The Collector found that on the death of the original land owners, respondents 3 to 14 became small land owners. The Division Bench took the view that no oral sale could be made, and therefore, the transfers made in favour of respondents 1 and 2 di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order passed by the Prescribed Authority and the deposit by them of the first instalment of the purchase price as required under Section 18 (4)(a). (Emphasis supplied) 298. While on the ambit of the saving clause we may notice Bansidhar v. State of Rajasthan (1989) 2 SCC 557 while dealing with the fact of saving clause in a repealing statute the court held as follows: 28. A saving provision in a repealing statute is not exhaustive of the rights and obligations so saved or the rights that survive the repeal. It is observed by this Court in IT Commissioner v. Shah Sadiq Sons [(1987) 3 SCC 516 : 1987 SCC (Tax) 270 : AIR 1987 SC 1217, 1221] : (SCC p. 524, para 15) ... In other words whatever rights are expressly saved by the savings provision stand saved. But, that does not mean that rights which are not saved by the savings provision are extinguished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted. Rights which have accrued are saved unless they are taken away expressly. This is the principle behind Section 6(c), General Clauses Act, 1897.... We agree with the High Court that the schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generally speaking be applied retrospectively where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished. (v) A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication. 301. Thereafter, the Court also went on to hold, however, that both the amendment clauses (b) and (bb) would apply retrospectively to all pending cases. Thus, it was found that the Amending Act was retrospective and both the clauses would apply to cases which were pending investigation on the date when the amendment came into force and where challan had not been filed till then. 302. In Ambalal Sarabhai Enterprises Ltd. (supra), by an amendment to the Delhi Rent Control Act, while a petition for eviction by the respondent landlord was pending on the ground of subletting, exclusion of the jurisdiction of the Rent Controller with respect of tenancies fetching monthly rent exceeding ₹ 3,500/- was brought into force. The question arose, inter alia, as to whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of Section 6 of the General Clauses Act is simply to leave the pending proceedings unaffected which commenced under the unrepealed provisions unless contrary intention is expressed. We find clause (c) of Section 6, refers the words any right, privilege, obligation acquired or accrued under the repealed statute would not be affected by the repealing statute. We may hasten to clarify here, mere existence of a right not being acquired or accrued on the date of the repeal would not get protection of Section 6 of the General Clauses Act. xxx xxx xxx xxx 35. In cases where Section 6 is not applicable, the courts have to scrutinise and find whether a person under a repealed statute had any vested right. In case he had, then pending proceedings would be saved. However, in cases where Section 6 is applicable, it is not merely a vested right but all those covered under various clauses from (a) to (e) of Section 6. We have already clarified that right and privilege under it is limited to that which is acquired and accrued . In such cases pending proceedings is to be continued as if the statute has not been repealed. 36. In view of the aforesaid legal principle eme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eating vested right in favour of the respondent. This court held as follows: 37. The argument advanced on the basis of so-called creation of vested right for obtaining sanction on the basis of the Building Rules (unamended) as they were on the date of submission of the application and the order of the High Court fixing a period for decision of the same, is misconceived. The word vest is normally used where an immediate fixed right in present or future enjoyment in respect of a property is created. With the long usage the said word vest has also acquired a meaning as an absolute or indefeasible right [see K.J. Aiyer s Judicial Dictionary (A Complete Law Lexicon), 13th Edn.]. The context in which the respondent Company claims a vested right for sanction and which has been accepted by the Division Bench of the High Court, is not a right in relation to ownership or possession of any property for which the expression vest is generally used. What we can understand from the claim of a vested right set up by the respondent Company is that on the basis of the Building Rules, as applicable to their case on the date of making an application for sanction and the fixed period a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge can be preferred to the adjudicating authority at this stage. A writ petition under Article 226 filed before a High Court would also be turned down on the ground that no right, much less a fundamental right, is affected at this stage. This is also made clear by the first proviso to Section 30(4), whereby a Resolution Professional may only invite fresh resolution plans if no other resolution plan has passed muster. xxx xxx xxx xxx 82. Take the next stage