MANISH KUMARversusUNION OF INDIA AND ANOTHER

                        [2021] 14 S.C.R. 895                              895


                         MANISH KUMAR                                     A
                                  v.
               UNION OF INDIA AND ANOTHER
                  (Writ Petition (C) No.26 of 2020)
                         JANUARY 19, 2021                                 B
     [ROHINTON FALI NARIMAN, NAVIN SINHA AND
                 K. M. JOSEPH, JJ.]
       Insolvency and Bankruptcy Code (Amendment) Act, 2020 –
s.3 –s.3 of the impugned amendment, amended s.7(1) of the
                                                                          C
Insolvency and Bankruptcy Code, 2016, incorporating three
provisos to s.7(1) – Under the second proviso, a new threshold was
declared for an allottee to move an application u/s.7 for trigerring
the insolvency resolution process under the Code – The second
proviso provided that for financial creditors who were allottees
under a real estate project, an application for initiating corporate      D
insolvency resolution process against the corporate debtor was to
be filed jointly by not less than one hundred of such allottees under
the same real estate project or not less than ten per cent of the total
number of such allottees under the same real estate project,
whichever is less – Challenge to the second proviso to s.7(1) – Held:
                                                                          E
Not tenable – 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 rationale
behind, confining allottees to the same real estate project, is to
promote the object of the Code – Once the threshold requirement           F
can pass muster when tested in the anvil of a challenge based on
Arts. 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 – Allottees under real estate projects are
                                                                          G
financial creditors, but they possess certain characteristics, which
set them apart from generality of the financial creditors, such as
numerosity; heterogeneity; and individuality in decision making –
If a single allottee, as a financial creditor, is allowed to move an
application u/s.7, the interests of all the other allottees may be put
in peril – In the circumstances, if the Legislature, taking into          H
                                  895
896            SUPREME COURT REPORTS                       [2021] 14 S.C.R.


A     consideration, the sheer numbers of a group of creditors, viz., the
      allottees of real estate projects, finds this to be an intelligible
      differentia, which distinguishes the allottees from the other financial
      creditors, who are not found to possess the characteristics of
      numerosity, then, it is not for this Court to sit in judgment over the
      wisdom of such a measure – The allottee continues to be a financial
B
      creditor – All that is envisaged is the legislative value judgment that
      a critical mass is indispensable for allottees to be present before
      the Code, can be activised – The purport of the critical mass of
      applicants would ensure that a reasonable number of persons
      similarly circumstanced, form the view that despite the remedies
C     available under the RERA or the Consumer Protection Act or a civil
      suit, the invoking of the Code is the only way out, in a particular
      case – If the Legislature felt that having regard to the consequences
      of an application under the Code, when such a large group of
      persons, pull at each other, an additional threshold be erected for
      exercising the right u/s.7, certainly, it cannot suffer a constitutional
D
      veto at the hands of Court exercising judicial review of legislation
      – This is not a case where the right of the allottee is completely
      taken away – All that has happened is a half-way house is built
      between extreme positions, viz., denying the right altogether to the
      allottee to move the application u/s.7 of the Code and giving an
E     unbridled license to a single person to hold the real estate project
      and all the stakeholders thereunder hostage to a proceeding under
      the Code –Insolvency and Bankruptcy Code, 2016 – s.7.
             Insolvency and Bankruptcy Code (Amendment) Act, 2020 –
      s.3 – s.3 of the impugned amendment, amended s.7(1) of the
F     Insolvency and Bankruptcy Code, 2016, incorporating three
      provisos to s.7(1) – The first proviso provided that for financial
      creditors, referred to in clauses (a) and (b) of sub-section (6A) of
      s.21, an application for initiating corporate insolvency resolution
      process against the corporate debtor shall be filed jointly by not
      less than one hundred of such creditors in the same class or not less
G     than ten per cent of the total number of such creditors in the same
      class, whichever is less – Challenge to – Held: The first proviso is
      invulnerable – The legislative understanding is clear that in regard
      to such creditors bearing the hallmark of large numbers they are
      required to be treated differently – If they are not treated differently
H     it would spell chaos and the objects of the Code would not be fulfilled
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                            897


– It is an extension of this basic principle which has led to the         A
insertion of the impugned proviso – Insisting on a threshold in regard
to these categories of creditors would lead to the halt to
indiscriminate litigation which would result in an uncontrollable
docket explosion as far as the authorities which work the Code are
concerned – The debtor who is apparently stressed is relieved of
                                                                          B
the last straw on the camel’s back, as it were, by halting individual
creditors whose views are not shared even by a reasonable number
of its peers rushing in with applications – Again, as in the case of
the allottees, this is not a situation where while treating them as
financial creditors they are totally deprived of the right to apply
under s.7 as part of the legislative scheme – The legislative policy      C
reflects an attempt at shielding the corporate debtor from what it
considers would be either for frivolous or avoidable applications –
All that the amendment is likely to ensure is that the filing of the
application is preceded by a consensus at least by a minuscule
percentage of similarly placed creditors that the time has come for
                                                                          D
undertaking a legal odyssey which is beset with perils for the
applicants themselves apart from others – As far as the percentage
of applicants contemplated under the proviso it is clear that it cannot
be dubbed as an arbitrary or capricious figure – Insolvency and
Bankruptcy Code, 2016 – s.7.
       Insolvency and Bankruptcy Code (Amendment) Act, 2020 –             E
s.4 – s.4 of the impugned amendment, incorporated an additional
Explanation in s.11 of the Code – While s.11 is about persons not
entitled to make application for initiating corporate insolvency
resolution process, the additional Explanation provided that nothing
in section 11 prevented a corporate debtor from initiating corporate      F
insolvency resolution process against another corporate debtor –
Held: The provisions of the impugned Explanation clearly amount
to a clarificatory amendment – A clarificatory amendment 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                G
28.12.2019 and, therefore, in respect to applications filed under
ss.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
– The intention of the Legislature was always to target the corporate     H
898            SUPREME COURT REPORTS                       [2021] 14 S.C.R.


A     debtor only insofar as it purported to prohibit application by the
      corporate debtor against itself, to prevent abuse of 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 s.11, from maximizing its assets by
      trying to recover the liabilities due to it from others – Not only does
B
      it go against the basic commonsense 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 – Insolvency and Bankruptcy Code, 2016 – s.11,
C     Explanation II.
             Insolvency and Bankruptcy Code (Amendment) Act, 2020 –
      s.10 – s.10 of the impugned amendment inserts s.32A in the Code –
      It was contended that but for s.32A, the properties which are
      acquired could be attached but that is pre-empted by s.32A – The
D     petitioners contend that immunity granted to the corporate debtors
      and its assets acquired from the proceeds of crimes and any criminal
      liability arising from the offences of the erstwhile management for
      the offences committed prior to initiation of CIRP and approval of
      the resolution plan by the adjudicating authority further jeopardizes
      the interest of the allottees/creditors – Held: No case whatsoever is
E     made out to seek invalidation of s.32A – The boundaries of this
      Court’s jurisdiction are clear – The wisdom of the legislation is not
      open to judicial review – Having regard to the object of the Code,
      the experience of the working of the code, the interests of all
      stakeholders including most importantly the imperative need to
F     attract resolution applicants who would not shy away from offering
      reasonable and fair value as part of the resolution plan if the
      legislature thought that immunity be granted to the corporate debtor
      as also its property, it hardly furnishes a ground for this Court to
      interfere – The provision is carefully thought out – It is not as if the
      wrongdoers are allowed to get away – They remain liable – The
G     extinguishment of the criminal liability of the corporate debtor is
      apparently important to the new management to make a clean break
      with the past and start on a clean slate – 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
H     of the corporate debtor – The new management cannot be the
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                             899


disguised avatar of the old management – It cannot even be the             A
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
                                                                           B
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 report submitted continues to be liable to be prosecuted
and punished for the offence committed by the corporate debtor –
The corporate debtor and its property in the context of the scheme         C
of the code constitute a distinct subject matter justifying the special
treatment accorded to them – Creation of a criminal offence as also
abolishing criminal liability must ordinarily be left to the judgement
of the legislature – Attaining public welfare very often needs delicate
balancing of conflicting interests – As to what priority must be
                                                                           D
accorded to which interest must remain a legislative value judgement
and if seemingly the legislature in its pursuit of the greater good
appears to jettison the interests of some it cannot unless it strikingly
ill squares with some constitutional mandate suffer invalidation –
There is no basis at all to impugn the Section on the ground that it
violates Articles 19, 21 or 300A – Insolvency and Bankruptcy Code,         E
2016 – s.32A.
       Insolvency and Bankruptcy Code (Amendment) Act, 2020 –
s.3 –s.3 of the impugned amendment, amended s.7(1) of the
Insolvency and Bankruptcy Code, 2016 – Amendment by s.3 of the
impugned amendment incorporated three provisos to s.7(1) – The             F
third proviso provided that where an application 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              G
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 – Held: The third proviso is a one-time affair – It is
intended only to deal with those applications, u/s.7, which were           H
900            SUPREME COURT REPORTS                       [2021] 14 S.C.R.


A     filed prior to 28.12.2019, when, by way of the impugned Ordinance,
      initially, the threshold 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 u/s.7 could
      be filed after 28.12.2019, except upon complying with the
      requirements in the first and second provisos – The Legislature did
B
      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, u/s.7(5) – In other
      words, the Legislature intended that in every application, filed under
C     s.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
D
      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 – When applications were filed under
      the unamended provisions of s.7, at any rate it would transform
      into a vested right – The vested right is to proceed with the action
E     till its logical and legal conclusion – 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 – Every
      sovereign Legislature is clothed with competence to make
F
      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 – The imposition of
      a threshold requirement being a mandatory and irreducible minimum
G     even, if it is to be achieved as and after the date of the amendment,
      constitutes an intrusion into the substantive right of action vested
      in the individual creditor – The action of the creditor was not a
      completed transaction – As regards his conduct in the past, viz.,
      moving u/s.7, it is incomplete but the action was commenced – But
      the law (the 3rd proviso) impairs the past action qua the future –
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    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                               901


Imposing the threshold requirement under the 3rd proviso, is not a           A
mere matter of procedure – It impairs vested rights – 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
                                                                             B
and the other stakeholders with deleterious consequences also qua
the objects of the Code – Insolvency and Bankruptcy Code, 2016 –
s.7.
       Insolvency and Bankruptcy Code, 2016 – Need of – Held:
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 business,   C
elevating the rate of recovery of loans, maximization of the assets
of ailing concerns and also, the balancing the interests of all
stakeholders.
      Amendment – Clarificatory amendment – Is retrospective in
nature.                                                                      D

     Legislation – Plenary Legislation – Challenge to – Grounds
– Discussed.
      Legislation – Plenary Legislation – Challenge to – On ground
of malice – Held: While malice may furnish a ground in an                    E
appropriate case to veto administrative action, malice does not
furnish a ground to attack a plenary law.
      Dismissing the writ petitions and transferred case, the Court
       HELD:1.1. The grounds on which plenary law can be
challenged are well established. A law can be successfully                   F
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              G
visited with unconstitutionality and declared void to the extent
of its contravention. Needless to say, a law within the meaning of
Article 19 of the Constitution would remain valid qua a non-citizen.
Thirdly, apart from Fundamental Rights, the supremacy of the

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902            SUPREME COURT REPORTS                        [2021] 14 S.C.R.


A     Constitution vis-a-vis the ordinary legislation, even when the law
      is plenary legislation, is preserved with a view that legislation
      must be in conformity with the other provisions of the
      Constitution. [Para 47][955-C-F]

           1.2. A plenary law if it is found to be manifestly arbitrary it
B     becomes vulnerable. [Para 50][958-C]

            1.3. A law, be it the offspring of a Legislature, it falls foul of
      Article 14 if it is found to be vague. [Para 51][958-E]

            1.4. It has been urged that the law was created by way of
C
      pandering to the real estate lobby and succumbing to their
      pressure or by way of placating their vested interests. Such an
      argument is nothing but a thinly disguised attempt at questioning
      the law of the Legislature based on malice. While malice may
      furnish a ground in an appropriate case to veto administrative
D     action it is trite that malice does not furnish a ground to attack a
      plenary law. [Para 52][958-G; 959-A, B-C]

             1.5. A supreme legislature cannot be cribbed, cabined or
      confined by the doctrine of promissory estoppel or estoppel. It
      acts as a sovereign body. The theory of promissory estoppel, on
E     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.
      [Para 54][959-E-G]
F
            1.6. A mere charge of either under inclusiveness or over
      inclusiveness which is not difficult to make hardly suffices to
      persuade the court to strike down a law. There is a wide latitude
      allowed in the legislature in these matters. The examination
      cannot be extended to find out whether there is mathematical
G     precision or wooden equality established. The working of the
      statute may produce further issues, all of it may not be fully
      perceived as which may not be wholly foreseen by the law giver.
      The freedom to experiment must be conceded to the legislature,
      particularly, in economic laws. If problems emerge in the working
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    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                             903


of law and which require legislative intervention, the court cannot        A
be oblivious to the power of the legislative to respond by stepping
in with necessary amendment. There is nothing like a perfect
law and as with all human institutions there are bound to be
imperfections. What is significant is however for the court ruling
on constitutionality, the law must present a clear departure from          B
constitutional limits. [Para 121][1005-E-H]

       1.7. 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          C
allottees are a part of. These are factual matters to be considered
in the facts of each case. [Para 124][1006-G-H]

        2. The rationale behind, confining allottees to the same real
estate project, is to promote the object of the Code. Once the
                                                                           D
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             E
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
a Promoter of a real estate project, may be having, in one sense,
it will make the task of the applicant himself, more cumbersome.           F
It becomes a sword, which will cut both ways. This is for the
reason that the complaints, relating to different projects, may be
different. With regard to one project of a Promoter of real estate
project, maybe, in the advanced stage, the allottees in a particular
project, may not have much of a complaint. The complaint, in
relation to yet another project, may be more serious. If the               G
complaint in respect of the latter, attracts the attention of a critical
mass of allottees, and the proposed applicant is part of that project
in the said project, then, it may be easier for the allottees to fulfil
the statutory mantra in the impugned provisos, with the junction
of likeminded souls. If, on the other hand, the requirement was            H
904            SUPREME COURT REPORTS                     [2021] 14 S.C.R.


A     to make a search for allottees of different projects, as would be
      the case, if the entirety of the allottees, under different projects,
      were to be reckoned, the task would have been much more
      cumbersome. The requirement of the allottees, being drawn from
      the same project, stands to reason and also does not suffer from
B     any constitutional blemish. [Para 140][1013-H; 1014-A-E]

            3. There can be no doubt that the requirement of a threshold
      under the impugned proviso, in Section 7(1), must be fulfilled as
      on the date of the filing of the application. [Para 141][1014-G-H]

C           4. In the matter of presentation of an application under
      Section 7, if the threshold requirement, under the impugned
      provisos, stands fulfilled, the requirement of the law must be
      treated as fulfilled. The contention, relating to the ambiguity and
      consequent unworkability and the resultant arbitrariness, is
      clearly untenable. If an allottee is able to, in other words, satisfy
D     the requirements, as on the date of the presentation, the
      requirement of the impugned law is fulfilled. [Para 143][1016-A-
      B]

             5. It does not matter whether a person has one or more
E     allotments in his name or in the name of his family members. As
      long as there are independent allotments made to him or his family
      members, all of them would qualify as separate allottees and they
      would count both in the calculation of the total allotments, as also
      in reckoning the figure of hundred allottees or one-tenth of the
      allottees, whichever is less. [Para 146][1017-F-G]
F
             6. 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
G
      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 allottee can be of any of the categories, fulfilling the

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   MANISH KUMAR v. UNION OF INDIA AND ANOTHER                           905


description of an allottee in Section 2(d) of RERA, joint allottees     A
of a single apartment, will be treated as only one allottee. Any
other view can lead to clear abuse and defeating of the object of
the Code. If, for instance, a single apartment is taken in the name
of hundred persons, a single allottee, who in turn comprise of
relatives or family members or friends, can move an application,
                                                                        B
even though the position ante would be restored, which means
that only the allottee qua one apartment, plot or building, is before
the Authority and it would not really represent a critical mass of
the allottees in the real estate project concerned. [Para 147][1018-
B-E]
                                                                        C
       7. 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      D
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         E
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 vividly different from that
of the Companies Act. Consequently, if the Legislature felt that        F
threshold requirement representing a critical mass of allottees,
alone would satisfy the requirement of a valid institution of an
application under Section 7, it cannot be dubbed as either
discriminatory or arbitrary. [Para 151][1019-D-G]
                                                                        G
      8. Invalidating a law made by a competent Legislature, on
the basis of what the Court may be induced to conclude, as a
better arrangement or a morewise and even fairer system, is
constitutionally impermissible. If, the impugned provisions are
otherwise not infirm, they must pass muster. [Para 157][1023-E]
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906            SUPREME COURT REPORTS                       [2021] 14 S.C.R.


A           9. The law giver has created a mechanism, namely, the
      association of allottees through which the allottees are expected
      to gather information about the status of the allotments including
      the names and addresses of the allottees. One cannot proceed
      on the basis in a case which involves a challenge to a statute that
      the information to be gathered under the statute will not be
B
      available on the basis that the statute will not be worked as
      contemplated by the law giver. [Para 163][1030-C-D]
            10. 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. A class
C     within a sub-class, is indeed not antithetical to the guarantee of
      equality under Article 14. [Para 188][1046-G-H; 1047-B]
             11. Allottees are, indeed, financial creditors. They do
      possess certain characteristics, however, which appear to have
      appealed to the Legislature as setting them apart from the
D     generality of financial creditors. These features, which set them
      apart, have been clearly indicated in the stand of the Union. They
      are: (i) Numerosity; (ii) Heterogeneity; and (iii) The individuality
      in decision making. [Para 189][1047-B-D]
             12. In the case of the allottees of a real estate project, it is
E     the approach of the Legislature that in a real estate project there
      would be 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
F     peril. This is for the reason that as stakeholders in the real estate
      project, having invested money and time and looking forward to
      obtaining possession of the flat or apartment and faced with the
      same state of affairs as the allottee, who moves the application
      under Section 7 of the Code, the other allottees may have a
      different take of the whole scenario. Some of them may approach
G     the Authority under the RERA. Others may, instead, resort to
      the For a under the Consumer Protection Act, though, the remedy
      of a civil suit is, no doubt, not ruled out. Ordinarily, the allottee
      would have the remedies available under RERA or the Consumer

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    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                           907


Protection Act, as the more effective option. In such                    A
circumstances, if the Legislature, taking into consideration, the
sheer numbers of a group of creditors, viz., the allottees of real
estate projects, finds this to be an intelligible differentia, which
distinguishes the allottees from the other financial creditors, who
are not found to possess the characteristics of numerosity, then,
                                                                         B
it is not for this Court to sit in judgment over the wisdom of such
a measure. [Para 192][1049-B-E]
       13. The enquiry 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          C
nexus with the object of the law. [Para 193][1049-F]
      14. 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           D
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          E
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 business, elevating the rate of recovery of loans,
maximization of the assets of ailing concerns and also, the
balancing the interests of all stakeholders. The Code purports           F
to achieve the object of maximization of the assets of corporate
bodies, inter alia, which have slipped into insolvency. Present a
default, which, no doubt, is not barred by time (subject to the
power of the Authority under Section 5 of the Limitation Act),
the Insolvency Resolution Process can be triggered. [Para                G
194][1049-G-H; 1050-A-C]
     15. A Resolution Plan is intended to resuscitate an ailing
corporate debtor and keep it going as a going concern. The

                                                                         H
908            SUPREME COURT REPORTS                       [2021] 14 S.C.R.


