The Supreme Court on Tuesday upheld the constitutional validity of certain amendments carried out in the Insolvency and Bankruptcy Code (Amendment) Act 2020, which mandated 100 home buyers or 10 per cent of allottees of a housing project will be needed to initiate an insolvency resolution process against defaulting real estate firms.

Prior to the amendment, made last year to the 2016 IBC code, even a single person could set the law into motion.

The amendment, along with certain other amended provisions, were challenged before the apex court in a batch of petitions on the ground that it violated fundamental rights of the home buyers as there was no such requirement for others such as a financial creditor who can even individually trigger the insolvency proceedings also known as the Corporate Insolvency Resolution Process.

However, rejecting the plea of the petitioners, Justice K.M. Joseph, who authored the judgment, said: “In the case of the allottees of a real estate project, it is the approach of the Legislature that in a real estate project there would be a large number of allottees. There can be hundreds or even thousands of allottees in a project.

“If a single allottee, as a financial creditor, is allowed to move an application under Section 7, the interests of all the other allottees may be put in peril.”

The bench also comprised Justices R.F. Nariman and Navin Sinha.