under Section 30. A Resolution Professional has presented a resolution plan to the Committee of Creditors for its approval, but the Committee of Creditors does not approve such plan after considering its feasibility and viability, as the requisite vote of not less than 66% of the voting share of the financial creditors is not obtained. As has been mentioned hereinabove, the first proviso to Section 30(4) furnishes the answer, which is that all that can happen at this stage is to require the Resolution Professional to invite a fresh resolution plan within the time-limits specified where no other resolution plan is available with him. It is clear that at this stage again no application before the adjudicating autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 593] (at paras 60-66), Darshan Singh v. Ram Pal Singh [Darshan Singh v. Ram Pal Singh, 1992 Supp (1) SCC 191] (at para 35), Pyare Lal Sharma v. Jammu Kashmir Industries Ltd. [Pyare Lal Sharma v. Jammu Kashmir Industries Ltd., (1989) 3 SCC 448 : 1989 SCC (L S) 484] (at para 21), P.D. Aggarwal v. State of U.P. [P.D. Aggarwal v. State of U.P., (1987) 3 SCC 622 : 1987 SCC (L S) 310] (at para 18), and Govind Das v. CIT [Govind Das v. CIT, (1976) 1 SCC 906 : 1976 SCC (Tax) 133] (at paras 6 and 11), to argue that if a section operates on an antecedent set of facts, but affects a vested right, it can be held to be retrospective, and unless the legislature clearly intends such retrospectivity, the section should not be construed as such. Each of these judgments deals with different situations in which penal and other enactments interfere with vested rights, as a result of which, they were held to be prospective in nature. However, in our judgment in ArcelorMittal [ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1], we have already held that resolution applicants have no vested right to be considered as such in the resolution process. Shri Mukul Rohatgi, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al took the view that the provision was a general enactment based on ground of public policy, Cozens Hardy M.R. while agreeing with the general proposition that a statute is presumed not to have retrospective operation unless a contrary intention appears by express words or by necessary implication held as follows: Retrospective operation is an inaccurate term. Almost every statute affects right which would have been existed but for the statute. 307. Buckley, L.J. went on to hold as follows: To my mind the word retrospective is inappropriate, and the question is not whether the section is retrospective. Retrospective operation is one matter. Interference with existing rights is another. If an Act provides that as at a past date the law shall be taken to have been that which it was not, that Act I understand to be retrospective. That is not this case. The question here is whether a certain provision as to the contents of leases is addressed to the case of all leases or only of some, namely, leases executed after the passing of the Act. The question is as to the ambit and scope of the Act, and not as to the date as from which the new law, as enacted by the Act, is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile a civil suit, equally there is a vested right to file a suit but the question would be as to when does it arise. From the line of argument pursued on behalf of the Union that in the case of the right to take advantage of an existing Statute, there is no accrued right, which means also that there is no vested right, should we proceed on the basis that the concept of a vested right qua a civil suit, can be recognized only after the civil suit is filed, at a time when there is no law, ousting or barring a civil suit and a law is passed, during the pendency of a civil suit, which again does not expressly bar the suits, which had already been filed? Since we are in the regions of vested rights, and every right must have a title to the right, and since every civil suit is based on a cause of action, could it not be said that the right to sue becomes vested from the point of time when the cause of action arises? Since, for every civil suit, there is a period of limitation prescribed, could it not be said that since a period of limitation has been prescribed for instituting a suit, the right to sue becomes vested from the first day when the period of limitation starts to run? 311. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is further stated, in Salmond on Jurisprudence that every legal right has a title, which are apparently the facts or events by reason of which the right has become vested in its owner. Now, it must be noticed also, at this stage that the Limitation Act, in fact, contemplates the time, within which the suit must be brought, beginning necessarily on the supposition, that at least, on the very first day of the period of time, from which a plaintiff can sue, the right is already vested in him. This would reinforce us in our view that a vested right to sue could be said to accrue, and it would always precede the institution of the suit. At any rate, it could be said to exist from the very first day, on which the time begins to run, under the Limitation Act. Thus, a vested right to sue could be tested with reference not to the date on which the suit is filed as would be the case where a question arises, whether a right of appeal exists. 