A     importance of rescuing ailing businesses in the form of infusing
      new life in such concerns, cannot be understated. Its significance
      lies in various directions. There would be various categories of
      creditors, of which, the legislative choice appears to show some
      degree of preference for the financial creditors, particularly in
      the form of banks and financial institutions. One of the chief goals
B
      of the Code is to prevent the loss of the value of capital. If the
      recovery of the loan is effected at the earliest, it translates into
      the availability of the recovered capital for being lent to other
      entrepreneurs, and this is an aspect, which goes to the root of
      the matter. With every passing hour, not unnaturally, depreciation
C     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,
D
      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. [Para
      194][1050-F-H; 1051-A-B]
             16. The speed, with which the processes can be conducted
E     and completed, is based on the volume of the litigation. The
      Adjudicating Authorities and the Appellate Bodies, viz.,
      N.C.L.A.T., are authorities under other enactments, as well. They
      are hard-pressed for time. The matters, which are covered by
      the Code, may present convoluted facts. The issues may bristle
F     with complications, both in points of law and also facts. If, out of a
      large body of financial creditors belonging to a sub-group, as for
      instance allottees of a real estate project, were to be given the
      freedom to activise the Code, then, the possibility of multiple
      individual actions, is a spectre, which the Legislature, must be
      presumed to be aware of. In other words, the Legislature became
G     alive to the peril of entire object of the Code, being derailed by
      permitting the individual players crowding the docket of the
      Authorities under the Code, and resultantly, reviving the very
      state of affairs, which compelled the Legislature to script a new
      dawn in this area of law. Instead, having regard to the numerosity,
H     the Legislature has thought it fit to adopt a balanced approach by
   MANISH KUMAR v. UNION OF INDIA AND ANOTHER                           909


not taking the allottee out of the fold of the financial creditors      A
altogether. The allottee continues to be a financial creditor. All
that is envisaged is the legislative value judgment that a critical
mass is indispensable for allottees to be present before the Code,
can be activised. The purport of the critical mass of applicants
would ensure that a reasonable number of persons similarly
                                                                        B
circumstanced, form the view that despite the remedies available
under the RERA or the Consumer Protection Act or a civil suit,
the invoking of the Code is the only way out, in a particular case.
[Para 196][1051-D-H; 1052-A-B]
       17. One of the objects is the balancing of the interests of
all stakeholders. By imposing a threshold limit of either hundred       C
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                D
homogenous group. All allottees of a real estate project form a
class. All of them have stakes in the prompt and effective
completion of the real estate project. There is a plurality of
remedies, which the law provides. More importantly, the outcome
of activising the Code, is almost like an uncertain wager. The
outcome of invoking the Code by individual allottees would be           E
apart from clogging the dockets of the Adjudicating Authorities
with even more voluminous files leading to greater delay, that at
the instance of such individual allottees, what would be perceived
as an avoidable calamity, is perpetuated. In other words, while a
vast majority of allottees may see reason in either giving time         F
and reposing faith in existing management of real estate project
or successfully invoking the other remedies available to them,
an individual allottee, out of the heterogenous group, would throw
the spanner in the works and bring the entire real estate project
itself to a possible doom. [Para 196][1052-D-H; 1053-A-B]
                                                                        G
       18. 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.

                                                                        H
910            SUPREME COURT REPORTS                       [2021] 14 S.C.R.


A     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
B     genuine and require greater and more timely attention;
             iii. It will defeat the object of the balancing the interests of
      all stakeholders. [Para 197][1053-E-G]
             19. The law under scrutiny is an economic measure. In
C     dealing with the challenge on the anvil of Article 14, the Court
      will not adopt a doctrinaire approach. A law cannot operate in a
      vacuum. In the concrete world, when the law is put into motion in
      practical experiences, bottlenecks that would flow from its
      application, are best envisaged by the Law Givers. Solutions to
      vexed problems made manifest through experience, would indeed
D     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. [Para
E     199][1054-G-H; 1055-A-B]
             20. 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
F     hand, is so described, on account of there being the element of
      borrowing. This distinction is indisputable. What is unique to the
      real estate developer vis-a-vis operational debts is that the
      developer is the debtor as an allottee funds his own apartment
      by paying amounts in advance. On the other hand, in case of
      operational debt, the person who has supplied the goods and
G     services, becomes the creditor and the corporate debtor is one
      who has availed such services. Another distinction is that an
      operational creditor has no interest or stake in the corporate
      debtor. The allottee is, on the other hand, vitally concerned with
      the financial health of the corporate debtor. Should financial ruin
      occur, the real estate project will come to a nought. Should such
H
   MANISH KUMAR v. UNION OF INDIA AND ANOTHER                          911


an event take place also, the allottee would not be in a position      A
to either claim or get compensation or even refund with interest.
Thirdly, there is no consideration for the time value of money in
the operational debt. This is not so in the case of an allottee.
[Para 212][1065-F-H; 1066-A-C]
       21. An action under the Code by way of an application under     B
Section 7 is an action in rem. The recovery of the amounts paid is
not what is primarily contemplated under the Code. 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 the one hand and a hostile discrimination falling foul     C
of the mandate of equality under Article 14, being fatal to the
Statute. In this case, while it may be true that the allottees are
unsecured creditors and in that regard, they are similar to the
operational creditors and it also may be true that many contracts
under real estate projects, may not involve large sums as the          D
subject matter of advances by banks and other financial
institutions, the similarity between the two ends there. What is
of greater importance is the distinctions and the most vital point
which sets them apart, in the matter of pronouncing on the vires
of the provisos under Section 7 is the numerosity of the allottees,
and what is more not being homogeneous in what they want in a          E
particular situation, since the law has indeed endowed the allottees
with different remedies, having different implications, be it under
the Consumer Protection Act or under RERA. If the Legislature
felt that having regard to the consequences of an application under
the Code, when such a large group of persons, pull at each other,      F
an additional threshold be erected for exercising the right under
Section 7, certainly, it cannot suffer a constitutional veto at the
hands of Court exercising judicial review of legislation. [Para
213][1066-F; 1067-B-F]
      22. This is not a case where the right of the allottee is        G
completely taken away. All that has happened is a half-way house
is built between extreme positions, viz., denying the right
altogether to the allottee to move the application under
Section 7 of the Code and giving an unbridled license to a single
person to hold the real estate project and all the stakeholders
                                                                       H
912            SUPREME COURT REPORTS                      [2021] 14 S.C.R.


A     thereunder hostage to a proceeding under the Code which must
      certainly pass inexorably within a stipulated period of time should
      circumstances exists under Section 33 into corporate death with
      the unavoidable consequence of all allottees and not merely the
      applicant under Section 7 being visited with payment out of the
      liquidation value, the amounts which are only due to the unsecured
B
      creditor. 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
C     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.
D
      The requirement is a mere one-tenth of the allottees. This is a
      number which goes to policy and lies exclusively within the
      wisdom of the Legislature. [Para 214][1067-G-H; 1068-A-D]
             23. The first proviso is invulnerable. The impact of the
      insertion of sub-section 3A in Section 25A is to be noticed. Section
E     25A, inter alia, deals with the exercise of rights and the liabilities
      of authorised representative of creditors like debenture holders
      and allottees. After the insertion of sub-section 3A in section
      25A, the majority of the creditors of a class is permitted to call
      the shots. It’s view, in other words, will hold sway. This is subject
F     to the Code otherwise. The legislative understanding is clear
      that in regard to such creditors bearing the hallmark of large
      numbers they are required to be treated differently. If they are
      not treated differently it would spell chaos and the objects of the
      Code would not be fulfilled. It is an extension of this basic
      principle which has led to the insertion of the impugned proviso.
G     Insisting on a threshold in regard to these categories of creditors
      would lead to the halt to indiscriminate litigation which would
      result in an uncontrollable docket explosion as far as the
      authorities which work the Code are concerned. The debtor who
      is apparently stressed is relieved of the last straw on the camel’s
H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                           913


back, as it were, by halting individual creditors whose views are        A
not shared even by a reasonable number of its peers rushing in
with applications. Again, as in the case of the allottees, this is not
a situation where while treating them as financial creditors they
are totally deprived of the right to apply under Section 7 as part
of the legislative scheme. The legislative policy reflects an attempt
                                                                         B
at shielding the corporate debtor from what it considers would
be either for frivolous or avoidable applications. What we mean
by avoidable applications is a decision which would not be taken
by similarly placed creditors keeping in mind the consequences
that would ensue not only in regard to persons falling in the same
category but also the generality of creditors and other                  C
stakeholders. All that the amendment is likely to ensure is that
the filing of the application is preceded by a consensus at least by
a minuscule percentage of similarly placed creditors that the time
has come for undertaking a legal odyssey which is beset with
perils for the applicants themselves apart from others. As far as
                                                                         D
the percentage of applicants contemplated under the proviso it
is clear that it cannot be dubbed as an arbitrary or capricious
figure. The legislature is not wanting in similar requirements
under other laws. The provisions of the Companies Act, 2013
and its predecessors contained similar provisions. Allowing what
is described as ‘lone Ranger’ applications beset with extremely          E
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
                                                                         F
security holders. The dividing line between wisdom or policy of
the legislature and limitation placed by the Constitution must
not be overlooked. [Para 220][1071-D-H; 1072-A-E]
       24. The intention of the Legislature was always to target
the corporate debtor only insofar as it purported to prohibit
application by the corporate debtor against itself, to prevent abuse     G
of 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       H
914            SUPREME COURT REPORTS                     [2021] 14 S.C.R.


A     basic commonsense view but it would frustrate the very object of
      the Code, if a corporate debtor is prevented from invoking the
      provisionsof 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
B
      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
C     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.
      [Para 243][1084-E-H; 1085-A]
            25. No case whatsoever is made out to seek invalidation of
D     Section 32A. The boundaries of this Court’s jurisdiction are clear.
      The wisdom of the legislation is not open to judicial review. Having
      regard to the object of the Code, the experience of the working
      of the code, the interests of all stakeholders including most
      importantly the imperative need to attract resolution applicants
      who would not shy away from offering reasonable and fair value
E     as part of the resolution plan if the legislature thought that
      immunity be granted to the corporate debtor as also its property,
      it hardly furnishes a ground for this this Court to interfere. The
      provision is carefully thought out. It is not as if the wrongdoers
      are allowed to get away. They remain liable. The extinguishment
F     of the criminal liability of the corporate debtor is apparently
      important to the new management to make a clean break with
      the past and start on a clean slate. One must also not overlook
      the principle that the impugned provision is part of an economic
      measure. As far as protection afforded to the property is concerned
      there is clearly a rationale behind it. Having regard to the object
G     of the statute one hardly sees any manifest arbitrariness in the
      provision. [Para 257][1098-B-D, F]
             27. 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.
H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                           915


The new management cannot be the disguised avatar of the old             A
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
                                                                         B
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 report submitted
continues to be liable to be prosecuted and punished for the
offence committed by the corporate debtor. The corporate debtor          C
and its property in the context of the scheme of the code constitute
a distinct subject matter justifying the special treatment accorded
to them. Creation of a criminal offence as also abolishing criminal
liability must ordinarily be left to the judgement of the legislature.
Erecting a bar against action against the property of the corporate
                                                                         D
debtor when viewed in the larger context of the objectives sought
to be achieved at the forefront of which is maximisation of the
value of the assets which again is to be achieved at the earliest
point of time cannot become the subject of judicial veto on the
ground of violation of Article 14. Attaining public welfare very
often needs delicate balancing of conflicting interests. As to what      E
priority must be accorded to which interest must remain a
legislative value judgement and if seemingly the legislature in
its pursuit of the greater good appears to jettison the interests of
some it cannot unless it strikingly ill squares with some
constitutional mandate suffer invalidation. There is no basis at
                                                                         F
all to impugn the Section on the ground that it violates Articles
19, 21 or 300A. [Paras 258, 259][1098-F-H; 1099-A-E]
      28. The third proviso is a one-time affair. It is intended
only to deal with those applications, under Section 7, which were
filed prior to 28.12.2019, when, by way of the impugned
Ordinance, initially, the threshold requirements came to be              G
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.
                                                                         H
916            SUPREME COURT REPORTS                    [2021] 14 S.C.R.


A     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
B
      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
C     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.[Para 261][1100-B-
      E]
D           29. 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. [Para
      333][1145-G-H; 1146-A]
E
            30. The financial creditors covered by the 3rd proviso were
      clothed with a statutory right under Section 7. This right was
      available to be exercised by an individual creditor, by himself or
      jointly with others. The imposition of a threshold requirement
      being a mandatory and irreducible minimum even, if it is to be
F     achieved as and after the date of the amendment, constitutes an
      intrusion into the substantive right of action vested in the
      individual creditor. The action of the creditor 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
G     the law (the 3rd proviso) impairs the past action qua the future.
      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. This Court has already upheld the first
      and second proviso, which, in fact, operates only in the future. In
H
   MANISH KUMAR v. UNION OF INDIA AND ANOTHER                          917


that sense, the Legislature has purported to equate persons who        A
had not filed applications with persons like the petitioners who
had filed the applications under the unamended law. [Para
346][1149-F-H; 1150-A-B]
      31. The requirement of compliance with the threshold
numerical requirements under the first and second proviso is an        B
integral and inseparable part of the third proviso. [Para 347][Para
348][1150-E]
       32. 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       C
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. [Para 359][1154-D-E]
                                                                       D
      33. The law in question is an economic measure. This is a
case where the Law Giver has not left anything to speculation or
doubt. [Para 360][1155-B]
      34. The Legislature has power to impair and take away
vested rights. The limitation that flows, however, is from both        E
Article 14 and 19 read with Article 21. It flows from the Doctrine
that the action of the State must be fair and reasonable. The
question, as to validity of the retrospective law, is a matter to be
judged on a consideration of the facts, the period of time, over
which the retrospective law operates, the impact of the law on
the vested rights, the public interest, the nature of the right,       F
which is the subject matter of the law and the terms of the law.
[Para 361][1155-D-F]
      35. 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        G
creditor to file the application, the proceedings are one in rem.
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
                                                                       H
918            SUPREME COURT REPORTS                     [2021] 14 S.C.R.


A     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 the time
      given under the proviso is manifestly arbitrary. A vested right
B
      under a statute can be taken away by a retrospective law. A right
      given under a statute can be taken away by another statute. There
      was considerable public interest behind such a law. The sheer
      numbers, in which applications proliferated, combined with the
      results it could produce, cannot be brushed aside as an irrational
C     or capricious aspect to have been guided by in making the law.
      Being an economic measure, the wider latitude available to the
      Law Giver, cannot be lost sight of. [Para 362][1155-F-H; 1156-A-
      C]
             36. As regards the compelled withdrawal under the third
D     proviso of the pending applications is concerned, once the
      Legislature intended that the pending applications must be made
      compliant with the threshold requirement, consequences for not
      doing so had to be provided. Otherwise, it would have created
      complete uncertainty and the applicant would have been dealt
      with in a manifestly arbitrary manner. Providing for the
E     consequence of withdrawal before admission does not have the
      consequence of preventing the fresh filing, even in regard to the
      same default, after complying, no doubt, with the requirement of
      the first or the second proviso, cannot be dubbed as arbitrary. No
      doubt, there is lack of clarity in this regard in the provision but
F     on an understanding of the law, as expounded, the provision was
      capable of being understood in the manner done. [Para 365][1156-
      G-H; 1157-A-B]
            37. In regard to the first and the second provisos, they have
      only prospective operation. The creditors covered by these
G     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
H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                              919


also become a Damocles Sword overhanging the debtor and the                 A
other stakeholders with deleterious consequences also qua the
objects of the Code. The period could have been more fair to the
petitioners by being longer but that is where one must bear in
mind, the limits of jurisdiction. Where would the Court draw the
line? It is difficult to hold that within the time limit of 30 days it is
                                                                            B
impossible to comply with the requirements. [Para 366 and
369][1157-B-D; 1158-C]
      38. The impugned amendments are upheld, subject to
directions issued under Article 142 of the Constitution of India.
[Para 372][1159-D]
                                                                            C
      The State of Gujarat and Others v. Shri Ambica Mills
      Ltd., Ahmedabad and Others (1974) 4 SCC 656 : [1974]
      3 SCR 760; State of West-Bengal v. Anwar Ali AIR 1952
      SC 75 : [1952] SCR 284; E.P. Royappa v. State of Tamil
      Nadu and Another (1974) 4 SCC 3 : [1974] 2 SCR 348;
      Shayara Bano v. Union of India (2017) 9 SCC 1 :                       D
      [2017] 9 SCR 797; Navtej Singh Johar and Others v.
      Union of India and Others (2018) 10 SCC 1 : [2018] 7
      SCR 379; Joseph Shine v. Union of India (2019) 3 SCC
      39 : [2018] 11 SCR 765; Justice K.S. Puttuswamy and
      Others v. Union of India and Others (2017) 10 SCC 1                   E
      : [2017] 10 SCR 569; Hindustan Construction
      Company Ltd. and Others v. Union of India and Others
      AIR 2020 SC 122; Shreya Singhal v. Union of India
      (2015) 5 SCC 1 : [2015] 5 SCR 963; K. Nagaraj and
      Others v. State of Andhra Pradesh and Another (1985)
      1 SCC 523 : [1985] 2 SCR 579; State of Himachal                       F
      Pradesh v. Narain Singh (2009) 13 SCC 165 : [2009]
      [10] SCR 821 – relied on.
      Pioneer Urban Land and Infrastructure Ltd. and
      another v. Union of India and Others (2019) 8 SCC
      416 : [2019] 10 SCR 381; Chitra Sharma and Others                     G
      v. Union of India and Others (2018) 18 SCC 575 :
      [2018] 12 SCR 1044; Motilal Padampat Sugar Mills
      Co. Ltd. v. State of U.P. (1979) 2 SCC 409 : [1979] 2
      SCR 641; Nagpur Investment Trust and Others v. Vithal
                                                                            H
920     SUPREME COURT REPORTS                    [2021] 14 S.C.R.


A     Rao and Others (1973) 1 SCC 500 : [1973] 3 SCR 39;
      B.K. Educational Services (P) Ltd. v. Parag Gupta &
      Associates (2019) 11 SCC 633 : [2018] 12 SCR 794;
      Swiss Ribbon Pvt. Ltd. & Ors. v. Union of India & Ors.
      (2019) 4 SCC 17 : [2019] 3 SCR 535; Garikapati
      Veeraya v. N. Subbiah Choudhry AIR 1957 SC 540 :
B
      [1957] SCR 488; Thirumalai Chemicals Limited v. Union
      of India and Others (2011) 6 SCC 739 : [2011] 4
      SCR 838; Delhi Metro Rail Corporation Ltd. v. Tarun
      Pal Singh and Others (2018) 14 SCC 161 : [2017] 14
      SCR 202; State of Karnataka and Others v. The
C     Karnataka Pawn Brokers Association and Others
      (2018) 6 SCC 363 : [2018] 10 SCR 409; Vasant Ganpat
      Padvave (D) by LRs & Ors. v. Anant Mahadev Sawant
      (D) Through LRs. & Ors. 2019 (12) SCALE 572;
      Ameerunnissa Begum and Others v. Mahboob Begum
      and others [1953] SCR 404; State of Jammu and
D
      Kashmir v. Triloki Nath Khosa and Others (1974) 1 SCC
      19 : [1974] 1 SCR 771; Murthy Match Works and
      others v. Assistant Collector of Central Excise and
      Another (1974) 4 SCC 428 : [1974] 3 SCR 121; Ajoy
      Kumar Banerjee and Others v. Union of India and
E     Others (1984) 3 SCC 127 : [1984] 3 SCR 252; Ashutosh
      Gupta v. State of Rajasthan and Others (2002) 4 SCC
      34 : [2002] 2 SCR 649; Indra Sawhney and Others v.
      Union of India and Others (1992) 3 Suppl. SCC 217 :
      [1992] 2 Suppl. SCR 454; Lord Krishna Sugar Mills
      Limited and Another v. Union of India and Another
F
      [1960] 1 SCR 39; State of Kerala and Another v. N.M.
      Thomas and Others (1976) 2 SCC 310 : [1976] 1
      SCR 906; State of West Bengal and Another v. Rash
      Behari Sarkar and Another (1993) 1 SCC 479 : [1992]
      3 Suppl. SCR 351; State of Kerala v. Aravind Ramakant
G     Modawdakar and Others (1999) 7 SCC 400; Sansar
      Chand Atri v. State of Punjab and Another (2002) 4
      SCC 154 : [2002] 2 SCR 881; Union of India and
      others v. Godfrey Philips India Ltd. (1985) 4 SCC 369
      : [1985] 3 Suppl. SCR 123; K. Nagaraj and Others v.
      State of A.P. and Another (1985) 1 SCC 523 : [1985]
H
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                  921


 2 SCR 579; State of Himachal Pradesh v. Narain Singh       A
 (2009) 13 SCC 165 : [2009] 10 SCR 821; Gujarat Agro
 Industries Co. Ltd. v. Municipal Corporation of the City
 of Ahmedabad and Others (1999) 4 SCC 468 : [1999]
 2 SCR 895; Howrah Municipal Corporation and
 Others v. Ganges Rope Co. Ltd. and Others (2004) 1
                                                            B
 SCC 663 : [2003] 6 Suppl. SCR 1212; Arcelormittal
 India Private Limited v. Satish Kumar Gupta and Others
 (2019) 2 SCC 1 : [2018] 12 SCR 362; Swiss Ribbons
 Private Limited and another v. Union of India and
 Others (2019) 4 SCC 17 : [2019] 3 SCR 535; Karnail
 Kaur and Others v. State of Punjab and Others (2015)       C
 3 SCC 206; Committee of Creditors of Essar Steel India
 Limited Through Authorised Signatory v. Satish Kumar
 Gupta and Others (2019) SCCONLINE SC 1478; M.S.
 Shivananda v. Karnataka State Road Transport
 Corporation and Others (1980) 1 SCC 149 : [1980]
                                                            D
 1 SCR 684 ; Lalji Raja and Sons v. Hansraj Nathuram
 (1971) 1 SCC 721 : [1971] 3 SCR 815; Kanaya Ram
 and Others v. Rajender Kumar and Others (1985) 1
 SCC 436 ; J.P. Srivastava & Sons (P) Ltd. and Others
 v. Gwalior Sugar Co. Ltd. and Others (2005) 1 SCC
 172 : [2004] 5 Suppl. SCR 648; Anjum Hussain and           E
 Others v. Intellicity Business Park Private Limited and
 Others (2019) 6 SCC 519 : [2019] 7 SCR 1036; Union
 of India and Others v. Godfrey Philips India Ltd. (1985)
 4 SCC 369 : [1985] 3 Suppl. SCR 123; B.K.
 Educational Services Private Limited v. Parag Gupta
                                                            F
 & Associates (2019) 11 SCC 633 : [2018] 12 SCR 794;
 Rajahmundry Electric Supply Corporation Ltd. v.
 A. Nageshwara Rao and Others AIR 1956 SC 213 :
 [1955] SCR 1066; Chairman, Tamil Nadu Housing
 Board v. T. N. Ganapathy (1990) 1 SCC 608 : [1990] 1
 SCR 272; Pioneer Urban Land and Infrastructure Ltd.        G
 and Another v. Union of India and Others (2019) 8
 SCC 416 : [2019] 10 SCR 381; Union of India v. Tarsem
 Singh (2019) 9 SCC 304; State of Gujarat and Another
 v. Shree Ambica Mills Ltd. (1974) 4 SCC 656 : [1974] 3
 SCR 760; In Re The Special Courts Bill, 1978 (1979) 1
                                                            H
922     SUPREME COURT REPORTS                     [2021] 14 S.C.R.


