LexMANSI BRAR FERNANDES versus SHUBHA SHARMA AND ANR.
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[2025] 10 S.C.R. 169 : 2025 INSC 1110 Mansi Brar Fernandes v. Shubha Sharma and Anr. (Civil Appeal No. 3826 of 2020) 12 September 2025 [J.B. Pardiwala and R. Mahadevan,* JJ.] Issue for Consideration Whether the appellants, fall within the category of “speculative investors” so as to disentitle them from initiating proceedings u/s.7 of the IBC; whether the Ordinance/Amendment Act introducing threshold requirements for filing of s.7 IBC applications by allottees was applicable to the facts of the present case. Headnotes† Insolvency and Bankruptcy Code, 2016 – s.7 – NCLAT set aside the NCLT’s order and reversed the admission of the application filed u/s.7 by the appellants, holding that they were “speculative investors” and not genuine homebuyers/ financial creditors – Appellants, if fall within the category of “speculative investors” disentitling them from initiating proceedings u/s.7: Held: 1.1 Yes – In C.A No. 3826 of 2020, the MoU executed reveals that possession was never contemplated – The agreement stipulated a buyback whereby Rs.35 lakhs invested would be returned with an additional Rs.65 lakhs as premium within 12 months – Though four apartments were notionally “allotted”, the appellant paid only Rs.35 lakhs with no provision for the balance – Instead, the corporate debtor issued post-dated cheques of Rs.1 crore, which were repeatedly dishonoured – Successive extensions of the MoU were granted without justification, and the appellant invoked proceedings u/s.138, N.I. Act for recovery. [Para 18.5] 1.2 Thus, the appellant’s true interest lay in assured returns, not possession – The MoU was in substance a buyback contract, not an agreement to sell flats – By the standard in Pioneer Urban case, the appellant was a speculative investor, disentitling her from invoking s.7. [Para 18.5] * Author 170 [2025] 10 S.C.R. Supreme Court Reports 1.3 Further, in C.A. No. 3903 of 2022, the MoU provided for an investment of Rs.25 lakhs per unit with assured returns of 25% per annum after 24 months – It contained a compulsory buyback clause and provisions for profit-sharing over and above guaranteed returns – The repeated use of the term “investment” coupled with a risk-free exit option, confirms that possession was never intended – While the NCLT admitted the appellant’s s.7 application ex parte, the NCLAT correctly reversed the order – A homebuyer cannot simultaneously demand refund with guaranteed returns while retaining the option to refuse possession. [Para 18.6] 1.4 On the facts and law, both the appellants are speculative investors – Their claims are in the nature of recovery, not insolvency resolution – Findings of the NCLAT treating the appellants as speculative investors upheld – Both impugned orders, setting aside admission of the s.7 applications, affirmed. [Paras 18.7, 18.8] Insolvency and Bankruptcy Code, 2016 – Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019 – IBC (Amendment) Act, 2020 – Appellants in C.A. No. 540 of 2021 and C.A. No. 5495 of 2025 assailed the first impugned order passed by NCLAT on the limited ground of non-compliance with the 2019 Ordinance, promulgated on 28.12.2019 – Appellants stated that the s.7 petition under the IBC filed by Respondent No.1 on 02.01.2020, was reserved on 04.12.2019, i.e., prior to the promulgation of the Ordinance – As on 28.12.2019, the application was still pending consideration – Thus, the Ordinance and the subsequent Amendment Act squarely applied to the proceedings and the failure of Respondent No.1 to satisfy the threshold requirement mandated under the Ordinance was fatal to the maintainability of the petition – NCLAT held that the Ordinance (later enacted as Amendment Act, 2020) was inapplicable to the present case: Held: Once orders were reserved, the appellant could not have complied with the Ordinance until pronouncement – To insist otherwise would be to compel the appellant to perform an impossibility contrary to the maxim lex non cogit ad impossibilia – The outcome on grounds of equity should be determined as on the date the order was reserved, and no subsequent legislative or administrative change should prejudice the parties – Where orders were already reserved prior to the promulgation of the Ordinance, the requirement cannot be retrospectively enforced [2025] 10 S.C.R. 171 Mansi Brar Fernandes v. Shubha Sharma and Anr. so as to defeat vested rights – The subsequent compliance by the
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