312. However, we must consider whether a right of suit is conferred by a statute. In this regard, we may notice the decision of this Court in Mardia Chemicals Ltd. and others v. Union of India and others (2004) 4 SCC 311. Therein the validity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e initial proceeding itself sounds unreasonable and oppressive, more particularly when the secured assets/the management thereof along with the right to transfer such interest has been taken over by the secured creditor or in some cases property is also sold. Requirement of deposit of such a heavy amount on the basis of a one-sided claim alone, cannot be said to be a reasonable condition at the first instance itself before start of adjudication of the dispute. Merely giving power to the Tribunal to waive or reduce the amount, does not cure the inherent infirmity leaning one-sidedly in favour of the party, who, so far has alone been the party to decide the amount and the fact of default and classifying the dues as NPAs without participation/association of the borrower in the process. Such an onerous and oppressive condition should not be left operative in expectation of reasonable exercise of discretion by the authority concerned. Placed in a situation as indicated above, where it may not be possible for the borrower to raise any amount to make the deposit, his secured assets having already been taken possession of or sold, such a rider to approach the Tribunal at the first instance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an enactment. It is the further case of the Union, apparently that, only upon an application being filed and what is more, it is admitted under Section 7(5), that a vested right would accrue. 314. We do not think that the principles which have been laid down, may apply in the case of a vested right of action. We take the view that a plaintiff has a vested right, depending on whether there is a cause of action and a period of limitation, which has begun to run, which necessarily involves, the existence of a vested right. In the case of an application under Section 7 of the Code, we may notice that it is a valuable right, no doubt, statutory in nature. It cannot be the law that a Statute cannot create vested rights. Should the ingredients which the Legislature contemplate exist in favour of a person as an action in law, it can also be described as a vested right. The application, under Section 7, is an application, which attracts the period of limitation, which has already been noticed. It commences from the time when the right to sue accrues. In every case, where the period of limitation began to run, in respect of debt prior to the Code coming into being, the right to sue woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... version of the ASG upon the act of the creditor invoking the Code. 317. In P.D. Aggrawal others v. State of U.P and others. (1987) 3 SCC 622, the Court was dealing with a challenge to statutory rules, inter alia, by which temporary Assistant Engineers who were working continuously since the date of their appointment in the cadre of Assistant Engineer were deprived of their services from the date of substantial appointment to the temporary post for the purpose of seniority. This Court in the context of rules and the impact it had held as follows: 18. It has been held by this Court in E.P. Royappa v. State of Tamil Nadu [AIR 1974 SC 555, 583 : (1974) 4 SCC 3 : 1974 SCC (L S) 165] , Maneka Gandhi v. Union of India [AIR 1978 SC 597, 624 : (1978) 1 SCC 248] that there should not be arbitrariness in State action and the State action must ensure fairness and equality of treatment. It is open to judicial review whether any rule or provision of any Act has violated the principles of equality and nonarbitrariness and thereby invaded the rights of citizens guaranteed under Articles 14 and 16 of the Constitution . It was also after noting the facts stated as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 SCC 593, the Constitution Bench had to consider whether Section 23 (I-A) and introduced by the amending Act 1984 was retrospective. In the majority judgement by S. C. Agrawal, J., we notice the following: 64. A statute dealing with substantive rights differs from a statute which relates to procedure or evidence or is declaratory in nature inasmuch as while a statute dealing with substantive rights is prima facie prospective unless it is expressly or by necessary implication made to have retrospective effect, a statute concerned mainly with matters of procedure or evidence or which is declaratory in nature has to be construed as retrospective unless there is a clear indication that such was not the intention of the legislature. A statute is regarded retrospective if it operates on cases or facts coming into existence before its commencement in the sense that it affects, even if for the future only, the character or consequences of transactions previously entered into or of other past conduct. By virtue of the presumption against retrospective applicability of laws dealing with substantive rights transactions are neither invalidated by reason of their failure to comply with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past. 23. In Advanced Law Lexicon by P. Ramanath Aiyar (3rd