A     SCC 380 : [1979] 2 SCR 476; Ajoy Kumar Banerjee
      and Ors. v. Union of India and Ors. (1984) 3 SCC 127
      : [1984] 3 SCR 252; Subramanian Swami v. Director,
      CBI and Ors. (2014) 8 SCC 682 : [2014] 6 SCR 873;
      Indira Sawney v. Union of India (1992) 3 Suppl. SCC
      217 : [1992] 2 Suppl. SCR 454; State of West Bengal
B
      and Ors. v. Rash Bihari Sarkar and Ors. (1993) 1 SCC
      479 : [1992] 3 Suppl. SCR 351; State of Kerala v.
      Aravind Ramakant Modawdakar and Ors. (1999) 7
      SCC 400; Sansar Chand Atri v. State of Punjab and
      Another (2002) 4 SCC 154 : [2002] 2 SCR 881; His
C     Holiness Kesavananda Bharti Sripadagalvaru v. State
      of Kerala and Another (1973) 4 SCC 225 : [1973]
      0 Suppl. SCR 1; Innoventive Industries Limited v. ICICI
      Bank and Another (2018) 1 SCC 407 : [2017] 8
      SCR 33; Vasant Ganpat Padave (D) by LRs. and Ors.
      v. Anant Mahadev Sawant (D) through LRs. and Ors.
D
      (2019) 12 SCALE 579; Shayara Bano v. Union of India
      and Others (2017) 9 SCC 1 : [2017] 9 SCR 797;
      S. Sundaram Pillai and others v. R. Pattabiraman and
      Others (1985) 1 SCC 591 : [1985] 2 SCR 643; Sonia
      Bhatia v. State of U.P. and Others (1981) 2 SCC 585 :
E     [1981] 3 SCR 239; Virtual Soft Systems Ltd. v.
      Commissioner of Income Tax, Delhi-I (2007) 9 SCC 665
      : [2007] 2 SCR 289; Hiralal Rattanlal and Ors. v. State
      of U.P. and another (1973) 1 SCC 216 : [1973] 2
      SCR 502; Hitendra Vishnu Thakur and Others v. State
      of Maharashtra and Others (1994) 4 SCC 602 : [1994]
F
      1 Suppl. SCR 360; Ambalal Sarabhai Enterprises Ltd.
      v. Amrit Lal & Co. and Another (2001) 8 SCC 397 :
      [2001] 2 Suppl. SCR 195; B.K. Educational Services
      Private Ltd. v. Parag Gupta and Associates (2019) 11
      SCC 633 : [2018] 12 SCR 794; Lalji Raja and Sons v.
G     Hansraj Nathuram (1971) 1 SCC 721 : [1971] 3 SCR
      815; Isha Valimohamed v. Haji Gulam Mohamad & Haji
      Dada Trust (1974) 2 SCC 484 : [1975] 1 SCR 720;
      Bombay Stock Exchange v. V.S. Kandalgaonkar (2015)
      2 SCC 1 : [2014] 14 SCR 409; New India Assurance
      Co. Ltd. v. Shanti Misra (1975) 2 SCC 840 : [1976]
H
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                923


 2 SCR 266; Vinod Gurudas Raikar v. National              A
 Insurance Co. Ltd. & Ors. (1991) 4 SCC 333 : [1991]
 3 SCR 912; Union of India v. Harnam Singh (1993) 2
 SCC 162 : [1993] 1 SCR 862; V. Dhanapal Chettiar v.
 Yesodai Ammal (1979) 4 SCC 214 : [1980] 1 SCR 334;
 D. C. Bhatia v. Union of India (1995) 1 SCC 104 :
                                                          B
 [1994] 4 Suppl. SCR 539; Mst. Bibi Sayeeda & Ors. v.
 State of Bihar and Others (1996) 9 SCC 516 : AIR
 1996 SC 1936 : [1996] 1 Suppl. SCR 799; M.S.
 Shivananda v. Karnataka SRTC (1980) 1 SCC 149 :
 [1980] 1 SCR 684; Rameshwar and Others v. Jot Ram
 and Another (1976) 1 SCC 194 : [1976] 1 SCR 847;         C
 Bansidhar v. State of Rajasthan (1989) 2 SCC 557 :
 [1989] 2 SCR 152; Mohinder Kumar and Others v. State
 of Haryana and Another (1985) 4 SCC 221 : [1985]
 2 Suppl. SCR 859; D. C. Bhatia and Others v. Union
 of India and Another (1995) 1 SCC 104 : [1994] 4
                                                          D
 Suppl. SCR 539; Howrah Municipal Corporation and
 Others v. Ganges Rope Co. Ltd. and Others (2004) 1
 SCC 663 : [2003] 6 Suppl. SCR 1212; Arcelormittal
 India Private Limited v. Satish Kumar Gupta & Others
 (2019) 2 SCC 1 : [2018] 12 SCR 362; B.K. Educational
 Services Private Limited v. Parag Gupta and Associates   E
 (2019) 11 SCC 633 : [2018] 12 SCR 794; M.P. Steel
 Corporation v. Commissioner of Central Excise (2015)
 7 SCC 58; Mardia Chemicals Ltd. and Others v. Union
 of India and Others (2004) 4 SCC 311 : [2004]
 3 SCR 982; P.D. Aggrawal & Others v. State of U.P
                                                          F
 and Others (1987) 3 SCC 622 : [1987] 3 SCR 427;
 Darshan Singh v. Ram Pal Singh and Ors. (1992) 1
 Suppl. SCC 191 : [1990] 3 Suppl. SCR 212; K.S.
 Paripoornan v. State of Kerala (1994) 5 SCC 593 :
 [1994] 3 Suppl. SCR 405; State Bank’s Staff Union
 (Madras Circle) v. Union of India and Others AIR 2005    G
 SC 3446 : (2005) 7 SCC 584 : [2005] 3 Suppl.
 SCR 200; Delhi Transport Corpn. v. D.T.C. Mazdoor
 Congress (1991) 1 Suppl. SCC 600 : [1990] 1 Suppl.
 SCR 142 and Vijay v. State of Maharashtra (2006) 6
 SCC 289 : [2006] 4 Suppl. SCR 81 – referred to.
                                                          H
924          SUPREME COURT REPORTS                    [2021] 14 S.C.R.


A          Gopeshur Pal v. Jiban Chandra Chandra and Others
           AIR 1914 Calcutta 806 – referred to.
           West v. Gwynne (1910) WLR 976; In Re: Pulborough
           Parish School Board Election, Bourke v. Nutt (1894) 1
           QB 725; Abbott and Minister of Lands (1895) AC 425;
B          Hamilton Gell v. White (1922) 2 K.B. 422; Odgen
           Industries Pty. Ltd. v. Haider Doreen Lucas 3 WLR 75/
           (1969) (1) All England Reports 121; Director of Public
           Works and Another v. Ho Po Sang and Others [1961] 3
           WLR 39 and L’Office Cherifien Des Phosphates and
           another And Yamashita-Shinnihon Steamship Co. Ltd.
C          (1994) 1 All ER 20 – referred to.
                           Case Law Reference
      [2019] 10 SCR 381             referred to          Para 14
      [2018] 12 SCR 1044            referred to          Para 20
D
      [1979] 2 SCR 641              referred to          Para 20
      [1973] 3 SCR 39               referred to          Para 20
      [2018] 12 SCR 794             referred to          Para 23
      [2019] 3 SCR 535              referred to          Para 23
E
      [1957] SCR 488                referred to          Para 25
      [2011] 4 SCR 838              referred to          Para 25
      [2017] 14 SCR 202             referred to          Para 25

F     [2018] 10 SCR 409             referred to          Para 26
      2019 (12) SCALE 572           referred to          Para 29
      [1953] SCR 404                referred to          Para 31
      [1974] 1 SCR 771              referred to          Para 31
G     [1974] 3 SCR 121              referred to          Para 31
      [1984] 3 SCR 252              referred to          Para 31
      [2002] 2 SCR 649              referred to          Para 31
      [1992] 2 Suppl. SCR 454       referred to          Para 36
H
   MANISH KUMAR v. UNION OF INDIA AND ANOTHER      925


[1960] 1 SCR 39            referred to   Para 36   A
[1976] 1 SCR 906           referred to   Para 36
[1992] 3 Suppl. SCR 351    referred to   Para 36
(1999) 7 SCC 400           referred to   Para 36
[2002] 2 SCR 881           referred to   Para 37   B
[1985] 3 Suppl. SCR 123    referred to   Para 38
[1985] 2 SCR 579           referred to   Para 38
[2009] 10 SCR 821          referred to   Para 38
                                                   C
[1999] 2 SCR 895           referred to   Para 39
[2003] 6 Suppl. SCR 1212   referred to   Para 39
[2018] 12 SCR 362          referred to   Para 39
[2019] 3 SCR 535           referred to   Para 39
                                                   D
(2015) 3 SCC 206           referred to   Para 39
[1980] 1 SCR 684           referred to   Para 40
[1971] 3 SCR 815           referred to   Para 40
(1985) 1 SCC 436           referred to   Para 40
                                                   E
[2004] 5 Suppl. SCR 648    referred to   Para 42
[2019] 7 SCR 1036          referred to   Para 42
[1974] 3 SCR 760           relied on     Para 47
[1952] SCR 284             relied on     Para 48   F
[1974] 2 SCR 348           relied on     Para 49
[2017] 9 SCR 797           relied on     Para 49
[2018] 7 SCR 379           relied on     Para 50
[2018] 11 SCR 765          relied on     Para 50   G
[2017] 10 SCR 569          relied on     Para 50
AIR 2020 SC 122            relied on     Para 50
[2015] 5 SCR 963           relied on     Para 51
                                                   H
926           SUPREME COURT REPORTS           [2021] 14 S.C.R.


A     [1985] 2 SCR 579          relied on        Para 52
      [2009] 10 SCR 821         relied on        Para 52
      [1985] 3 Suppl. SCR 123   referred to      Para 54
      [2018] 12 SCR 794         referred to      Para 134
B     [1955] SCR 1066           referred to      Para 142
      [1990] 1 SCR 272          referred to      Para 155
      [2019] 10 SCR 381         referred to      Para 158
      (2019) 9 SCC 304          referred to      Para 170
C
      [1974] 3 SCR 760          referred to      Para 175
      [1979] 2 SCR 476          referred to      Para 176
      [1984] 3 SCR 252          referred to      Para 177
      [2014] 6 SCR 873          referred to      Para 178
D
      [1992] 2 Suppl. SCR 454   referred to      Para 183
      [1992] 3 Suppl. SCR 351   referred to      Para 184
      (1999) 7 SCC 400          referred to      Para 185
      [2002] 2 SCR 881          referred to      Para 186
E
      [1973] 0 Suppl. SCR 1     referred to      Para 199
      [2017] 8 SCR 33           referred to      Para 203
      (2019) 12 SCALE 579       referred to      Para 216

F     [2017] 9 SCR 797          referred to      Para 216
      [1985] 2 SCR 643          referred to      Para 227
      [1981] 3 SCR 239          referred to      Para 227
      [2007] 2 SCR 289          referred to      Para 228
G     [1973] 2 SCR 502          referred to      Para 233
      [1994] 1 Suppl. SCR 360   referred to      Para 262
      [2001] 2 Suppl. SCR 195   referred to      Para 262
      [2018] 12 SCR 794         referred to      Para 262
H     [1971] 3 SCR 815          referred to      Para 272
   MANISH KUMAR v. UNION OF INDIA AND ANOTHER                   927


[1975] 1 SCR 720                referred to          Para 281   A
[2014] 14 SCR 409               referred to          Para 287
[1976] 2 SCR 266                referred to          Para 288
[1991] 3 SCR 912                referred to          Para 291
[1993] 1 SCR 862                referred to          Para 291   B
[1980] 1 SCR 334                referred to          Para 292
[1994] 4 Suppl. SCR 539         referred to          Para 293
[1996] 1 Suppl. SCR 799         referred to          Para 294
                                                                C
[1980] 1 SCR 684                referred to          Para 296
[1976] 1 SCR 847                referred to          Para 297
[1989] 2 SCR 152                referred to          Para 298
[1985] 2 Suppl. SCR 859         referred to          Para 302
                                                                D
[1994] 4 Suppl. SCR 539         referred to          Para 302
[2003] 6 Suppl. SCR 1212        referred to          Para 303
[2018] 12 SCR 362               referred to          Para 304
[2018] 12 SCR 794               referred to          Para 308
                                                                E
(2015) 7 SCC 58                 referred to          Para 308
[2004] 3 SCR 982                referred to          Para 312
[1987] 3 SCR 427                referred to          Para 317
[1990] 3 Suppl. SCR 212         referred to          Para 319   F
[1994] 3 Suppl. SCR 405         referred to          Para 322
[2005] 3 Suppl. SCR 200         referred to          Para 323
[1990] 1 Suppl. SCR 142         referred to          Para 326
[2006] 4 Suppl. SCR 81          referred to          Para 328   G
       CIVIL ORIGINAL JURISDICTION: Writ Petition (Civil) No.
26 of 2020.
     Under Article 32 of The Constitution of India
     With
                                                                H
928            SUPREME COURT REPORTS                         [2021] 14 S.C.R.


A           Writ Petition (C) No. 53, 28, 47, 27, 73, 328, 210, 191, 164, 163,
      166, 173, 182, 176, 177, 257, 341, 267, 333, 337, 388, 402, 390, 393, 783,
      579, 806, 714, 642, 805, 19, 33, 75, 165, 850, 374, 229, 228, 209 Of 2020
      And Transferred Case (c) No. 228/2020
             Ms. Madhavi Diwan, ASG, Tushar Mehta, SG, Sajan Poovayya,
B     Rana Mukherjee, Neeraj Kishan Kaul, Sr. Advs., Krishnamohan K.
      Menon, Chaitanyashil Priyadarshi, Ms. Dania Nayyar, Ms. Parul
      Sachdeva, Akash Vajpayee, Vaibhav Manu Srivastava, Bhanu Pant, Namit
      Saxena, Piyush Singh, Aditya Parolia, Akshay Srivastava, Nithin
      Chandran, Rajesh Kumar, Gaurav Goel, Srijan Sinha, Himanshu Chaubey,
      Ashwarya Sinha, Santosh Kumar, Ayushmaan Vatsyayana, Ms. Hemlata
C     Rawat, Deepak Anand, Mareesh Pravir Sahay, Ms. Tasheem Ahmadi,
      Sudhir Kumar Gupta, Manish Gupta, Shikhil Suri, Shiv Kumar Suri, Ms.
      Madhu Suri, Ms. Shilpa Saini, Ms. Nikita Thapar, Ms. Vinishma Kaul,
      Ms. Priyanjali Singh, Ms. Rashi Bansal, Dinesh Chandra Pandey, Dhruv
      Gupta, Harshil Gupta, Arjun Singh Bhati, Annam D. N. Rao, Annam
D     Venkatesh, Rahul Mishra, Sidharth Joshi, Gopal Singh Chauhan, Saurabh
      Trivedi, Mahesh Agarwal, Himanshu Satija, Raheel Patel, Ajitesh Soni,
      Rohan Talwar, Ramchandra Madan, Akash Lamba, E. C. Agrawala,
      Ms. Shivali, Nilotpal Shyam, Ms. Bharti Tyagi, Rajesh Goyal, Sumit
      Gehlawat, Tervender Singh, Abhishek Bharadwaj, Pai Amit, Ms. Pankhuri
      Bhardwaj, Rakesh Taneja, Parshuram A.L., Kumar Vaibhav, Ankit
E     Agrawal, Rahat Bansal, A.D.N. Rao, Annam Venkatesh,
      Chandrashekhar A. Chakalabbi, Shivanshu Kumar, Shiv Kumar Pandey,
      Awanish Kumar, Anshul Rai for M/s Dharmaprabhas Law Associates,
      Mayank Pandey, Ms. Misha Rohatgi Mohta, Johnson Subba, Ms. Purti
      Marwaha Gupta, Dr. Anindita Pujari, Arvind Kumar Gupta, Ms. Henna
F     George, Ms. Twisha Issar, Ms. Deval Singh, Om Narayan, Pallav Mongia,
      Kanu Agarwal, Ms. Sunita Sharma, Rajeev Ranjan, Ms. Sansriti Pathak,
      Arvind Kumar Sharma, Ms. Charu Ambwani, Hirendranath, Santanam
      Swaminadhan, Ms. Prakruti Golechha, Ms. Abhilasha Shrawat,
      Mrs. Aarthi Rajan, Amar Gupta, Divyam Agarwal, Daksh Ahluwalia,
      Ms. Pallavi Kumar, Adhiraj Gupta, Pratibhanu Singh, Shikhar Maniar,
G     Ms. Raksha Aggarwal, Keshav Mohan, R.K. Awasthi, Prashant Kumar,
      Piyush Vats, Ms. Ritu Arora, Santosh Kumar - I, Rajesh P., Karan
      Rajpurohit, Krishna Dev Jagarlamudi, Vikram Hegde, Rahul Kumar, Advs.
      for the appearing parties.
            Respondent-in-person
H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                    929


      The Judgment of the Court was delivered by                                  A
      K. M. JOSEPH, J.
       1. The petitioners have approached this Court under Article 32 of
the Constitution of India. They call in question Sections 3, 4 and 10 of
the Insolvency and Bankruptcy Code (Amendment) Act 2020 (hereinafter
referred to as ‘the impugned amendments’, for short). Section 3 of the            B
impugned amendment, amends Section 7(1) of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as ‘the Code’, for short).
Section 4 of the impugned amendment, incorporates an additional
Explanation in Section 11 of the Code. Section 10 of the impugned
amendment inserts Section 32A in the Code.                                        C
      2. Section 7(1) of the Code before the amendment read as follows:
      “7. Initiation of corporate insolvency resolution process by financial
      creditor:
      (1) A financial creditor either by itself or jointly with other financial   D
          creditors, or any other person on behalf of the financial creditor,
          as may be notified by the Central Government, may file an
          application for initiating corporate insolvency resolution process
          against a corporate debtor before the Adjudicating Authority
          when a default has occurred.”
                                                                                  E
      Explanation- For the purposes of this sub section, a default includes
      a default in respect of a financial debt owed not only to the applicant
      financial creditor but to any other financial creditor of the corporate
      debtor.
     The amendment to the same by Section 3 of the impugned
                                                                                  F
amendment incorporates 3 provisos to Section 7(1), which reads as under:
      “Provided that for the financial creditors, referred to in clauses
      (a) and (b) of sub-section (6A) of section 21, an application for
      initiating corporate insolvency resolution process against the
      corporate debtor shall be filed jointly by not less than one hundred
      of such creditors in the same class or not less than ten per cent.          G
      of the total number of such creditors in the same class, whichever
      is less:
      Provided further that for financial creditors who are allottees under
      a real estate project, an application for initiating corporate
                                                                                  H
930           SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A          insolvency resolution process against the corporate debtor shall
           be filed jointly by not less than one hundred of such allottees under
           the same real estate project or not less than ten per cent. of the
           total number of such allottees under the same real estate project,
           whichever is less:
B          Provided also that where an application 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
C          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:
D
           “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:-

E          (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
F          (c) a corporate debtor or a financial creditor who has violated any
           of the terms of resolution plan which was approved twelve months
           before the date of making of an application under this Chapter; or
           (d) a corporate debtor in respect of whom a liquidation order has
           been made. Explanation 1 [I]. - For the purposes of this section, a
G          corporate debtor includes a corporate applicant in respect of such
           corporate debtor.”
           The explanation which was inserted through the impugned
      amendment reads as follows:

H
   MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   931
                [K. M. JOSEPH, J.]

      “Explanation II.- For the purposes of this section, it is hereby          A
      clarified that nothing in this section shall prevent a corporate debtor
      referred to in clauses (a) to (d) from initiating corporate insolvency
      resolution process against another corporate debtor.”
       4. Section 32A inserted through the impugned amendment reads
as follows:                                                                     B
      “32A. (1) Notwithstanding anything to the contrary contained in
      this Code or any other law for the time being in force, the liability
      of a corporate debtor for an offence committed prior to the
      commencement of the corporate insolvency resolution process
      shall cease, and the corporate debtor shall not be prosecuted for         C
      such an offence from the date the resolution plan has been
      approved by the Adjudicating Authority under section 31, if the
      resolution plan results in the change in the management or control
      of the corporate debtor to a person who was not—
      (a) a promoter or in the management or control of the corporate           D
      debtor or a related party of such a person; or
      (b) 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 commission of
      the offence, and has submitted or filed a report or a complaint to        E
      the relevant statutory authority or Court:
      Provided that if a prosecution had been instituted during the
      corporate insolvency resolution process against such corporate
      debtor, it shall stand discharged from the date of approval of the
      resolution plan subject to requirements of this sub-section having        F
      been fulfilled:
      Provided further that every person who was a “designated partner”
      as defined in clause (j) of section 2 of the Limited Liability
      Partnership Act, 2008, or an “officer who is in default”, as defined
      in clause (60) of section 2 of the Companies Act, 2013, or was in
                                                                                G
      any manner incharge of, or responsible to the corporate debtor
      for the conduct of its business or associated with the corporate
      debtor 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        H
932         SUPREME COURT REPORTS                       [2021] 14 S.C.R.


A     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
B     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—
C     (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 commission of the offence,
D     and has submitted or filed a report or a complaint to the relevant
      statutory authority or Court.
      Explanation.—For the purposes of this sub-section, it is hereby
      clarified that,—
      (i)    an action against the property of the corporate debtor in
E            relation to an offence shall include the attachment, seizure,
             retention or confiscation of such property under such law as
             may be applicable to the corporate debtor;
      (ii) nothing in this sub-section shall be construed to bar an action
           against the property of any person, other than the corporate
F          debtor or a person who has acquired such property through
           corporate insolvency resolution process or liquidation process
           under this Code and fulfils the requirements specified in this
           section, against whom such an action may be taken under
           such law as may be applicable.
G     (3) Subject to the provisions contained in sub-sections (1) and
          (2), and notwithstanding the immunity given in this section,
          the corporate debtor and any person who may be required to
          provide assistance under such law as may be applicable to
          such corporate debtor or person, shall extend all assistance
          and co-operation to any authority investigating an offence
H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   933
                 [K. M. JOSEPH, J.]

            committed prior to the commencement of the corporate                 A
            insolvency resolution process.”
       WHO ARE THE PETITIONERS?
       5. More than the lion’s share of the petitioners are allottees under
real estate projects and hereinafter referred to as allotees. They have
trained the constitutional gun at the impugned provisos.                         B

       6. Under the second proviso, a new threshold has been declared
for an allottee to move an application under Section 7 for triggering the
insolvency resolution process under the Code. The threshold is the
requirement that there should be at least 100 allottees to support the
application or 10 per cent of the total allottees whichever is less. Moreover,   C
they should belong to the same project. Almost all (except in two petitions),
the petitioners also had under the erstwhile regime which permitted even
a single allottee to move an application under Section 7 filed petitions
singly or with less than the number required under the proviso and they
are visited with the provisions of the third proviso as per which such of        D
those applications under section 7 which had not been admitted would
stand withdrawn within 30 days, if the newly declared threshold of 100
allottees 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      E
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           F
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,            G
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
                                                                                 H
934             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A     for corporate persons. ‘Corporate person’ has been defined in Section
      3(7) as follows:
            “3(7). “corporate person” means a company as defined in clause
            (20) of section 2 of the Companies Act, 2013, a limited liability
            partnership, as defined in clause (n) of sub-section (1) of section
B           2 of the Limited Liability Partnership Act, 2008, or any other person
            incorporated with limited liability under any law for the time being
            in force but shall not include any financial service provider.”
            10. Section 3(8) defines ‘corporate debtor’ which provides that a
      corporate debtor means a person who owes a debt to any person.
C            11. We may notice that Chapter II of Part II which consists of
      Sections 6 to 32 deal with the corporate insolvency resolution process.
      Chapter III deals with ordinary liquidation process in regard to corporate
      person. Chapter IV of Part II consisting of four sections deal with fast-
      track insolvency resolution process. Chapter V which consists of Section
D     59 only deals with voluntary liquidation of corporate person. Chapter VI
      deals with miscellaneous aspects. Chapter VII Part II deals with Penalties.
             12. Part III deals with insolvency resolution and bankruptcy code
      for individuals and partnership firms. It may be noticed at once that
      partnership firms with limited liability as defined in the Limited Liability
E     Partnership Act, 2008 fall within the definition of the word ‘Corporate
      person’ and insolvency and liquidation process in regard to the same is
      found in Part II of the Code. It is in regard to Insolvency resolution and
      bankruptcy for the other partnership firms which one has to look to the
      provisions of Part III. Part III begins with Section 78 and ends with
      Section 187. The further provisions relate to the regulation of insolvency
F     professional agencies and information utilities. They are all key
      instrumentalities for the effective working of the Code. Equally, it may
      be apposite to bear in mind Section 238A. It reads as follows:
            “238A. Limitation - The provisions of the Limitation Act, 1963
            (36 of 1963) shall, as far as may be, apply to the proceedings or
G           appeals before the Adjudicating Authority, the National Company
            Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt
            Recovery Appellate Tribunal, as the case may be.”
              13. Shri Krishna Mohan Menon, learned counsel for the petitioners
      (allottees) in some of the petitions has addressed the following submissions
H     before us:
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                              935
                    [K. M. JOSEPH, J.]

                The impugned amendment clearly falls foul of the mandate       A
         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.
                                                                               B
         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    C
         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
                                                                               D
         argument addressed by Shri Krishna Mohan Menon, learned
         counsel is that the amendment has the legally pernicious effect of
         creating a class within a class, a result, which is frowned upon by
         the law.
       14. Learned counsel would expatiate and submit that under the
Code, the law provides for a period of 14 days for the Adjudicating            E
Authority to decide whether an application under Section 7 should be
admitted. Section 12 declares an inflexible time limit for the insolvency
resolution process to be terminated. The whole purport of the provisions
of the Code and the manner in which it is structured is geared to achieve
a laudable object. The Code aims at improving the ranking of India in the      F
matter of ease of doing business. It is an economic measure which is
intended to transform India into a country which would attract capital
and investment. The Code has indeed resulted in a transformation of
attitudes of the key players, in that it has come to be perceived as a law
not merely on paper but one with teeth to it. He would point out that this
Court in its decision in the Pioneer’s Case Pioneer Urban Land and             G
Infrastructure Ltd. and another v. Union of India and others1 has
elaborately dealt with the apprehension that allowing the home buyers
like the petitioners who finance the builder’s activities to invoke the CIRP
process will lead to misuse of the provisions and allayed the unfounded
1
    (2019) 8 SCC 416                                                           H
936            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A     fears. Yet the legislature has ventured to place unjustifiable clogs on the
      right of one category of financial creditors alone which is impermissible.
      The spectre of a speculative investor running riot and playing havoc has
      been adequately addressed by this Court. There is no worthwhile data
      of misuse by home buyers. He points out the judgments passed by NCLAT
      where the financial creditors, who are home buyers, approach the Tribunal
B
      and the cases reflect gross and inordinate delay of nearly five years
      justifying the approach made by the home buyers under the Code. In
      other words, there were genuine cases where the debtor had become
      insolvent and hence the home buyer had complete justification in knocking
      at the doors of the competent Tribunal under the Code. He took us
C     through the reports of the Parliamentary Committee and complained
      that no reasons are discernible to justify the amendments. Equally, he
      commended for our acceptance the observations in the dissent notes
      and contended that they fortify the submissions.
            15. In regard to the comparison sought to be made, with similar
D     requirements 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
E     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
F     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
G     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 the date of default of various home buyers may be different.
      Therefore, to forge a common complaint impelling a group of home buyers
      to come together is impracticable and not workable’. He would submit
H     that legislature cannot be permitted to take away through one hand what
      it has given by the other.
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   937
                 [K. M. JOSEPH, J.]

       18. Learned Counsel would further contended that as far as the            A
third proviso is concerned while accepting the position that the 14 days
period for disposal of the matter under the Code has been understood to
be directory and not mandatory, at the same time, it cannot be the law
that a case should grace the docket endlessly and never witness an end
and the retrospectivity which it reflects clearly renders it arbitrary.
                                                                                 B
        19. Shri Shikhil Suri, learned Counsel for the petitioner in Writ
Petition (Civil) No. 191 of 2020 would submit that the impugned
amendment is arbitrary being in the teeth of the principles laid down in
Pioneer (supra). The object of the law would stand defeated he contends.
The Ordinance would not only deprive the petitioner of her right under
Section 7 but it also violates Article 14 of the Constitution of India. The      C
threshold limit is unreasonable and arbitrary. It is excessive and irrational.
It is not in public interest. He also points out that there exists adequate
shield against a single allottee misusing the Code. The threshold is thrust
upon only on the home buyer and is not applicable across the board for
other financial creditors. It is discriminatory. There is no rationale. It       D
treats equals unequally and unequals as equals. There is no intelligible
differentia. The law does not permit classes among financial creditors.
There is breach of the guarantee of equal protection of law. The threshold
in Section 4, namely, default of Rupees One crore is the one which
applies to all creditors. It is inexplicable as to how only in regard to home
buyers, a different threshold should be insisted upon. The remedy of the         E
home buyer is defeated. The Ordinance was brought in haste without
proper discussion and debate. The amendment takes away the vested
right of the home buyers. There is no intelligible differentia bearing a
nexus with the object and purpose of the Act. He also emphasised the
practical difficulties involved in arranging the necessary numerical strength    F
under the impugned provision.
       20. Shri Piyush Singh, learned counsel for the 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.     G
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
                                                                                 H
938             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A     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 others2 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
B
      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 prevent enactment of the impugned provisions. He would
      expatiate and submit that the conditions which have been imposed render
      the remedy illusory. He drew our attention to Order 1 Rule 8 of the
C     Code of Civil Procedure and also took us to the explanation therein. He
      would submit that the proviso is not on similar lines as Order 1 Rule 8.
      This is for the reason that under the procedure under Order 1 Rule 8, the
      numerical stipulation in the impugned Provisos is not insisted upon. Once
      persons having same interest institute a civil suit, after following the
      procedure all persons having the same interest become involved and
D
      what is more would be bound by the decision. Section 12 of the Consumer
      Protection Act which also captures and embodies the principle of Order
      1 Rule 8 ensures the protection of class interest and also protect class
      interest without putting stiff barriers as threshold limits as done by the
      impugned amendment. He pointed out that the real estate owners do not
E     take any loan from financial institutions. They raise capital exclusively
      from the allottees virtually. In such circumstances, to put this threshold
      limit is clearly impermissible. He drew our attention to the judgment of
      the Court in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P3.,
      to buttress his submission regarding availability of principles of promissory
      estoppel. There is manifest arbitrariness in the provisions. He complained
F
      that the RERA has not been constituted in all the States. He also made
      an attempt at pointing out the perception that the amendment is to confer
      an unmerited advantage on the builder. This he purported to do by drawing
      our attention to an article in a newspaper. He essentially projected this
      argument as a thinly disguised argument of malice against the law giver.
G     He also sought to draw support from the judgment of this Court in
      Nagpur Investment Trust and others v. Vithal Rao and others4. He
      reiterated the principle of hostile discrimination. He drew our attention
      2
        (2018) 18 SCC 575
      3
        (1979) 2 SCC 409
      4
H       (1973) 1 SCC 500
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  939
                 [K. M. JOSEPH, J.]

to the definition of the word ‘allottee’ in RERA. It is here that he            A
complained of the provision being under inclusive and over inclusive.
The legislature, he points out should have waited and at best could have
acted if there is impeachable and empirical evidence warranting such a
drastic incursion into the vested right of the home buyer. He also highlights
that in law there can only be one default. A home buyer who before the
                                                                                B
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      C
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
                                                                                D
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 other words, the requirement under the provision       E
is that the applicants must be 100 allottees or one-tenth of the allottees
of a particular real estate project. He would point out that a corporate
body may be having different projects. If that be so, there is no rationale
in insisting that the said corporate body has become insolvent, qua the
particular project in which the applicants are interested. Insolvency, in       F
other words, would be a financial malaise, which afflicts the corporate
body as a whole, qua all its projects. If the allottees can be drawn from
other projects undertaken by the company then maybe it may have
rendered the provisions more reasonable appears to be the argument of
the petitioner. But this is not so. The provisions are irrational. The home
buyer is a person who invests his life time savings. He is in a weak            G
position already. Instead of conferring protection on him, the homebuyer
is being saddled with more oppressive and burdensome conditions. There
is no platform for the exchange and availability of information with details
regarding the allottees. The Limitation Act applies as held by this Court.
He would also appear to rely on the theory of a single default. The             H
940             SUPREME COURT REPORTS                       [2021] 14 S.C.R.


A     conditions are impossible to fulfil. The home buyer is being shut out at
      the very threshold.
             22. Shri Dinesh C. Pandey, learned Counsel would also contend
      that Section 6 of the General Clauses Act would protect all the pending
      applications.
B            23. Shri Dhruv Gupta, learned Counsel appearing in W.P. (C)
      No.177 of 2020 complained against retrospectivity spelt out by the
      impugned provisions. The right which was a vested right was substantive
      in nature. The law could only be prospective. He draws our attention to
      the judgment of this Court in B.K. Educational Services (P) Ltd. v.
C     Parag Gupta & Associates5. He also lays store by the principles laid
      down by this Court in Swiss Ribbon Pvt. Ltd. & Ors. v. Union of India
      & Ors.6 and also in The Pioneer (supra).
            24. Ms. Purti Marwaha Gupta, learned counsel in W.P.(C) No.
      75 of 2020 adopted the contentions of Shri Krishna Mohan Menon.
D     Learned counsel would make submissions qua section 32A which is yet
      another provision which is challenged. She drew our attention to Section
      2(u) and 20 of the Prevention of Money Laundering Act, 2002. She
      would submit but for Section 32A, the properties which are acquired
      could be attached but that is pre-empted by Section 32A. The civil
      remedies open are taken away in regard to acts of crime. Section 14 of
E     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
F     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 Choudhry7. 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,
G     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

      5
        (2019) 11 SCC 633
      6
        (2019) 4 SCC 17
      7
H       AIR 1957 SC 540 / 1957 SCR 488
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 941
                 [K. M. JOSEPH, J.]

others8. He also contends that a proviso cannot override the main              A
provision. In this regard, he relied upon the judgment of this court in
Delhi Metro Rail Corporation Ltd. v. Tarun Pal Singh and others9.
He would in fact point out with reference to facts that the orders were
reserved in the application under Section 7 in November, 2019. The
proviso came to be inserted on 28th December 2019. Resultantly, when
                                                                               B
the order came to be pronounced regarding admission of the application
under Section 7, the authorities stood overtaken by the amendment. All
of this is for no fault of the litigant who at the time when the application
was moved was governed by a different regime which did not contain
the harsh and arbitrary provisions. He would also point out practical
difficulty in finding out other allottees.                                     C
       26. Smt. Tasleem Ahmadi, learned Counsel would submit that an
amendment as impugned in this case has the effect of setting at nought
the directions and decision of this court. She would complain that an
amendment has been engrafted without removing the premise on which
Pioneer was decided. She drew our attention to the judgment of this            D
Court in State of Karnataka and others v. The Karnataka Pawn
Brokers Association and others10 (paragraphs-16, 20, 23 and 24).
       27. Shri Aditya Parolia, learned Counsel would submit that while
the legislature has the freedom to experiment the power does not exist
beyond certain limits. It cannot create provisions which are arbitrary.        E
Unequals are treated equally. The objections of the home buyers were
not discussed. The draft was not discussed. In this regard he points to
the dissent of Shri TK Rangarajan. There is no intelligible differentia to
distinguish the home buyers from the other creditors. The class action
under the Consumer Protection Act is denied under the code. Even a
decree holder under the aegis of RERA is denied relief. He also points         F
out the lack of information required to properly work the statute. Allottees
are spread across the globe. The real estate investor siphons off major
amounts. The default is in rem.
       28. Shri Pallav Mongia, learned Counsel would point out that home
buyers would continue to be financial creditors. The proviso cannot take       G
away the said right. Unequals are being made equal. Information regarding
allottees is not available. He refers to the report of the Parliamentary
8
  (2011) 6 SCC 739
9
  (2018) 14 SCC 161
10
   (2018) 6 SCC 363                                                            H
942               SUPREME COURT REPORTS                       [2021] 14 S.C.R.


A     Committee. He also complains about the absence of undisputed
      documents. 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
B
      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.
C              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.

D            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
E     Companies Act, 2013. He pointed out that the threshold under the said
      Act could be relaxed whereas under the code the law giver has inflicted
      the requirement as an inflexible mandate. He also complained of there
      being no information qua the requirement of 10 percent. He drew our
      attention to Rule 8A. He would submit that actually Parliament had in
F     mind the home buyer. The insertion of the 1st proviso betrays a mistaken
      roping in of the category of creditors represented by his clients. He
      sought to draw considerable support from the judgment of this Court in
      Vasant Ganpat Padvave (D) by LRs & Ors. v. Anant Mahadev Sawant
      (D) Through LRs. & Ors.11 of his compilation. He commended for our
      acceptance the principle that the law must be considered having regard
G     to consequences it produces. He requested that the court may bear in
      mind the requirement that the law in its application must produce fair
      results.


      11
H          2019 (12) SCALE 572
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                       943
                 [K. M. JOSEPH, J.]

     30. Per contra, the stand of the Union, as projected through Smt.               A
Madhavi Divan, learned ASG, and through the Written Submissions
submitted, can be summed-up as follows:
              The impugned amendments are perfectly valid. The
       amendments are part of an economic measure. There was a
       Report of an Expert Committee. The Expert Committee                           B
       recommended imposing a threshold amendment in respect of
       certain classes of financial creditors. It is modelled on the
       Companies Act. There are other statutory examples of such
       threshold requirements. The impugned provisions conform to the
       principle of reasonable classification. Intelligible differentia
       distinguishes the allottees and debenture holders and security                C
       holders covered by the provisos from the other financial creditors.
       The amendments were necessitated from experience. There is a
       rational nexus between the differentia and the objects. The
       amendment, as far as the impugned provisos are concerned, are
       essentially an extension of Sections 21(6A) and Section 25A of                D
       the Code, under which, the debenture holders and security holders,
       on the one hand, and allottees, on the other, are treated differently.
       The provisions are not manifestly arbitrary, they are, indeed,
       workable. Having regard to the Explanation in Section 7(1), the
       default qua any financial creditor, even if, he is not an applicant,
       can be made use of by other allottees or debenture holders and                E
       security holders.
        31. It is pointed out further that the constitutional 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                         F
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                       G
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
                                                                                     H
944                SUPREME COURT REPORTS                       [2021] 14 S.C.R.