Edn., 2005) the expressions retroactive and retrospective have been defined as follows at p. 4124, Vol. 4: Retroactive. - Acting backward; affecting what is past. (Of a statute, ruling, etc.) extending in scope or effect to matters that have occurred in the past. - Also termed retrospective. (Black's Law Dictionary, 7th Edn., 1999) Retroactivity is a term often used by lawyers but rarely defined. On analysis it soon becomes apparent, moreover, that it is used to cover at least two distinct concepts. The first, which may be called true retroactivity , consists in the application of a new rule of law to an act or transaction which was completed before the rule was promulgated. The second concept, which will be referred to as quasi-retroactivity , occurs when a new rule of law is applied to an act or transaction in the process of completion . The foundation of these concepts is the distinction between completed and pending transactions . T.C. Hartle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns the enjoyment of some natural right, equitable and just in itself, but which they were not able to enforce on account of defects in the law or its omission to provide the relief necessary to secure such right. 27.Craies on Statute Law (7th Edn.) at p. 396 observes that: If a statute is passed for the purpose of protecting the public against some evil or abuse, it may be allowed to operate retrospectively, although by such operation it will deprive some person or persons of a vested right. (Emphasis supplied) 324. The Court also repelled the argument that vested rights cannot be taken away by the Legislature by way of retrospective legislation. In paragraph-35, the Court held as follows: 31. Learned counsel for the appellant submitted that vested rights cannot be taken away by the legislature by way of retrospective legislation. The plea is without substance. Whenever any amendment is brought in force retrospectively or any provision of the Act is deleted retrospectively, in this process rights of some are bound to be affected one way or the other. In every case the exercise by the legislature by introducing a new provision or deleting an existing provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s language and its intention is clear, it is not permissible either to mend or bend it even if such recasting is in accord with good reason and conscience. In such circumstances, it is not possible for the court to remake the statute. Its only duty is to strike it down and leave it to the legislature if it so desires, to amend it. What is further, if the remaking of the statute by the courts is to lead to its distortion that course is to be scrupulously avoided. One of the situations further where the doctrine can never be called into play is where the statute requires extensive additions and deletions. Not only it is no part of the court's duty to undertake such exercise, but it is beyond its jurisdiction to do so. 327. Now, the terms of the proviso are clear. It does not admit of more than one interpretation at least in terms of the matter covered by it. The only area left is the impact of the withdrawal which is to happen. 328. We may also notice the judgment of this Court in Vijay v. State of Maharashtra (2006) 6 SCC 289. The appellant was elected as a member of the Panchayat in 2000 and elected as the Sarpanch. He was further elected as Councillor of the Zila P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exist, can also be a vested right. Such a right can be created by a Statute and even on a repeal of such a Statute, should conditions otherwise exist, giving a right under the repealed Statute, the right would remain an accrued right [See Isha Valimohamed (supra)]. 332. No doubt, there may not be a vested right as regard mere procedure and while limitation, ordinarily, belongs to the domain of procedure, should new law shorten the existing period of limitation, such a law would not operate in regard to the right of action which is vested [See Shanti Misra (supra)]. A party may not have a vested right of Forum as distinct from the vested right of action [See Shanti Misra (supra)]. 333. Every sovereign Legislature is clothed with competence to make retrospective laws. It is open to the Legislature, while making retrospective law, to take away vested rights. If a vested right can be taken away by a retrospective law, there can be no reason why the Legislature cannot modify the vested rights [See State Bank's Staff Union (Madras Circle) (supra)]. 334. In an action, where the law is not challenged, the Court would ordinarily proceed as follows. It will presume that a law, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge is made under Article 14 of the Constitution, (i) the Court must consider whether the law, in its retrospectivity, manifests forbidden classification. (ii) Whether the law, in its retrospectivity, produces manifests arbitrariness, (iii) if a law is alleged to be violative of Article 19(1)(g), firstly, the Court, in an action by a citizen, would, in the first place, find whether the right claimed, falls, within the ambit of Article 19(1)(g). The Court will further enquire as to whether such a law is made, inter alia, by way of placing reasonable restrictions by looking into the public interest. In the case of law, which is found to be not unfair, it would also not fall foul of Article 21. 341. Where the law is challenged on the ground that it is violative of Fundamental Rights under Article 14, necessarily the Court must enquire whether it is a capricious, irrational, disproportionate, excessive and, finally, without any determining principle. [see Shayara Bano case (supra)] The right of a citizen, or for that matter, any person under Article 14, is a right which is personal to him. 342. The golden thread which runs through the grounds making up the Doctrine of Mani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on would be that it may land the applicant and also all the stakeholders, in liquidation of the corporate debtor. 344. As far as, the manner, in which, the value of the right is affected or if we may use the word impaired , it is another most significant aspect, to be borne in mind. The manner, in which, a particular Statute carrying retrospective effect, will impair, the rights will depend on the facts of each case. We have, for instance, noticed the clear unfairness, which, the Rule in question carried qua a set of employees in regard to their vested right, in P.D. Aggrawal (supra). The vested right, in fact, consisted of the right to have certain period reckoned for the purpose of seniority. As far as the clarity of the language used, there does not appear to be any ambiguity, and what Parliament intended is, completely free from doubt. The only area where any ambiguity can be said to exist is the effect of the application being treated as withdrawn. The further aspect, which is to be borne in mind, is the circumstances in which the legislation is created. It is here that the mischief rule and the aspect of public interest looms large. At the end of the day, the tussle is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not a completed transaction. As regards his conduct in the past, viz., moving under Section 7, it is incomplete but the action was commenced. But the law (the 3rd proviso) impairs the past action qua the future. We would find as follows. Imposing the threshold requirement under the 3rd 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. We have already upheld the first and second proviso, which, in fact, operates only in the future. In that sense, 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. 347. At this point, we must notice one argument, which is that, the Law Giver has discriminated between applicants under Section 7, which were pending at different stages. We may notice, in this regard, however, that all the applicants share the common characteristic of being applicants in applications which were not admitted. In fact, most of the applications would appear to have been filed in the year 2019. Enquiring further into the different stage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e withdrawal of the application is declared by the Legislature, and therefore, Order XXIII(1) would not apply. 352. Section 14 of the Limitation Act, 1963 reads as follows: 14. Exclusion of time of proceeding bona fide in court without jurisdiction. - (1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it. (2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it. (3) Notwithstanding anyt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the applicant before its admission. 355. The application made under Rule 4 is the application under Section 7 by the financial creditor. However, rule 8 is silent as to any similar prohibition as is contained in Order XXIII(1)4(b). Unless the principle of Order XXIII Rule 1 which is based on public policy, is applied, a fresh application, compliant with the first two provisos in Section 7, may not be barred. In this regard, since under the Explanation in Section 7(1), default occurs when default qua any financial creditor is made out, the cause of action can become different, in which case, even the principle of Order XXIII Rule 1, may not apply. 356. In this regard, since withdrawal is ordained by the third proviso, it would not be a withdrawal under Rule 8 on request. Secondly, even for the principle based on public policy to apply to a withdrawal under Rule 8, there must be a request and withdrawal. We do not pronounce on the effect of the same, viz., withdrawal on request. Suffice it to conclude and hold that the withdrawal under the third proviso would not bar a fresh application by the same party after complying with the provision of the first or second proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 7 of the Code permitted filing of applications by single applicants. It has been realised by the Legislature that there is dire need to condition the absolute right in respect of certain classes of financial creditors. We have already upheld the classification enacted in the first and the second provisos. From the standpoint of public interest, every application maintained by a single applicant, is perceived as a veritable threat to the fulfilment of the objectives of the Code. The continuance of the applications could not, therefore, be in public interest. It is, as if, the Legislature intended to apply its brakes in the form of asking the applicants to obtain the consensus of a minimum number of similar stakeholders, before the applications could be further processed. 