A     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 the creases. The ASG drew support from
      judgments of this Court which are as follows:
B            i.     Ameerunnissa Begum and others v. Mahboob Begum and
                    others 12;
             ii.    State of Jammu and Kashmir v. Triloki Nath Khosa and
                    others 13;
             iii. Murthy Match Works and others v. Assistant Collector
C                 of Central Excise and another14;
             iv.    Ajoy Kumar Banerjee and others v. Union of India and
                    others 15;
             v.     Ashutosh Gupta v. State of Rajasthan and others16;
D            32. It is contended that there is a rational nexus with the objects
      of the Code insofar as the impugned provisos are concerned and the
      classification is permissible under Article 14 of the Constitution. She
      drew our attention to the Statements of Objects and Reasons appended
      to the amendment Bill to the Code, 2019, which introduced sub-Section
      3A in Section 25A. It reads as follows:
E
             “[…]
                 2. The Preamble to the Code lays down the objects of the
             Code to include “the insolvency resolution” in a time bound manner
             for maximisation of value of assets in order to balance the interests
F            of all the stakeholders. Concerns have been raised that in some
             cases extensive litigation is causing undue delays, which may
             hamper the value maximisation. There is a need to ensure that all
             creditors are treated fairly, without unduly burdening the
             Adjudicating Authority whose role is to ensure that the resolution
             plan complies with the provisions of the Code. Various stakeholders
G            have suggested that if the creditors were treated on an equal
      12
         (1953) SCR 404
      13
         (1974) 1 SCC 19
      14
         (1974) 4 SCC 428
      15
         (1984) 3 SCC 127
      16
H        (2002) 4 SCC 34
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  945
                 [K. M. JOSEPH, J.]

      footing, when they have different preinsolvency entitlements, it          A
      would adversely impact the cost and availability of credit. Further,
      views have also been obtained so as to bring clarity on the voting
      pattern of financial creditors represented by the authorised
      representative.
      […]                                                                       B
      (d) to insert sub-section (3A) in section 25A of the Code to provide
      that an authorised representative under sub-section (6A) of section
      21 will cast the vote for all 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,   C
      who have cast their vote, in order to facilitate decision making in
      the committee of creditors, especially when financial creditors
      are large and heterogeneous group;”
       33. Thus, the Statement of Objects and Reasons recognizes the
heterogeneity within the class and the need to streamline, smoothen and         D
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         E
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:                                                F
      “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         G
      other creditors in the class who are not in favor of such initiation.
      It is being recommended that there should be a requirement for a
      minimum threshold number of certain financial creditors in a class
      for initiation of the CIRP. So, an amendment to section 7(1) to
      provide that for a class of creditors falling within clause (a) or (b)
                                                                                H
946      SUPREME COURT REPORTS                           [2021] 14 S.C.R.


A     of Section 21(6A), the CIRP may only be initiated by at least a
      hundred such creditors or 10 percent of the total number of such
      creditors in a class.
      4. APPLICATION FOR INITIATION OF CIRP BY
      CLASSES OF CREDITORS
B     4.1. Section 7 of the Code allows a financial creditor to initiate a
      CIRP against a corporate debtor upon the occurrence of default,
      either by itself, or jointly with other financial creditors.
      4.2. It was brought to the Committee that for classes of financial
      creditors referred to in sub-clauses (a) and (b) of Section 21(6A)
C     of the Code - such as deposit holders, bondholders and homebuyers
      - there was a concern that the CIRP can be initiated by only one
      or few such financial creditors following minor disputes. This may
      exert undue pressure on the corporate debtor, and has the potential
      to jeopardise the interests of the other creditors in the class who
D     are not in favour of the initiation of CIRP. This may also impose
      additional burden upon the Adjudicating Authority to hear
      objections to heavily disputed applications. The Committee noted
      that this may be antithetical to the value of a time-bound resolution
      process, as the already over-burdened Adjudicating Authorities
      are unable to list and admit all such cases filed before them.
E
      4.3. The Committee discussed that classes of creditors such as
      homebuyers and deposit holders have every right as financial
      creditors to initiate CIRP against a corporate debtor that has
      defaulted in the repayment of its dues. However, it was
      acknowledged that initiation of CIRP by classes of similarly
F     situated creditors should be done in a manner that represents their
      collective interests. It was felt that a CIRP should be initiated
      only where there is enough number of such creditors in a class
      forming a critical mass that indicates that there is in fact largescale
      agreement that the issues against a corporate entity need to be
G     resolved by way of a CIRP under the Code. This may well be a
      more streamlined way of allowing a well-defined class of creditors
      to agree upon initiating what 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
H
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 947
             [K. M. JOSEPH, J.]

 file an application for initiation of CIRP for having failed to reach     A
 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
                                                                           B
 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           C
 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 that there should be a requirement        D
 to have the support of a threshold number of financial creditors in
 a class for initiation of CIRP.
 4.6. In this regard, the Committee considered if a cue may be
 taken from the requirements for filing of class actions suits as
 provided under the Companies Act, 2013. Class action suits may            E
 inter alia be filed by a hundred members or depositors or by at
 least 5 per cent of the total number of members or depositors of
 the company.14 Similar to this requirement, and keeping with the
 extant situation of classes of creditors under the Code, it was
 suggested that Section 7 of the Code could be amended in respect
 of such classes of creditors to allow initiation by a collective number   F
 of at least a hundred such creditors or at least ten percent of the
 total number of such creditors forming part of the same class.
 Thus, the Committee agreed that Section 7(1) of the Code may
 be amended to provide that for classes of creditors falling within
 clauses (a) and (b) of Section 21(6A), the CIRP may only be               G
 initiated by at least a hundred such creditors, or ten percent of the
 total number of such creditors in a class.
 4.7. The Committee also noted that the collective number of
 homebuyers that form the threshold amount for initiation of a CIRP,
 should belong to the same real estate project. This would allow           H
948            SUPREME COURT REPORTS                             [2021] 14 S.C.R.


A           homebuyers that have commonality of interests, i.e. allottees under
            the same real estate project, to come together to take action for
            initiating CIRP against a real estate developer. Thus, in such cases,
            the CIRP may be initiated by at least a hundred such allottees or
            ten percent of the total number of such allottees belonging to the
            same real estate project.
B
            4.8. However, to ensure that there is no prejudice to the interests
            of any such creditor in a class whose application has already been
            filed but not admitted by the Adjudicating Authority, the Committee
            agreed that a certain grace period may be provided within which
            such creditor in a class may modify and file its application in
C           accordance with the above-stated threshold requirements.
            However, if the creditor is unable to fulfil the threshold requirements
            to file such modified application within the grace period provided,
            the application filed by such creditor would be deemed withdrawn.”
                                                              (Emphasis supplied)
D
             34. In the Statement of Objects and Reasons to the Second
      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
E     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;
F
            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;
G           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
H     to be as follows:
     MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 949
                  [K. M. JOSEPH, J.]

       i.   Preventing multiple individual applications, which has the effect   A
            of not only crowding the docket of the Adjudicating Authority
            and further holding up a process in which time is of the
            essence;
       ii. Safeguarding the interest of hundreds or even thousands of
           allottees who may oppose the application of a single home-           B
           buyer;
       iii. Balancing the interest of members of the same sub-Class as
            also other financial creditors and other operational creditors.
            The availability of remedies to the members of the sub-class
            under RERA, in the case of allottees;                               C
       iv. Lastly, the process becomes smoother and cost-effective.
           Unnecessary financial bleeding of the corporate debtor who
           is already in difficulty, is avoided.
       36. Time is of the essence of the Code. Proceedings are in the
nature of proceedings in rem. It impacts the rights of creditors, including     D
similarly placed creditors. It is therefore, reasonable and logical to place
the threshold. The minimum threshold is a minimum requirement. The
threshold is kept low and reasonable. This Court has upheld
subclassification provided there is a rational basis. She drew support
from the following decisions;                                                   E
                                                                          17
       i.   Indra Sawhney and others v. Union of India and others ;
       ii. Lord Krishna Sugar Mills Limited and another v. Union
           of India and another18;
       iii. State of Kerala and another v. N.M. Thomas and others19;
                                                                                F
       iv. State of West Bengal and another v. Rash Behari Sarkar
           and another20;
       v. State of Kerala v. Aravind Ramakant Modawdakar and
          others 21.
                                                                                G

17
   1992 Supp.(3) SCC 217
18
   (1960) 1 SCR 39
19
   (1976) 2 SCC 310
20
   (1993) 1 SCC 479
21
   (1999) 7 SCC 400                                                             H
950                SUPREME COURT REPORTS                       [2021] 14 S.C.R.


A            37. She sought to distinguish the judgment of this Court in Sansar
      Chand Atri v. State of Punjab and another22, which was relied on by
      the petitioners on the basis that this Court in the said case, only frowned
      upon creating a class within a class without rational basis. In this case,
      there was a rational basis for creating a sub-class. Differential treatment
      is also contemplated under UNCITRAL Legislative Guide and the
B
      Guidelines.
             38. There is no basis in the contention that the amendments go
      against the law laid down in Pioneer (supra). The question involved in
      the said case was not whether there can be a different treatment to the
      real estate allottees for the purpose of initiating CIRP. Secondly, it is
C     pointed out that the Legislature is free to make laws to deal with problems
      that manifest with experience. The numerical 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
D     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
E     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
F     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, pursuant to the Ordinance between
      December 29th, 2019 and August 26th, 2020, there is a sharp fall, as,
      nearly in eight months, only 130 cases were filed. It is pointed out that
      the argument, based on estoppel and malice against the Legislature, is
G     untenable. There can be no estoppel against the Legislature and the
      decision of this Court in Union of India and others v. Godfrey Philips
      India Ltd.23, is relied on. The concept of transferred malice is alien in
      the field of legislation. In this regard, reference is placed on decisions of
      22
           (2002) 4 SCC 154
H     23
           (1985) 4 SCC 369
     MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                951
                  [K. M. JOSEPH, J.]

this Court in K. Nagaraj and others v. State of A.P. and another24             A
and State of Himachal Pradesh v. Narain Singh25.
       39. The right to file an application under Section 7 is a statutory
right and it can be conditioned. Reliance is placed on judgment of this
Court in Gujarat Agro Industries Co. Ltd. v. Municipal Corporation
of the City of Ahmedabad and others26. There is no inherent or absolute        B
right to file an application under Section 7 of the Code. The Legislature
is well within its power to impose conditions for the exercise of such
statutory rights. It is further contended that the third proviso inserted in
Section 7(1) does not affect any vested right of the creditors who have
already filed applications for initiating CIRP. A vested right has been the
subject matter of several decisions. In this regard reliance is placed on      C
the following judgments:
       i.   Howrah Municipal Corporation and others v. Ganges
            Rope Co. Ltd. and others27;
      ii.   Arcelormittal India Private Limited v. Satish Kumar Gupta          D
            and others 28;
      iii. Swiss Ribbons Private Limited and another v. Union of
           India and others29;
      iv. Karnail Kaur and others v. State of Punjab and others30;
                                                                               E
      v.    Committee of Creditors of Essar Steel India Limited
            Through Authorised Signatory v. Satish Kumar Gupta and
            Others 31.
       40. Mere right to take advantage of a statute is not a vested right.
In this regard, the following case law is relied upon:
                                                                               F
      i.    Director of Public Works and another v. Ho Po Sang
            and Others 32;

24
   (1985) 1 SCC 523
25
   (2009) 13 SCC 165
26
   (1999) 4 SCC 468
                                                                               G
27
   (2004) 1 SCC 663
28
   (2019) 2 SCC 1
29
   (2019) 4 SCC 17
30
   (2015) 3 SCC 206
31
   (2019) SCCONLINE SC 1478
32
   [1961]3 WLR 39                                                              H
952                SUPREME COURT REPORTS                      [2021] 14 S.C.R.


A            ii.    M.S. Shivananda v. Karnataka State Road Transport
                    Corporation and others33;
             iii. Lalji Raja and Sons v. Hansraj Nathuram34;
             iv. Kanaya Ram and others v. Rajender Kumar and others35;
B            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
C     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
D     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 action.
E     Section 245 of the Companies Act, 2013 and 241 of the said Act are
      relied upon. Sections 397 and 398 of the Companies Act, 1956, read
      with Section 399, contemplated a minimum threshold requirement for
      seeking relief under Sections 397 and 398. Reference is placed on the
      Bhabha Committee Report (Company Law Committee) in 1952. So also,
      is support, sought to be drawn from the judgment of this Court in J.P.
F     Srivastava & Sons (P) Ltd. and others v. Gwalior Sugar Co. Ltd.
      and others36. Under the Consumer Protection Act, this Court, rendered
      the judgment in Anjum Hussain and others v. Intellicity Business Park
      Private Limited and others37. A minimum threshold adds, authenticity
      and weightage to the claim in a class action, proving it to be a common
G     grievance and not a mere obstruction in the work of the opposite party.
      Reference is made to Rule 23 of Federal Rules of Civil Procedure in the
      33
         (1980) 1 SCC 149
      34
         (1971) 1 SCC 721
      35
         (1985) 1 SCC 436
      36
         (2005) 1 SCC 172
      37
H        (2019) 6 SCC 519
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  953
                 [K. M. JOSEPH, J.]

United States, which provide for class action suits. The said Rules             A
contemplate numerosity, commonality, typicality and adequacy of
representation. It is pointed out that joint filing was not only not alien to
Section 7 but it was interwoven into its very DNA. Even as originally
enacted, Section 7 contemplated joint filing by financial creditors.
Uniqueness of the Code lies in the fact that the financial creditors may
                                                                                B
file an application based on a default that occurred in respect of the
third-party financial creditor, who may choose not to file an application
itself. At the triggering stage, an application under Section 7 partakes
the character of an application in rem proceeding rather than in personam
one. The impugned amendment merely extends the same rationale.
       43. It is further pointed out that Debenture Trustees are defined        C
in Section 2(bb)of the Securities and Exchange Board of India Debenture
Trustees Regulations, 1993, as a Trustee of a trust deed for securing any
issue of debentures of a body corporate. Debenture is a long-term bond
issued by a company or an unsecured loan that a company issues without
a pledge of assets, as for example, interest bearing bond. Debenture            D
Trustees are registered under Chapter 2 of the said Regulations. The
Regulations provide for responsibilities and duties of Debenture Trustees.
In the case of a debenture-holder and other security-holder, there is a
Debenture Trustee to protect their interest from the inception under SEBI.
       44. As far as absence of information, so far as debenture holders        E
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          F
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                    G
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.

                                                                                H
954            SUPREME COURT REPORTS                         [2021] 14 S.C.R.


A           45. As regards the allottees are concerned, the submission, is as
      follows:
                    Reference is made to Section 19 of RERA. Thereunder,
            Section 19(9) obliges every allottee of a real estate project to
            participate towards the Association of Allottees. Section 11 (4)(e)
B           of RERA also obliges the Promoter to enable the formation of
            such an Association. RERA compels the constitution of such an
            Association, prior to the allotment. This is for the reason that an
            Association plays an important role during the development of the
            project. It is pointed out that under Section 8 of RERA, upon
            lapse of or revocation of the registration, the Authority is obliged
C           to take such action, as it may deem fit, including the carrying out
            of the remaining development works. The Association of allottees
            have been given the right of first refusal for carrying out the
            remaining development works. Section 11(4) contemplates the
            obligations to be discharged by the Promoter towards the
D           Association. Reference is also made to Section 4(2)(c) of RERA.
            Under Section 17 of the RERA, the Promoter is to execute a
            registered conveyance in regard to the undivided proportionate
            title in the common areas to the Association of the allottees.
            Physical possession of the common areas is to be handed over to
            the Association of the Allottees. Under Section 31 of RERA, the
E           Association can file complaint with the Authority. Apart from this,
            it is also pointed out that under Section 11(1)(b), the Promoter is
            bound to create a webpage on the website of the RERA Authority
            and enter thereon the quarterly up-to-date list of the number and
            the types of the plots/apartments as may be booked.
F            46. Shri Sajan Poovayya, learned senior Counsel who appears on
      behalf of respondent no. 4 in Writ Petition No. 191 of 2020, which is a
      builder, also supported the Union. The second proviso, he contends is a
      logical and legitimate method to strike a fair balance between all
      stakeholders. It makes the Code workable. The object of the Amendment
G     Act is to prevent the use of the Code for an extraneous purpose and not
      to shield and protect an errant real estate developer. He has referred to
      the facts pertaining to his client by way of an example of the misuse
      which has happened under the earlier regime.
            He drew support from paragraph-41 of the judgment in Pioneer
H     (supra). Second proviso is an independent provision to made the Code
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                955
                    [K. M. JOSEPH, J.]

workable. He drew our attention to paragraph-43 of this court in 1985 1          A
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
                                                                                 B
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           C
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               D
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 meaning of Article 19 of the Constitution would remain valid
qua a non-citizen (see in this regard The State of Gujarat and others v.
Shri Ambica Mills Ltd., Ahmedabad and Others38). Thirdly, apart from             E
Fundamental Rights, the supremacy of the Constitution vis-a-vis the
ordinary legislation, even when the law is plenary legislation, is preserved
with a view that legislation must be in conformity with the other provisions
of the Constitution.
       48. While on breaches of the Fundamental Right, furnishing a              F
plank of attack against plenary law, it is necessary to notice a challenge
to law under Article 14, was essentially confined to the law, being class
legislation. In other words, a law, if it manifested reasonable classification
for treating different persons or things differently, the law would pass
muster. Interestingly, even while the theory of reasonable classification
had come to be proclaimed in the first year of the Republic, and what is         G
more followed in State of West-Bengal v. Anwar Ali39, the following
doubts were expressed by Justice Vivian Bose:

38
     (1974) 4 SCC 656
39
     AIR 1952 SC 75                                                              H
956      SUPREME COURT REPORTS                           [2021] 14 S.C.R.


A     “82. I can conceive of cases where there is the utmost good faith
      and where the classification is scientific and rational and yet which
      would offend this law. Let us take an imaginary cases in which a
      State legislature considers that all accused persons whose skull
      measurements are below a certain standard, or who cannot pass
      a given series of intelligence tests, shall be tried summarily
B
      whatever the offence on the ground that the less complicated the
      trial the fairer it is to their sub-standard of intelligence. Here is
      classification. It is scientific and systematic. The intention and
      motive are good. There is no question of favouritism, and yet I
      can hardly believe that such a law would be allowed to stand. But
C     what would be the true basis of the decision? Surely simply this
      that the judges would not consider that fair and proper. However
      much the real ground of decision may be hidden behind a screen
      of words like ‘reasonable’, ‘substantial’, ‘rational’ and ‘arbitrary’
      the fact would remain that judges are substituting their own
      judgment of what is right and proper and reasonable and just for
D
      that of the legislature; and up to a point that, I think, is inevitable
      when a judge is called upon to crystallise a vague generality like
      article 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:
E     “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
F     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:
G            “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
H     margin within which judges, who are human, will always be
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  957
                    [K. M. JOSEPH, J.]

          influenced by subjective factors, their training and their tradition     A
          makes the main body of their decisions speak with the same voice
          and reach impersonal results whatever their personal predilections
          or their individual backgrounds. It is the function of the legislature
          alone, headed by the government of the day, to determine what is,
          and what is not, good and proper for the people of the land and
                                                                                   B
          they must be given the widest latitude to exercise their functions
          within the ambit of their powers, else all progress us barred. But,
          because of the Constitution, there are limits beyond which they
          cannot go and even though it falls to the lot of judges to determine
          where those limits, lie, the basis of their decision cannot be whether
          the Court thinks the law is for the benefit of the people of not.        C
          Cases of this type must be decided solely on the basis whether
          the Constitution forbids it.”
                                                          (Emphasis supplied)
         49. The seed of this idea had a muted growth. It was in the decision
of this Court in E.P. Royappa v. State of Tamil Nadu and Another40                 D
that this Court laid bare a new dimension in the majestic provisions of
Article 14. This Court took the view that arbitrariness and fairness are
sworn enemies. The guarantee of Article 14 is not confined in other
words to it being a prohibition against equals being discriminated against
or unequals being treated alike. State action must be fair and not arbitrary       E
if it is to be pass muster in a court of law. It is essentially following the
dicta laid down as aforesaid that this Court in the case of Shayara
Bano v. Union of India41, wherein one of us (Justice Rohinton F.
Nariman), speaking for the majority, held as follows:
          “101. It will be noticed that a Constitution Bench of this Court         F
          in Indian Express Newspapers (Bombay) (P) Ltd. v. Union of
          India [Indian Express Newspapers (Bombay) (P) Ltd. v. Union
          of India, (1985) 1 SCC 641 : 1985 SCC (Tax) 121] stated that it
          was settled law that subordinate legislation can be challenged on
          any of the grounds available for challenge against plenary
          legislation. This being the case, there is no rational distinction       G
          between the two types of legislation when it comes to this ground
          of challenge under Article 14. The test of manifest arbitrariness,
          therefore, as laid down in the aforesaid judgments would apply to
40
     (1974) 4 SCC 3
41
     (2017) 9 SCC 1                                                                H
958             SUPREME COURT REPORTS                            [2021] 14 S.C.R.