360. Let us consider the impugned proviso with a different wording. What, if the proviso provided for a longer period of time to comply with the requirement under the first and second provisos.? In such a scenario, once the numerical strength, contained in the first and second provisos, in regard to the persons covered by the same, has been found to be valid by us, the blemish that would remain is, no dou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject matter of the law and the terms of the law. 362. The nature of the right involved in this case, is the right of the financial creditors to move an application under Section 7. Though, Section 7 confers a right upon the financial creditor to file the application, the proceedings are one in rem. We have already dealt with the scope of the Code and the consequences it can produce on the stakeholders and also the real estate project. The Legislature was faced with the situation, where it felt that the requirement, as to maintainability of the application under Section 7, must, in regard to pending applications, be modified in the manner done. There is a determining principle, namely, the perception from experience about how the entire object of the Code would stand jeopardised if applications already filed could go on even when a fair and reasonable number of kindred souls are not available to support it. Once there is a principle, it cannot be capricious, excessive or disproportionate unless we find the time given under the proviso is manifestly arbitrary. A vested right under a statute can be taken away by a retrospective law. A right given under a statute can be taken away b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso, cannot be dubbed as arbitrary. No doubt, there is lack of clarity in this regard in the provision but on an understanding of the law, as we have expounded, the provision was capable of being understood in the manner done. 366. In regard to the first and the second provisos, they have only prospective operation. The creditors covered by these provisos, are not subjected to any time limit (except, no doubt, the bar under Article 137 of the Limitation Act), in the matter of garnering the requisite support. However, prescribing a time limit in regard to pending applications, cannot be, per se, described as arbitrary, as otherwise, it would be an endless and uncertain procedure. The applications would remain part of the docket and also become a Damocles Sword overhanging the debtor and the other stakeholders with deleterious consequences also qua the objects of the Code. 367. Finally, the actual time provided. Is it manifestly unfair? Would not six weeks, two months or even more lengthier periods, be more fair? Undoubtedly, it would be, from the point of view of the applicants. Another way to approach the problem is, was it impossible for the creditor/creditors to seek infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e year. We have already found that the withdrawal under the third proviso, will not stand in the way of the applicant, invoking the same default and filing the application and even the principle of Order XXIII Rule 1 of the CPC will not apply and will not bar such application. As far as limitation is concerned, we have explained as to what is to be the impact. The nature of the vested right and the impact of the law, the public interest, the sublime objects, which would be fulfilled, would, in the facts of this case, constrain us from interfering, even though, this Court may have a different view about the period of time, which is allowed to the applicant. 371. Lastly, there remains a question of court fees. As far as court fees is concerned, it is true that in the circumstances of the case, there is compelled withdrawal of the applications. The other side of the picture is, even, according to the petitioners, the applications engaged the Adjudicating Authority and time was spent on the applications. In the circumstances of these cases, we would resort to our power under Article 142 of the Constitution to order as follows. We would direct that in case applications are moved by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of delay shall be condoned in regard to the period, during which, the earlier applications filed by them, which is the subject matter of the third proviso, was pending before the Adjudicating Authority. iii. We make it clear that the time limit of two months is fixed only for conferring the benefits of exemption from court fees and for condonation of the delay caused by the applications pending before the Adjudicating Authority. In other words, it is always open to the petitioners to file applications, even after the period of two months and seek the benefit of condonation of delay under Section 5 of the Limitation Act, in regard to the period, during which, the applications were pending before the Adjudicating Authority, which were filed under the unamended Section 7, as also thereafter. 373. The Writ Petitions and the Transferred Case will stand dismissed subject to the aforesaid directions and the observations contained in the Judgment, and we only make it clear that the benefits of the directions, under Article 142, will be available also to the petitioners in the Transferred Case. 374. The intervention application (I.A.No.67473 of 2020 in WP (C)No.26 of 2020) ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