A            invalidate legislation as well as subordinate legislation under Article
             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
B
             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
C     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 42;
             (2) Joseph Shine v. Union of India43;
D
             (3) Justice K.S. Puttuswamy and Others v. Union of India
             and Others 44.
             (4) Hindustan Construction Company Ltd. and Others v. Union
             of India and Others45.
E            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 v. Union of India46). It
      must be elaborated and we must remember that the case involved
      overturning Section 66A of the Information Technology Act which
      purported to create a criminal offence, the ingredients of which were
F
      found to be vague.
             52. While, on the basis, furnished under law, for impugning the
      plenary legislation, we may notice two grounds, which have been urged
      before us by some of the petitioners. It has been urged that the law was
      created by way of pandering to the real estate lobby and succumbing to
G
      their pressure or by way of placating their vested interests. Such an
      42
         (2018) 10 SCC 1
      43
         (2019) 3 SCC 39
      44
         (2017) 10 SCC 1
      45
         AIR 2020 SC 122
      46
H        (2015) 5 SCC 1
     MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                959
                  [K. M. JOSEPH, J.]

argument is nothing but a thinly disguised attempt at questioning the law      A
of the Legislature based on malice. A law is made by a body of elected
representatives of the people. When they act in their legislative capacity,
what is being rolled out is ordinary law. Should the same legislators sit to
amend the Constitution, they would be acting as members of the
Constituent Assembly. Whether it is ordinary legislation or an amendment
                                                                               B
to the Constitution, the activity is one of making the law. While malice
may furnish a ground in an appropriate case to veto administrative action
it is trite that malice does not furnish a ground to attack a plenary law
[See in this regard K. Nagaraj and others v. State of Andhra Pradesh
and another47 and State of Himachal Pradesh v. Narain Singh48].
                                                                               C
       53. Yet another ground which has been urged in these cases is
that when this Court decided Pioneer (supra) the Union of India defended
the amendment to the Code which included the insertion of the explanation
to Section 5(8)(f) of the Code. It was this explanation which made it
clear that home buyers would be financial creditors. All grounds urged
by the financial creditors were fiercely countered by the very same            D
Union of India by contending that the home buyers are financial creditors
and what is more, there existed sufficient safeguards against abuse of
power by the individual home buyers. What is contended before us by
some of the petitioners is that the supreme legislature is in such
circumstances estopped by the principle of promissory estoppel from            E
enacting the impugned enactment.
       54. A supreme legislature cannot be cribbed, cabined or confined
by the doctrine of promissory estoppel or estoppel. It acts as a sovereign
body. The theory of promissory estoppel, on the one hand, has witnessed
an incredible trajectory of growth but it is incontestable that it serves as   F
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.49 – Paragraph-13].

                                                                               G



47
   (1985) 1 SCC 523
48
   (2009) 13 SCC 165
49
   (1985) 4 SCC 369                                                            H
960             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A              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
B     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
C     to initiate the corporate insolvency resolution process (hereinafter referred
      to as CIRP) in respect of the corporate debtor in the manner provided
      under Chapter II. Chapter II consists of Section 6 to Section 32A.
      Section 7 (1) provides that a financial creditor by himself or joining with
      other financial creditors or any other person on behalf of the financial
      creditor as may be notified by the Central Government may file an
D
      application under Section 7 for initiating the CIRP before the adjudicating
      authority when a default has occurred. The adjudicating authority defined
      in Section 5(1) of the Code is the NCLT constituted under Section 408
      of the Companies Act 2013. The unamended Section 7(1) read as follows:
              “7. (1) A financial creditor either by itself or jointly with other
E             financial creditors may file an application for initiating corporate
              insolvency resolution process against a corporate debtor before
              the Adjudicating Authority when a default has occurred.”
              Explanation - For the purposes of this sub-section, a default
              includes a default in respect of a financial debt owed not only to
F             the applicant financial creditor but to any other financial creditor
              of the corporate debtor.”
               57. The three impugned provisos which we have already noted
      and which have been inserted vide the impugned amendment have been
      sandwitched in between the provisions of sub-section (1) and the
      explanation. Sub- section 2 of Section 7 provides that the financial creditor
G     shall make the application which shall be in such manner and form and
      accompanied by such fee as may be prescribed.
              58. Section 3(26) defines the word ‘prescribed’ as meaning
      prescribed by rules made by the Central Government. Section 239, inter
      alia, confers power on the Central Government to make rules for carrying
H     out the provisions of the Code. Accordingly, the Insolvency and
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  961
                 [K. M. JOSEPH, J.]

Bankruptcy (Application to Adjudicating Authority) Rules, 2016 came to          A
be made and were enforced from 1.12.2016. Rule 4 reads as under:
      “4. Application by financial creditor.—(1) A financial creditor, either
      by itself or jointly, shall make an application for initiating the
      corporate insolvency resolution process against a corporate debtor
      under section 7 of the Code in Form 1, accompanied with                   B
      documents and records required therein and as specified in the
      Insolvency and Bankruptcy Board of India (Insolvency Resolution
      Process for Corporate Persons) Regulations, 2016.
      (2) Where the applicant under sub-rule (1) is an assignee or
      transferee of a financial contract, the application shall be              C
      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        D
      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:                                                                        E
      “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.”
                                                                                F
      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      G
      under the Code are notified, the application made under sub-section
      (1) of section 7, sub-section (1) of section 9 or sub-section (1) of
      section 10 of the Code shall be filed before the Adjudicating
      Authority in accordance with rules 20, 21, 22, 23, 24 and 26 of
      Part III of the National Company Law Tribunal Rules, 2016.
                                                                                H
962             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A           (2) An applicant under these rules shall immediately after becoming
            aware, notify the Adjudicating Authority of any winding-up petition
            presented against the corporate debtor.
            (3) The application shall be accompanied by such fee as specified
            in the Schedule.”
B            61. Form 1 is the application prescribed in relation to an application
      to be filed by the financial creditor. It reads as follows:
                                      “FORM 1
                             (See sub-rule (1) of rule 4)
C          APPLICATION BY FINANCIAL CREDITOR(S) TO
         INITIATE CORPORATE INSOLVENCY RESOLUTION
         PROCESS UNDER CHAPTER II OF PART II UNDER
               CHAPTER IV OF PART II OF THE CODE.
                                       [*strike out whichever is not applicable]
D
            (Under section 7 of the Insolvency and Bankruptcy Code,
            2016 read with Rule 4 of the Insolvency and Bankruptcy
            (Application to Adjudicating Authority) Rules, 2016)
                                                                           [Date]
E           To,
            The National Company Law Tribunal
            [Address]
            From,
F           [Names and addresses of the registered officers of the
            financial creditors]
            In the matter of [name of the corporate debtor]
            Subject: Application to initiate corporate insolvency resolution
            process in the matter of [name of the corporate debtor] under
G           the Insolvency and Bankruptcy Code, 2016.
            Madam/ Sir,
            [Names of the financial creditor(s)], hereby submit this
            application to initiate a corporate insolvency resolution process in
H
     MANISH KUMAR v. UNION OF INDIA AND ANOTHER                        963
                  [K. M. JOSEPH, J.]

       the matter of [name of corporate debtor]. The details for the   A
       purpose of this application are set out below:
                                  Part-I


                                                                       B




                                                                       C




                                PART-II                                D

                  PARTICULARS OF THE CORPORATE DEBTOR

1.   NAME OF THE CORPORATE DEBTOR
2.   IDENTIFICATION NUMBER OF CORPORATE
     DEBTOR
                                                                       E
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)                                                       F
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                                           G
       (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)




                                                                       H
964            SUPREME COURT REPORTS                         [2021] 14 S.C.R.


A                                      Part-III




B                                     Part-IV




C


                                       Part-V
      PARTICULARS OF FINANCIAL DEBT [DOCUMENTS, RECORDS AND EVIDENCE OF
      DEFAULT]
D
      1.   PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CREATION, ITS
           ESTIMATED VALUE AS PER THE CREDITOR.


           ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE ISSUED BY
           THE REGISTRAR OF COMPANIES (IF THE CORPORATE DEBTOR IS A COMPANY)
E     2.   PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR ARBITRAL PANEL
           ADJUDICATING ON THE DEFAULT, IF ANY (ATTACH A COPY OF THE ORDER)

      3.   RECORD OF DEFAULT WITH THE INFORMATION UTILITY, IF ANY (ATTACH A
           COPY OF SUCH RECORD)

      4.   DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A WILL, OR LETTER
           OF ADMINISTRATION, OR COURT DECREE (AS MAY BE APPLICABLE), UNDER
           THE INDIAN SUCCESSION ACT, 1925 (10 OF 1925) (ATTACH A COPY)
F
      5.   THE LATEST AND COMPLETE COPY OF THE FINANCIAL CONTRACT
           REFLECTING ALL AMENDMENTS AND WAIVERS TO DATE (ATTACH A COPY)

      6.   A RECORD OF DEFAULT AS AVAILABLE WITH ANY CREDIT INFORMATION
           COMPANY (ATTACH A COPY)

      7.   COPIES OF ENTRIES IN A BANKERS BOOK IN ACCORDANCE WITH THE
           BANKERS BOOKS EVIDENCE ACT, 1891 (18 OF 1891) (ATTACH A COPY)
G
      8.   LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION IN ORDER TO
           PROVE THE EXISTENCE OF FINANCIAL DEBT, THE AMOUNT AND DATE OF
           DEFAULT


            I, hereby certify that, to the best of my knowledge, [name of
            proposed insolvency professional], is fully qualified and
H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  965
                 [K. M. JOSEPH, J.]

      permitted to act as an insolvency professional in accordance with         A
      the Insolvency and Bankruptcy Code, 2016 and the associated
      rules and regulations.
      [Name of the financial creditor] has paid the requisite fee for
      this application through [state means of payment] on [date].
      Yours sincerely,                                                          B




                                                                                C
      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         D
      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
                                                                                E
      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 Section 7 provides that financial creditor along with the      F
application shall furnish record of the default recorded by the information
utility or all such other record or evidence before as may be specified.
The word ‘specified’ has been defined in Section 3 (32) as meaning
specified by regulations made by the Board and the term ‘specify’ is to
be construed accordingly.                                                       G
      63. Section 7(3) (b) requires the financial creditor who makes the
application to furnish the name of the Resolution Professional proposed
as an Interim Resolution Professional (hereafter referred to as “RP”
and “IRP” respectively). Section 5(27) defines the word ‘Resolution
Professional’ for the purpose of Part 2 to mean an insolvency professional      H
966             SUPREME COURT REPORTS                            [2021] 14 S.C.R.


A     appointed to conduct the CIRP and includes an interim resolution
      professional. In turn Section 3(19) defines ‘insolvency professional’ as
      the person enrolled under Section 206 with an insolvency professional
      agency as its member and registered with the Board as an insolvency
      professional under Section 207. Sub-Section (5) of Section 7 proclaims
      that when adjudicating authority is satisfied that a default has occurred
B
      and the application under sub-section is complete and that there is no
      disciplinary proceedings pending against the proposed resolution
      professional, it may by order admit an application. Inter alia on the ground
      that default has not occurred, it is open to adjudicating authority to reject
      the application. If rejection is intended, the proviso obliges the adjudicating
C     authority to issue a notice to rectify any defect in the application (this is
      for the reason that under sub-Section 5 apart from there being no default,
      if there is any disciplinary action against the proposed resolution
      professional, the application is liable to be rejected) This is apart from
      the application being otherwise defective. The application is to contain
      other information as may be specified under regulations by the Code.
D
      The adjudicating authority is required by the letter of the law and indeed
      we may say so, in accordance with the spirit to ascertain within 14 days
      of the receipt of the application if there is any default from the records
      of information utility or on the basis of other evidence made available by
      the financial creditor under sub-section (3) [In Pioneer (supra), the period
E     has been understood as directory]. ‘Information utility’ has been defined
      in 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.
F           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
G     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:
H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 967
                 [K. M. JOSEPH, J.]

      “12. Time-limit for completion of insolvency resolution process.-        A
      (1) Subject to sub-section (2), the corporate insolvency resolution
      process shall be completed within a period of one hundred and
      eighty days from the date of admission of the application to initiate
      such process.
      (2) The resolution professional shall file an application to the         B
      Adjudicating Authority to extend the period of the corporate
      insolvency resolution process beyond one hundred and eighty days,
      if instructed to do so by a resolution passed at a meeting of the
      committee of creditors by a vote of seventy-five per cent. of the
      voting shares.                                                           C
             (3) On receipt of an application under sub-section (2), if
      the Adjudicating Authority is satisfied that the subject matter of
      the case is such that corporate insolvency resolution process cannot
      be completed within one hundred and eighty days, it may by order
      extend the duration of such process beyond one hundred and eighty        D
      days by such further period as it thinks fit, but not exceeding ninety
      days:
      Provided that any extension of the period of corporate insolvency
      resolution process under this section shall not be granted more
      than once.                                                               E
      Provided further that the corporate insolvency resolution process
      shall mandatorily be completed within a period of three hundred
      and thirty days from the insolvency commencement date, including
      any extension of the period of corporate insolvency resolution
      process granted under this section and the time taken in legal           F
      proceedings in relation to such resolution process of the corporate
      debtor:
      Provided also that where the insolvency resolution process of a
      corporate debtor is pending and has not been completed within
      the period referred to in the second proviso, such resolution process
                                                                               G
      shall be completed within a period of ninety days from the date of
      commencement of the Insolvency and Bankruptcy Code
      (Amendment) Act, 2019.”
      66. Coming to sub-Section 2, the CIRP is to be completed within
180 days from the date of admission of the application to initiate the
                                                                               H
968            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A     process. As far as an application by a financial creditor is concerned,
      the date of admission is the date of the order admitting the application.
      Under sub-Section (2) however if the Committee of creditors by a vote
      of 66 per cent of the voting share instructs the RP to extend the period
      of CIRP beyond 180 days, the RP is bound to file an application. The
      adjudicating authority on receipt of the application can extend the period
B
      of 180 days for a maximum period of 90 days. Such extension can be
      granted only once. 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
C     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
D
      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
E           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
            time taken in legal proceedings. However, on the facts of a given
            case, if it can be shown to the Adjudicating Authority and/or
F           Appellate Tribunal under the Code that only a short period is left
            for completion of the insolvency resolution process beyond 330
            days, and that it would be in the interest of all stakeholders that
            the corporate 10-12-2020 (Page 69 of 85) debtor be put back on
            its feet instead of being sent into liquidation and that the time
            taken in legal proceedings is largely due to factors owing to which
G           the fault cannot be ascribed to the litigants before the Adjudicating
            Authority and/or Appellate Tribunal, the delay or a large part
            thereof being attributable to the tardy process of the Adjudicating
            Authority and/or the Appellate Tribunal itself, it may be open in
            such cases for the Adjudicating Authority and/or Appellate Tribunal
H           to extend time beyond 330 days. Likewise, even under the newly
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 969
                 [K. M. JOSEPH, J.]

      added proviso to Section 12, if by reason of all the aforesaid factors   A
      the grace period of 90 days from the date of commencement of
      the Amending Act of 2019 is exceeded, there again a discretion
      can be exercised by the Adjudicating Authority and/or Appellate
      Tribunal to further extend time keeping the aforesaid parameters
      in mind. It is only in such exceptional cases that time can be
                                                                               B
      extended, the general Rule being that 330 days is the outer limit
      within which resolution of the stressed assets of the corporate
      debtor must take place beyond which the corporate debtor is to
      be driven into liquidation.”
       67. At this juncture, it must be noted that under the first proviso
inserted by the amendment dated 16.08.2019, reference to the period of         C
330 days is made with regard to the insolvency commencement date.
The insolvency commencement date has been defined in Section 5(12).
Section 5(12) reads as follows:
             “5(12) “insolvency commencement date” means the date
      of admission of an application for initiating corporate insolvency       D
      resolution process by the Adjudicating Authority under sections 7,
      9 or section 10, as the case may be.”
       There was a proviso but it stands omitted by Act 1/2020 (with
effect from 28/12/2019).
                                                                               E
       68. In this regard, it is to be noticed that the scheme appears to be
that the name of the RP to act as the IRP is to be indicated in the
application. While admitting the application under Section 7(5), the
adjudicating authority is to 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.         F
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         G
      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.                                              H
970            SUPREME COURT REPORTS                           [2021] 14 S.C.R.


A            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.
B
            1. A moratorium contemplated under Section 14 is to be declared.
            2. A Public announcement of the initiation of the CIRP and inviting
               claims against the corporate debtor is to be made.
            3. The appointment of the IRP- the appointment is to be done in
C              the manner as provided in Section 16. The announcement is to
               be made immediately after the appointment of resolution
               professional.
            71. Section 14 deals with moratorium.

D               “14. Moratorium. - (1) Subject to provisions of sub-sections
                (2) and (3), on the insolvency commencement date, the
                Adjudicating Authority shall by order declare moratorium for
                prohibiting all of the following, namely: -
                (a) the institution of suits or continuation of pending suits or
                proceedings against the corporate debtor including execution
E
                of any judgement, decree or order in any court of law, tribunal,
                arbitration panel or other authority;
                (b) transferring, encumbering, alienating or disposing off by
                the corporate debtor 1 Ins. by Act No. 26 of 2019, sec. 4
                (w.e.f. 16-8-2019). 2 Ins. by Act No. 26 of 2018, sec. 9 (w.e.f.
F
                6-6-2018). 20 any of its assets or any legal right or beneficial
                interest therein;
                (c) any action to foreclose, recover or enforce any security
                interest created by the corporate debtor in respect of its property
                including any action under the Securitisation and Reconstruction
G               of Financial Assets and Enforcement of Security Interest Act,
                2002 (54 of 2002); (d)the recovery of any property by an owner
                or lessor where such property is occupied by or in the
                possession of the corporate debtor.
                Explanation.-For the purposes of this sub-section, it is hereby
H               clarified that notwithstanding anything contained in any other
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                971
             [K. M. JOSEPH, J.]

   law for the time being in force, a licence, permit, registration,      A
   quota, concession, clearance or a similar grant or right given
   by the Central Government, State Government, local authority,
   sectoral regulator or any other authority constituted under any
   other law for the time being in force, shall not be suspended or
   terminated on the grounds of insolvency, subject to the condition
                                                                          B
   that there is no default in payment of current dues arising for
   the use or continuation of the license, permit, registration, quota,
   concession, clearances or a similar grant or right during the
   moratorium period.
   (2) The supply of essential goods or services to the corporate
   debtor as may be specified shall not be terminated or suspended        C
   or interrupted during moratorium 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           D
   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                   E
   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;                     F
   (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:
                                                                          G
   Provided that where at any time during the corporate insolvency
   resolution process period, if the Adjudicating Authority approves
   the resolution plan under sub-section (1) of section 31 or passes
   an order for liquidation of corporate debtor under section 33,
   the moratorium shall cease to have effect from the date of
   such approval or liquidation order, as the case may be.”               H
972            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A             72. It will be noticed that while Section 6 read with Section 7
      contemplates that a financial creditor may move the application
      individually, he may also move the application jointly with other financial
      creditors. Even if a single financial creditor was to be the applicant,
      after the appointment of the interim resolution professional, the applicant
      ceases to be in seisin of the lis. The provisions of Section 17 is to be
B
      noticed. It reads as follows:
            “17. Management of affairs of corporate debtor by interim
            resolution professional. - (1) From the date of appointment of the
            interim resolution professional, -
C               (a) the management of the affairs of the corporate debtor shall
                vest in the interim resolution professional;
                (b) the powers of the board of directors or the partners of the
                corporate debtor, as the case may be, shall stand suspended
                and be exercised by the interim resolution professional;
D               (c) the officers and managers of the corporate debtor shall
                report to the interim resolution professional and provide access
                to such documents and records of the corporate debtor as may
                be required by the interim resolution professional;
                (d) the financial institutions maintaining accounts of the
E               corporate debtor shall act on the instructions of the interim
                resolution professional in relation to such accounts and furnish
                all information relating to the corporate debtor available with
                them to the interim resolution professional.
            (2) The interim resolution professional vested with the management
F           of the corporate debtor, shall-
            (a) act and execute in the name and on behalf of the corporate
            debtor all deeds, receipts, and other documents, if any;
            (b) take such actions, in the manner and subject to such restrictions,
            as may be specified by the Board;
G
            (c) have the authority to access the electronic records of corporate
            debtor from information utility having financial information of the
            corporate debtor;
            (d) have the authority to access the books of accounts, records
H           and other relevant documents of corporate debtor available with
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  973
                 [K. M. JOSEPH, J.]

      government authorities, statutory auditors, accountants and such          A
      other persons as may be specified; 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           B
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        C
the acts and authority indicated in sub-section 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. –
                                                                                D
      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
                                                                                E
      –
          (i) business operations for the previous two years;
          (ii) financial and operational payments for the previous two
          years;
          (iii) list of assets and liabilities as on the initiation date; and   F

          (iv) such other matters as may be specified;
      (b) receive and collate all the claims submitted by creditors to
      him, pursuant to the public announcement made under sections
      13 and 15;                                                                G
      (c) constitute a committee of creditors;
      (d) monitor the assets of the corporate debtor and manage its
      operations until a resolution professional is appointed by the
      committee of creditors;
                                                                                H
974             SUPREME COURT REPORTS                             [2021] 14 S.C.R.


A            (e) file information collected with the information utility, if
             necessary; and
             (f) take control and custody of any asset over which the corporate
             debtor has ownership rights as recorded in the balance sheet of
             the corporate debtor, or with information utility or the depository
B            of securities or any other registry that records the ownership of
             assets including –
                (i) assets over which the corporate debtor has ownership rights
                which may be located in a foreign country;
                (ii) assets that may or may not be in possession of the corporate
C               debtor;
                (iii) tangible assets, whether movable or immovable;
                (iv) intangible assets including intellectual property;
                (v) securities including shares held in any subsidiary of the
D               corporate debtor, financial instruments, insurance policies;
                (vi) assets subject to the determination of ownership by a court
                or authority:
             (g) to perform such other duties as may be specified by the Board.
E            Explanation. – For the purposes of this 1 section, the term “assets”
             shall not include the following, namely: -
             (a) assets owned by a third party in possession of the corporate
             debtor held under trust or under contractual arrangements including
             bailment;
F            (b) assets of any Indian or foreign subsidiary of the corporate
             debtor; and
             (c) such other assets as may be notified by the Central Government
             in consultation with any financial sector regulator.”
             75. It will be noticed that amongst his duties, is the duty to constitute
G
      a Committee of Creditors. The constitution of the committee of creditors
      and the method of voting and the extent of the same are found detailed
      inter alia in Section 21. Since much may turn on the said provision we
      refer to the same:
             “21. Committee of creditors. –
H
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 975
             [K. M. JOSEPH, J.]

 (1) The interim resolution professional shall after collation of all      A
 claims received against the corporate debtor and 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:                                                  B
 Provided that a financial creditor or the authorised representative
 of the financial creditor referred to in sub-section (6) or sub-section
 (6A) or sub-section (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:       C
 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           D
 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 voting     E
 share shall be determined on the basis of the financial debts owed
 to them.
       (4) Where any person is a financial creditor as well as an
 operational creditor –
 (a) such person shall be a financial creditor to the extent of the        F
 financial debt owed by the corporate debtor, and shall be included
 in the committee of creditors, with voting share proportionate to
 the extent of financial debts owed to such creditor;
  (b) such person shall be considered to be an operational creditor
 to the extent of the operational debt owed by the corporate debtor        G
 to such creditor.
 (5) Where an operational creditor has assigned or legally
 transferred any operational debt to a financial creditor, the
 assignee or transferee shall be considered as an operational creditor
 to the extent of such assignment or legal transfer.                       H
976      SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A     (6) Where the terms of the financial debt extended as part of a
      consortium arrangement or syndicated facility provide for a single
      trustee or agent to act for all financial creditors, each financial
      creditor may-
       (a) authorise the trustee or agent to act on his behalf in the
B     committee of creditors to the extent of his voting share;
      (b) represent himself in the committee of creditors to the extent
      of his voting share;
      (c) appoint an insolvency professional (other than the resolution
      professional) at his own cost to represent himself in the committee
C     of creditors to the extent of his voting share; or
      (d) exercise his right to vote to the extent of his voting share with
      one or more financial creditors jointly or severally.
      (6A) Where a financial debt—
         (a) is in the form of securities or deposits and the terms of the
D     financial debt provide for appointment of a trustee or agent to act
      as authorised representative for all the financial creditors, such
      trustee or agent shall act on behalf of such financial creditors;
      (b) is owed to a class of creditors exceeding the number as may
      be specified, other than the creditors covered under clause (a) or
E     sub-section (6), the interim resolution professional shall make an
      application to the Adjudicating Authority along with the list of all
      financial creditors, containing the name of an insolvency
      professional, other than the interim resolution professional, to act
      as their authorised representative who shall be appointed by the
      Adjudicating Authority prior to the first meeting of the committee
F
      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
G     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 sub-section (6A), if any, shall be
      as per the terms of the financial debt or the relevant documentation;
H     and
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                               977
             [K. M. JOSEPH, J.]

 (ii) under clause (b) of sub-section (6A) shall be as specified which   A
 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        B
 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
 creditors, the committee of creditors shall be constituted and shall
 comprise of such persons to exercise such functions in such             C
 manner as may be specified.
    (9) The committee of creditors shall have the right to require
 the resolution professional to furnish any financial information in
 relation to the corporate debtor at any time during the corporate
 insolvency resolution process.                                          D
 (10) The resolution professional shall make available any financial
 information so required by the committee of creditors under sub-
 section (9) within a period of seven days of such requisition.”
 Section 22 (1) and (2) read as follows:
    “22. Appointment of resolution professional. –                       E
    (1) The first meeting of the committee of creditors shall be
    held within seven days of the constitution of the committee of
    creditors.
    (2) The committee of creditors, may, in the first meeting, by a
    majority vote of not less than sixty-six per cent of the voting      F
    share of the financial creditors, either resolve to appoint the
    interim resolution professional as a resolution professional or
    to replace the interim resolution professional by another
    resolution professional.”
 Section 23 reads as follows:                                            G
 “23. Resolution professional to conduct corporate insolvency
 resolution process.–
 (1) Subject to section 27, the resolution professional shall conduct
 the entire corporate insolvency resolution process and manage
                                                                         H
978            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A           the operations of the corporate debtor during the corporate
            insolvency resolution process period:
            Provided that the resolution professional shall continue to manage
            the operations of the corporate debtor after the expiry of the
            corporate insolvency resolution process period, until an order
B           approving the resolution plan under sub-section (1) of section 31
            or appointing a liquidator under section 34 is passed by the
            Adjudicating Authority.
               (2) The resolution professional shall exercise powers and
            perform duties as are vested or conferred on the interim resolution
C           professional under this Chapter.
            (3) In case of any appointment of a resolution professional under
            sub-sections (4) of section 22, the interim resolution professional
            shall provide all the information, documents and records pertaining
            to the corporate debtor in his possession and knowledge to the
D           resolution professional.”
            76. Section 24 deals with the meeting of committee of creditors.
      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.
E     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
F           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.”
G            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
H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                979
                 [K. M. JOSEPH, J.]

matters. It includes making any change in the management of corporate         A
debtor and its subsidiary (Section 28(j)). Section 30 contemplates that
resolution applicant may submit a resolution plan. The ‘resolution
applicant’ has been defined in sub-section 25 of Section 5 which reads
as follows:
      “5(25) “resolution applicant” means a person, who individually or       B
      jointly with any other person, submits a resolution plan to the
      resolution professional pursuant to the invitation made under clause
      (h) of sub-section (2) of section 25.”
      The resolution plan has been defined in Section 5 (26). The same
reads as under:                                                               C
      “5(26) “resolution plan” means a plan proposed by resolution
      applicant for insolvency resolution of the corporate debtor as a
      going concern in accordance with Part II.
      Explanation.- For removal of doubts, it is hereby clarified that a
      resolution plan may include provisions for the restructuring of the     D
      corporate debtor, including by way of merger, amalgamation and
      demerger.”
       78. The resolution professional has to examine each resolution
plan received by him on the basis of the invitation made by the resolution
professional under Section 25(h) and ascertain whether the plan is in         E
conformity with the various criteria mentioned in Section 30(2) of the
Code. The matter is thereafter put up by the resolution professional
before the committee of creditors. All resolution plans which conform
with the conditions in sub-section (2) of Section 30 are, in fact, to be
placed before the committee of creditors. The committee of creditors          F
may approve the resolution plan after considering its feasibility and
viability, the manner of distribution proposed, which may take into account
the hurdles, priority amongst creditors as laid down in sub-section(1) of
Section 53 including the priority and the value of security interest of
secured creditors and such other requirements as may be specified by
the Board. There are other details with which we are not concerned in         G
Section 30. Section 31 requires approval of the resolution plan by the
adjudicating authority. It reads inter-alia as follows:
      “31. Approval of resolution plan. –

                                                                              H
980             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A           (1) If the Adjudicating Authority is satisfied that the resolution
            plan as approved by the committee of creditors under sub-section
            (4) of section 30 meets the requirements as referred to in sub-
            section (2) of section 30, it shall by order approve the resolution
            plan which shall be binding on the corporate debtor and its
            employees, members, creditors, including the Central Government,
B
            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:
C           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
D     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
E     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 with.
              80. Section 33, which is in Chapter III in Part II, compels
      announcing the death knell of the corporate debtor. That is if, before the
F     expiry of insolvency resolution process period or the maximum period
      permitted which is CIRP under Section 12, inter alia, a resolution plan
      is not received or though received is rejected by the adjudicating authority,
      then under Section 33, order is to be passed. The curtains are wrung
      down on the insolvency resolution process. The corporate debtor goes
G     into liquidation. The adjudicating authority is bound to pass an order
      requiring corporate debtor to be liquidated as provided in chapter III
      Part II. Section 33(2) contemplates that before the confirmation of the
      resolution plan if the committee of creditors so approved by not less than
      66% of the voting decide to liquidate the corporate debtor, the adjudicating
      authority is to pass the liquidation order. Section 33(5) may be noticed at
H     this stage:
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                981
                 [K. M. JOSEPH, J.]

      “33 (5) Subject to section 52, when a liquidation order has been        A
      passed, no suit or other legal proceeding shall be instituted by or
      against the corporate debtor:
      Provided that a suit or other legal proceeding may be instituted by
      the liquidator, on behalf of the corporate debtor, with the prior
      approval of the Adjudicating Authority.                                 B
      An explanation has been added to Section 33(2)of the Code.
      “Explanation - For the purpose of this sub-section, it is hereby
      declared that the committee of creditors may take the decision to
      liquidate the corporate debtor, any time after constitution under
      sub-section (1) of Section 21 and before the confirmation of the        C
      resolution plan, including at any time before the preparation of the
      information memorandum.”
      THE   REAL  ESTATE  (REGULATION     AND
      DEVELOPMENT) ACT, 2016 AND ITS SCHEME
      (HEREINAFTER REFERRED TO AS ‘RERA’, FOR                                 D
      SHORT).
       81. The Real Estate Regulation and Development Bill was
introduced in the Rajya Sabha in 2013. Noticing the fact that though the
Consumer Protection Act, 1986 is available as a Forum in the real estate
market for the buyers, the recourse is only curative and is not adequate      E
to address all the concerns of the buyers and promoters in the said sector,
it was felt that there should be a central legislation in the interest of
effective consumer protection, uniformity and standardization of business
practices and transactions in the real estate sector. The Bill was passed
by both the Houses of Parliament and received the assent of the President     F
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:
                                                                              G
      “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
                                                                              H
982            SUPREME COURT REPORTS                           [2021] 14 S.C.R.


A           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;”
B
            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 the case may be, has
C           been allotted, sold (whether as freehold or leasehold) or otherwise
            transferred by the promoter, and includes the person who
            subsequently acquires the said allotment through sale, transfer or
            otherwise but does not include a person to whom such plot,
            apartment or building, as the case may be, is given on rent;”

D            85. As can be seen, the word ‘allottee’ includes, plot, apartment
      or building. The words ‘apartment’ and ‘building’ are defined. Section
      2(e) defines the word ‘apartment’ and it reads as follows:
            “2(e) “apartment” whether called block, chamber, dwelling unit,
            flat, office, showroom, shop, godown, premises, suit, tenement,
            unit or by any other name, means a separate and self-contained
E
            part of any immovable property, including one or more rooms or
            enclosed spaces, located on one or more floors or any part thereof,
            in a building or on a plot of land, used or intended to be used for
            any residential or commercial use such as residence, office, shop,
            showroom or godown or for carrying on any business, occupation,
F           profession or trade, or for any other type of use ancillary to the
            purpose specified;”
            86. Section 2(j) defines the word ‘building’ and it reads as follows:
            “2(j) “building” includes any structure or erection or part of a
            structure or erection which is intended to be used for residential,
G           commercial or for the purpose of any business, occupation,
            profession or trade, or for any other related purposes;”
            Section 2(s) defines ‘development’ and it reads as follows:
            “2(s) “development” with its grammatical variations and cognate
H           expressions, means carrying out the development of immovable
   MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   983
                [K. M. JOSEPH, J.]

      property, engineering or other operations in, on, over or under the       A
      land or the making of any material change in any immovable
      property or land and includes redevelopment;’’
      ‘Development works’ is defined in Section 2(t) and it reads as
follows:
      “2(t) “development works” means the external development works            B
      and internal development works on immovable property;”
      The word ‘promoter’ is defined in 2(zk) and it reads as follows:
      “2(zk) “promoter” means,—
         (i)     a person who constructs or causes to be constructed an         C
                 independent building or a building consisting of apartments,
                 or converts an existing building or a part thereof into
                 apartments, for the purpose of selling all or some of the
                 apartments to other persons and includes his assignees;
                 or                                                             D
         (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
                                                                                E
         (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
                                                                                F
                 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 co-operative housing finance society
              and a primary co-operative housing society which
              constructs apartments or buildings for its Members or in          G
              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
                                                                                H
984            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A                     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 is constructed or plot is developed for sale;
                      or
                (vi) such other person who constructs any building or
B                    apartment for sale to the general public.
                   Explanation.—For the purposes of this clause, where the
            person who constructs or converts a building into apartments or
            develops a plot for sale and the person who sells apartments or
            plots are different person, both of them shall be deemed to be the
C           promoters and shall be jointly liable as such for the functions and
            responsibilities specified under this Act or the rules and regulations
            made thereunder;”
            Section 2(zn) defines ‘real estate project’, it reads as follows:
            “2(zn) “real estate project” means the development of a building
D           or a building consisting of apartments, or converting an existing
            building or a part thereof into apartments, or the development of
            land into plots or apartments, as the case may be, for the purpose
            of selling all or some of the said apartments or plots or building, as
            the case may be, and includes the common areas, the development
E           works, all improvements and structures thereon, and all easement,
            rights and appurtenances belonging thereto;”
              87. Section 3 prohibits any promoter from advertising, marketing,
      etc. or even inviting persons to purchase any plot, apartment or building
      in any real estate project or part of it without there being registration.
F     Sub-Section (2), however, exempts certain projects from the requirement
      of registration and it reads as follows:
            “3(2) Notwithstanding anything contained in sub-section (1), no
            registration of the real estate project shall be required—
                (a) where the area of land proposed to be developed does not
G               exceed five hundred square meters or the number of apartments
                proposed to be developed does not exceed eight inclusive of
                all phases:
                       Provided that, if the appropriate Government considers
                it necessary, it may, reduce the threshold below five hundred
H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 985
                 [K. M. JOSEPH, J.]

            square meters or eight apartments, as the case may be, inclusive   A
            of all phases, for exemption from registration under this Act;
                   (b) where the promoter has received completion
            certificate for a real estate project prior to commencement of
            this Act;
                   (c) for the purpose of renovation or repair or re-          B
            development which does not involve marketing, advertising
            selling or new allotment of any apartment, plot or building, as
            the case may be, under the real estate project.
                   Explanation.—For the purpose of this section, where
            the real estate project is to be developed in phases, every such   C
            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:                                  D
      “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—
                                                                               E
      (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           F
          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       G
      the following practices, namely:—
      (A) The practice of making any statement, whether in writing or
      by visible representation which,—
      (i)      falsely represents that the services are of a particular
               standard or grade;                                              H
986                SUPREME COURT REPORTS                        [2021] 14 S.C.R.


A           (ii)     represents that the promoter has approval or affiliation which
                     such promoter does not have;
            (iii)    makes a false or misleading representation concerning the
                     services;
            (B) the promoter permits the publication of any advertisement or
B               prospectus whether in any newspaper or otherwise of services
                that are not intended to be offered;
            (d) the promoter indulges in any fraudulent practices.”
            We may also further notice Section 7(3). It read as follows:
C           “7(3) The Authority may, instead of revoking the registration under
            sub-section (1), permit it to remain in force subject to such further
            terms and conditions as it thinks fit to impose in the interest of the
            allottees, and any such terms and conditions so imposed shall be
            binding upon the promoter.”
D           We may further bear in mind Section 8 and it reads as follows:
                   “8. Obligation of Authority consequent upon lapse of or on
            revocation of registration.—Upon lapse of the registration or on
            revocation of the registration under this Act, the Authority, may
            consult the appropriate Government to take such action as it may
E           deem fit including the carrying out of the remaining development
            works by competent authority or by the association of allottees or
            in any other manner, as may be determined by the Authority:
                  Provided that no direction, decision or order of the Authority
            under this section shall take effect until the expiry of the period of
F           appeal provided under the provisions of this Act:
                   Provided further that in case of revocation of registration
            of a project under this Act, the association of allottees shall have
            the first right of refusal for carrying out of the remaining
            development works.”
G            88. Section 11 deals with the functions and duties of a promoter
      and is of considerable importance, and it reads as follows:
            “11. Functions and duties of promoter —(1) The promoter shall,
            upon receiving his Login Id and password under clause (a) of
            sub-section (1) or under sub-section (2) of section 5, as the case
H
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                               987
             [K. M. JOSEPH, J.]

 may be, create his web page on the website of the Authority and         A
 enter all details of the proposed project as provided under sub-
 section (2) of section 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          B
           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      C
           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.           D
 (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.                    E
 (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, by display at the site      F
        or such other place as may be specified by the regulations
        made by the Authority;
    (b) the stage wise time schedule of completion of the project,
         including the provisions for civic infrastructure like water,
         sanitation and electricity.                                     G

 (4) The promoter shall—
    (a) be responsible for all obligations, responsibilities and
        functions under the provisions of this Act or the rules and
        regulations made thereunder or to the allottees as per the
                                                                         H
988   SUPREME COURT REPORTS                           [2021] 14 S.C.R.


A         agreement for sale, or to the association of allottees, as
          the case may be, till the conveyance of all the apartments,
          plots or buildings, as the case may be, to the allottees, or
          the common areas to the association of allottees or the
          competent authority, as the case may be: Provided that
          the responsibility of the promoter, with respect to the
B
          structural defect or any other defect for such period as is
          referred to in sub-section (3) of section 14, shall continue
          even after the conveyance deed of all the apartments, plots
          or buildings, as the case may be, to the allottees are
          executed.
C     (b) be responsible to obtain the completion certificate or the
          occupancy certificate, or both, as applicable, from the
          relevant competent authority as per local laws or other
          laws for the time being in force and to make it available to
          the allottees individually or to the association of allottees,
D         as the case may be;
      (c) be responsible to obtain the lease certificate, where the
          real estate project is developed on a leasehold land,
          specifying the period of lease, and certifying that all dues
          and charges in regard to the leasehold land has been paid,
E         and to make the lease certificate available to the association
          of allottees;
      (d) be responsible for providing and maintaining the essential
          services, on reasonable charges, till the taking over of the
          maintenance of the project by the association of the
F         allottees;
      (e) enable the formation of an association or society or co-
          operative society, as the case may be, of the allottees, or a
          federation of the same, under the laws applicable: Provided
          that in the absence of local laws, the association of allottees,
G         by whatever name called, shall be formed within a period
          of three months of the majority of allottees having booked
          their plot or apartment or building, as the case may be, in
          the project;
      (f) execute a registered conveyance deed of the apartment,
          plot or building, as the case may be, in favour of the allottee
H
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                989
             [K. M. JOSEPH, J.]

         along with the undivided proportionate title in the common       A
         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    B
        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                C
        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          D
 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 property, to pay such outgoings and penal
 charges, if any, to the authority or person to whom they are payable
 and be liable for the cost of any legal proceedings which may be         E
 taken therefor by such authority or person;
    (h) after he executes an agreement for sale for any apartment,
        plot or building, as the case may be, not mortgage or create
        a charge on such apartment, plot or building, as the case
        may be, and if any such mortgage or charge is made or
                                                                          F
        created then notwithstanding anything contained in any
        other law for the time being in force, it shall not affect the
        right and interest of the allottee who has taken or agreed
        to take such apartment, plot or building, as the case may
        be;
       (5) The promoter may cancel the allotment only in terms of         G
 the agreement for sale:
         Provided that the allottee may approach the Authority for
 relief, if he is aggrieved by such cancellation and such cancellation
 is not in accordance with the terms of the agreement for sale,
 unilateral and without any sufficient cause.                             H
990            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A                  (6) The promoter shall prepare and maintain all such other
            details as may be specified, from time to time, by regulations made
            by the Authority.”
             89. Section 14 declares that the proposed project shall be
      developed and completed by the promoter in accordance with the
B     sanctioned plans, layout plans and specifications, as approved by the
      Competent Authorities.
            90. Sub-Section (2) of Section 14, reads as follows:
            “14. (2) Notwithstanding anything contained in any law, contract
            or agreement, after the sanctioned plans, layout plans and
C           specifications and the nature of the fixtures, fittings, amenities
            and common areas, of the 16 apartment, plot or building, as the
            case may be, as approved by the competent authority, are disclosed
            or furnished to the person who agree to take one or more of the
            said apartment, plot or building, as the case may be, the promoter
D           shall not make—
               (i) any additions and alterations in the sanctioned plans, layout
               plans and specifications and the nature of fixtures, fittings and
               amenities described therein in respect of the apartment, plot or
               building, as the case may be, which are agreed to be taken,
E              without the previous consent of that person:
                      Provided that the promoter may make such minor
               additions or alterations as may be required by the allottee, or
               such minor changes or alterations as may be necessary due to
               architectural and structural reasons duly recommended and
F              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
G
               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.
H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 991
                 [K. M. JOSEPH, J.]

          (ii) any other alterations or additions in the sanctioned plans,     A
          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,        B
      irrespective of the number of apartments or plots, as the case
      may be, booked by him or booked in the name of his family, or in
      the case of other persons such as companies or firms or any
      association of individuals, etc., by whatever name called, booked
      in its name or booked in the name of its associated entities or
      related enterprises, shall be considered as one allottee only.”          C

       91. A similar Explanation, as found in Section 14, regarding what
the word allottee means for the purpose of section 15 is found in Section
15. Section 15 deals with obligations of promoter in the case of transfer
of a real estate project to a third party and Section 15(1) reads as follow:
                                                                               D
       “15. Obligations of promoter in case of transfer of a real estate
      project to a third party.—(1) The promoter shall not transfer or
      assign his majority rights and liabilities in respect of a real estate
      project to a third party without obtaining prior written consent
      from two-third allottees, except the promoter, and without the prior
      written approval of the Authority: Provided that such transfer or        E
      assignment shall not affect the allotment or sale of the apartments,
      plots or buildings as the case may be, in the real estate project
      made by the erstwhile promoter. …”
      Section 17 (1) of the RERA, reads as follows:
                                                                               F
      “17. Transfer of title.—(1) The promoter shall execute a registered
      conveyance deed in favour of the allottee along with the undivided
      proportionate title in the common areas to the association of the
      allottees or the competent authority, as the case may be, and hand
      over the physical possession of the plot, apartment of building, as
      the case may be, to the allottees and the common areas to the            G
      association of the allottees or the competent authority, as the case
      may be, in a real estate project, and the other title documents
      pertaining thereto within specified period as per sanctioned plans
      as provided under the local laws:
                                                                               H
992            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A                  Provided that, in the absence of any local law, conveyance
            deed in favour of the allottee or the association of the allottees or
            the competent authority, as the case may be, under this section
            shall be carried out by the promoter within three months from
            date of issue of occupancy certificate”
B          92. Section 18 deals with the right of the allottee to obtain the
      amount given by the allottee and even compensation. It reads as follows:
                  “18. Return of amount and compensation.—(1) If the
            promoter fails to complete or is unable to give possession of an
            apartment, plot or building,—
C                   (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
D           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
E           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.
F
                   (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 under
            this subsection shall not be barred by limitation provided under
G           any law for the time being in force.
                   (3) If the promoter fails to discharge any other obligations
            imposed on him under this Act or the rules or regulations made
            thereunder or in accordance with the terms and conditions of the
            agreement for sale, he shall be liable to pay such compensation to
H           the allottees, in the manner as provided under this Act.”
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                    993
                 [K. M. JOSEPH, J.]

       Finally, Section 19 deals with the rights and obligations of an allottee   A
and it reads as follows:
       “19. Rights and duties of allottees.—(1) The allottee shall be
       entitled to obtain the information relating to sanctioned plans, layout
       plans along with the specifications, approved by the competent
       authority and such other information as provided in this Act or the        B
       rules and regulations made thereunder or the agreement for sale
       signed with the promoter.
       (2) The allottee shall be entitled to know stage-wise time schedule
       of completion of the project, including the provisions for water,
       sanitation, electricity and other amenities and services as agreed         C
       to between the promoter and the allottee in accordance with the
       terms and conditions of the agreement for sale.
       (3) The allottee shall be entitled to claim the possession of
       apartment, plot or building, as the case may be, and the association
       of allottees shall be entitled to claim the possession of the common       D
       areas, as per the declaration given by the promoter under sub-
       clause (C) of clause (l) of sub-section (2) of section 4.
       (4) The allottee shall be entitled to claim the refund of amount
       paid along with interest at such rate as may be prescribed and
       compensation in the manner as provided under this Act, from the            E
       promoter, if the promoter fails to comply or is unable to give
       possession of the apartment, plot or building, as the case may be,
       in accordance with the terms of agreement for sale or due to
       discontinuance of his business as a developer on account of
       suspension or revocation of his registration under the provisions
       of this Act or the rules or regulations made thereunder.                   F
       (5) The allottee shall be entitled to have the necessary documents
       and plans, including that of common areas, after handing over the
       physical possession of the apartment or plot or building as the
       case may be, by the promoter.
                                                                                  G
       (6) Every allottee, who has entered into an agreement for sale 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           H
994            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A           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).
B           (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
C           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 or
D           building, as the case may be.
            (11) Every allottee shall participate towards registration of the
            conveyance deed of the apartment, plot or building, as the case
            may be, as provided under sub-section (1) of section 17 of this
            Act.”
E
            93. The Act contemplates setting-up of a Real Estate Regulatory
      Authority, a Central Advisory Council and the Real Estate Appellate
      Tribunal. Offences and penalties are provided for to give teeth to the
      Act. Section 71 gives the power of adjudication of compensation. Section
      72 provides for the factors to be taken into consideration for adjudging
F     the quantum of compensation or interest under Section 71. Section 79
      enacts a bar of jurisdiction of the civil court in regard to any matter in
      which the Authority, the Adjudicating Officer or the Appellate Tribunal
      is empowered by the Act to determine. An injunction cannot be issued
      by any court or other Authority in respect of any action taken or to be
      taken in pursuance of the power conferred by or under the Act under
G
      the RERA.
            94. Section 85 deals with the power to make regulations. Section
      85(2) reads as follows inter alia:


H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                995
                 [K. M. JOSEPH, J.]

      “85(2) In particular, and without prejudice to the generality of the    A
      foregoing power, such regulations may provide for all or any of
      the following matters, namely —
                                   xxx
                                   xxx
                                                                              B
                                   xxx
                                   xxx
      (c) such other information and documents required under clause
      (f) of sub-section (1) of section 11;
                                                                              C
      (d) display of sanctioned plans, layout plans along with
      specifications, approved by the competent authority, for display
      under clause (a) of sub-section (3) of section 11;
      (e) preparation and maintenance of other details under sub-section
      (6) of section 11;
                                                                              D
      Section 88 of RERA, read as follows:
      “88. Application of other laws not barred.—The provisions of this
      Act shall be in addition to, and not in derogation of, the provisions
      of any other law for the time being in force.”
      It is also important to notice, at once, Section 89 and it reads as     E
follows:
      “89. Act to have overriding effect — The provisions of this Act
      shall have effect, notwithstanding anything inconsistent therewith
      contained in any other law for the time being in force.”
                                                                              F
     95. The only Act, which is repealed is the Maharashtra Housing
(Regulation and Development) Act, 2012.
      96. A perusal of Section 88 reveals, on the one hand, that the
provisions of the RERA, are in addition to and not in derogation of the
provisions of any other law for the time being in force. At the same time,
                                                                              G
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.
                                                                              H
996            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


A           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
B           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,

C           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
D           two or three apartments, the owner of such building may, by a
            declaration duly executed and registered under the provisions of
            the Registration Act, 1908 (16 of 1908), indicate his intention to
            make the provisions of this Act applicable to such building, and on
            such declaration being made, such owner shall execute and register
            a Deed of Apartment in accordance with the provisions of this
E           Act, as if such owner were the promoter in relation to such
            building.”
            98. Section 3(b) defines the word ‘allottee’ as follows:
            “3(b) “allottee”, in relation to an apartment, means the person to
            whom such apartment has been allotted, sold or otherwise
F
            transferred by the promoter;”
             99. Section 3(c) defines apartment and it reads as follows:
            “3(c) “apartment” means a part of any property, intended for any
            type of independent use, including one or more rooms or enclosed
G           spaces located on one or more floors or any part or parts thereof,
            in a multi-storeyed building to be used for residence or office or
            for the practice of any profession, or for the carrying on of any
            occupation, trade or business or for such other type of independent
            use as may be prescribed, and with a direct exit to a public street,
            road or highway, or to a common area leading to such street, road
H
   MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  997
                [K. M. JOSEPH, J.]

      or highway, and includes any garage or room (whether or not              A
      adjacent to the multi-storeyed building in which such apartment is
      located) provided by the promoter for use by the 4 owner of such
      apartment for parking any vehicle or, as the case may be, for the
      residence of any domestic aide employed in such apartment;”
      100. Section 3(e) defines ‘apartment owner’ and it reads as              B
follows:
      “3(d) “apartment number” means the number, letter or combination
      thereof, designating an apartment;
      101. Section 3(f) defines ‘association of apartment owners’ as
follows:                                                                       C

      “3(e) “apartment owner” means the person or persons owning an
      apartment and an undivided interest in the common areas and
      facilities appurtenant to such apartment in the percentage specified
      in the Deed of Apartment;
                                                                               D
      102. Section 4, 4(1), (2) and (3), read as follows:
      “4. Ownership of apartments.—(1) Every person to whom any
      apartment is allotted, sold or otherwise transferred by the promoter,
      on or after the commencement of this Act, shall, save as otherwise
      provided in section 6, and subject to the other provisions of this
                                                                               E
      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
                                                                               F
      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   G
      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”                                     H
998             SUPREME COURT REPORTS                           [2021] 14 S.C.R.


A            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 Section 13.
             105. Section 15 declares that there shall be an association of
B     apartment owners in relation to the apartment and property pertaining
      thereto and for the management of common areas and facilities. Model
      byelaws are to be framed by the Administrator and the Association of
      Apartment Owners can make departure from the model byelaws only
      with the prior approval of the Administrator.
C           106. There are similar laws made in the States which relate to the
      right of the apartment owners. We will revert back to the specific
      questions which have been raised by the petitioners.
             THE CONTENTIONS

D            107. The contention which is raised is that under the impugned
      provisos inserted in Section 7(1) of the Code, an application by an allottee,
      can be made only if there are hundred allottees or a number representing
      one-tenth of the total number of allottees, whichever is less, with a further
      rider that the allottees must be part of the same real estate project. It is
      contended that the word ‘allottee’ is to be understood in the sense in
E     which the word has been defined in the RERA. If that is so, it is contended
      that the impugned amendment would be inflicted with the vice of
      vagueness and it is arbitrary.
            108. What is to be meaning of the word ‘allottees’? The following
      questions are posed:
F
             i. Is the total number of the allottees, to be calculated qua the
                Units promised?
                                           Or
             ii. Is it to be based on the number of units constructed or is it to
G                be the number of units allotted or units where the agreement
                 to sell is entered into?
              109. There is an information asymmetry. There is no published
      data available of status of allotted units. No builder shares the information.
      It is impossible for the buyers to obtain the information. Ten per cent of
H     allotted units, even it is assumed to be qua letter of allotment, is a dynamic
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  999
                 [K. M. JOSEPH, J.]

figure and keeps changing. A buyer may calculate ten per cent of the            A
hundred units allotted by morning and it may become 110 by night
rendering the filing impossible.
       110. Further, it is complained that it is not clear as to whether in
determining allottees, in a real estate project, whether it is a tower? the
entire colonization? Or a SPV? Ten per cent of a real estate allottees          B
could mean ten per cent of the allotted units or ten per cent of the total
legal persons, who have bought into the project, particularly, in cases of
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.                       C

      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.   D
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          E
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 and
which is a separate and self-contained part of any immovable property.          F
It includes any one or more rooms or enclosed spaces located on one or
more floors or any part thereof, in a building or on a plot of land. It may
be used or intended to be used for any residential or commercial use
such as residence, office, shop, showroom or godown or for carrying on
any business, occupation, profession, trade or any other type of use,
which his ancillary.                                                            G
       112. ‘Building’ has been defined as including any structure or
erection or part of any structure and intended to be used for residential
or commercial purposes, inter alia. Thus, an allotment under RERA
can be in relation to a plot, an apartment or a building. In other words, a
                                                                                H
1000             SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A     project, would be in relation to plots, apartments or buildings. It could
       also be for a composite one for plots and apartments or for plots and
       buildings. We have noticed the expansive definition of the word apartment
       and flats are comprehended within the definition of the word apartment.
       We have also noticed in this regard, the definition of the word apartment,
       in the Delhi Apartment Ownership Act, 1986. We have also seen that
 B
       under the Delhi Apartment Ownership Act, allottee has been defined in
       relation to an apartment to mean the person to whom such apartment
       has been allotted, sold or otherwise transferred by the promoter.
             113. For appreciating the meaning of the word ‘allottee’, for the
       purpose of the Code, undoubtedly, it is necessary to travel to Section
 C     2(d) and 2(zn)of RERA for the reason that in Section 5(8)(f) of the
       Code, the following Explanation was inserted by Act 26 of 2018 w.e.f.
       06.06.2018. This provision has been upheld by this Court in Pioneer
       (supra).
             “5(8)(f)     xxx             xxx               xxx
 D
             Explanation.—For the purposes of this sub-clause,—
             (i) any amount raised from an allottee under a real estate project
             shall be deemed to be an amount having the commercial effect of
             a borrowing; and
 E           (ii) the expressions, “allottee” and “real estate project” shall have
             the meanings respectively assigned to them in clauses (d) and
             (zn) of section 2 of the Real Estate (Regulation and Development)
             Act, 2016;”
              114. Real estate project may relate to plots, apartments, or buildings
 F     or plots/apartments and plots/buildings. As far as the expression ‘allottee’
       is concerned, since the Code in the Explanation to Section 5(8)(f),
       incorporates 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.
 G          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.
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1001
                 [K. M. JOSEPH, J.]

      ii. An allottee, in the case of an apartment, which expression            A
          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.
                                                                                B
      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            C
          given on rent. Whatever we have mentioned about apartments,
          is equally true qua allotment of plots or buildings.
    A MISCELLANY OF CONTENTIONS REGARDING
ALLOTTEES
        116. The definition of the word ‘promoter’ in RERA may be               D
noticed in this regard. It includes a person who constructs or causes to
be constructed an independent building or apartments or convert an
existing building or a part thereof into apartments for the purpose of
selling or some of the apartments to other persons. In regard to such a
person, it is clear that there is no allotment of any plot as such. It may be   E
another matter that the contract may contemplate the assignment of the
undivided interest in the land upon which the construction is made to the
allottee but the allottee is the allottee of the building or the apartment as
defined in the Act. Coming to clause (ii) of Section 2(zk) defining
‘promoter’, it contemplates a developer who develops land into a project.
The promoter in such a case may also put up construction on any of the          F
plots for the purpose of sale either with or without structures thereon.
Therefore, this category of promoter and therefore real estate project
would be a hybrid project which involves the development of the land
into plots sale of plots aloneafter development or sale of the plot with the
construction thereon. Coming to clause (iii) of the definition of ‘promoter’    G
it includes any public body or development authority in respect of allottees
of building or apartments constructed by such authority or body on lands
owned by them or placed at their disposal by the Government. There
may be such promoters who are development authorities or public bodies,
if they own plots or have plots at their disposal by the Government which
                                                                                H
1002            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     is then, allotted. The allotment must be for the purpose of selling. The
       plots and the apartments must be intended for sale. In regard to Apex
       Level Co-operative Housing Society or Primary Co-operative Housing
       Society, they are treated as promoters in regard to apartments or buildings
       for its purpose or in respect of allottees, apartments or buildings. This
       necessarily mean that in regard to such societies the allottees could be
 B
       the members or non-members. Clause V also includes person who acts
       as builder, colonizer, contractor, developer, estate developer or any other
       name or claiming to be the Power of Attorney of the holder of the land
       on which the building, apartment constructed or the plot developed for
       sale. This must be further understood in the light of the definition of the
 C     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

 D           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
 E     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
 F     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 into an
       apartment. It may be a project for merely development of land into plots
       and sale of the plotted land as such. It may be also that the same person
 G     may also develop either apartments or building to be sold. In this regard
       we may remember the explanation in Section 2(zk) (vi) defining the
       word ‘promoter’. The said section reads as under:
             “(zk) “promoter” means,—
              (i) xxx                    xxx                       xxx
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1003
                 [K. M. JOSEPH, J.]

      (ii) xxx                     xxx                        xxx               A
      (iii) xxx                    xxx                        xxx
      (iv) xxx                     xxx                        xxx
      (v) xxx                      xxx                        xxx
         (vi) such other person who constructs any building or apartment        B
      for sale to the general public.
      Explanation.—For the purposes of this clause, where the person
      who constructs or converts a building into apartments or develops
      a plot for sale and the person who sells apartments or plots are
      different person, both of them shall be deemed to be the promoters        C
      and shall be jointly liable as such for the functions and
      responsibilities specified under this Act or the rules and regulations
      made thereunder;”
        118. Therefore, a conspectus of the provisions would show that
having regard to the legislative intention the term ‘allottees’ as defined in   D
Section 2(d) must be understood undoubtedly on its own terms
predominantly. But at the same time the other provisions which form
part of the Act and therefore the scheme must also be borne in mind.
The Argument that the definition of ‘allottee’ suffers from over
inclusiveness and under inclusiveness needs to be considered. Under
                                                                                E
inclusiveness and over inclusiveness are aspects of the guarantee under
Article 14. Equals must be treated equally. Unequals must not be treated
equally. What constitutes reasonable classification must depend upon
the facts of each case, the context provided by the statute, the existence
of intelligible differentia which has led to the grouping of the persons or
things as a class and the leaving out of those who do not share the             F
intelligible differentia. No doubt it must bear rational nexus to the objects
sought to be achieved.
        119. Coming to the definition of the word ‘allottee’ it appears to
be split up into three categories broadly, they are- plot, apartment and
buildings. In the context of the impugned proviso, it must be remembered        G
that if an applicant is able to garner a magical figure of 100 allottees,
then he can present the application under Section 7 of the Code. This is
for the reason that the further 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
                                                                                H
1004             SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A     ‘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.
 B
       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
 C     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 ‘allotment’ does mean allotment in the sense of
       documented booking as is mentioned in Section 11(1)(b) in regard to
 D     apartment or plot with which we are largely concerned. Such detail
       regarding the quarterly up-to-date list of the number and the types of
       apartments are to be uploaded as provided in Section 11. It is this
       information incidentally, which is the reservoir of data which the legislature
       intends that the allottees can use even though it is not necessarily confined
       to them. The allottee would also include a person who acquires the
 E     allotment either through sale, transfer or otherwise. The transferee of
       the allotment is contemplated. There can be no difficulty in including
       such assignee of the allotment as also the allottee for the purpose of
       complying with the threshold requirement under the impugned proviso.
       Thus, all allottees and all assignees of allotment would qualify both to be
 F     considered for the purpose of calculating the total number of allottees
       but confined to the particular real estate project and therefore for arriving
       at the figure of 100 allottees or one-tenth of the allottees as the case
       may be. Then, there is a third category, which is introduced by the
       expression ‘sold’ (whether as ‘leasehold’ or ‘freehold’ or otherwise
       transferred by the Promoter). Here a question may arise, if the word
 G     ‘sold’ is applied to the expression ‘plot’, then undoubtedly the transferee
       would be an allottee. If the sale is to the allottee in a real estate project
       which is a hybrid project consisting of development of land into plots and
       also development of buildings as is contemplated under Section 2(zk)
       then the transferee of the plot undoubtedly would be an allottee. He may
 H     have a complaint regarding the default by the promoter in the matter of
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1005
                 [K. M. JOSEPH, J.]

development of the plot under hybrid project. As far as sale whether           A
‘freehold’ or ‘leasehold’ of an apartment or a building is concerned,
once an apartment or building is sold, it presupposes that the construction
of the building or the apartment is complete ordinarily. No doubt, he may
also have complaints against the promoter which may be addressed under
the RERA. For the purpose of the proviso in question, going by the
                                                                               B
definition, undoubtedly, such transferee of an apartment or building, is to
be treated as an allottee. Let us take an example. A Promoter constructs
several apartments. An apartment is defined so as to include ‘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,   C
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
                                                                               D
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      E
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 court to strike down a law. There is a wide latitude allowed in the
legislature in these matters. The examination cannot be extended to find       F
out whether there is mathematical precision or wooden equality
established. The working of the statute may produce further issues, all
of it may not be fully perceived as which may not be wholly foreseen by
the law giver. The freedom to experiment must be conceded to the
legislature, particularly, in economic laws. If problems emerge in the
working of law and which require legislative intervention, the court cannot    G
be oblivious to the power of the legislative to respond by stepping in with
necessary amendment. There is nothing like a perfect law and as with
all human institutions there are bound to be imperfections. What is
significant is however for the court ruling on constitutionality, the law
must present a clear departure from constitutional limits.                     H
1006             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A           122. In the example of an apartment which is sold where the
       project is not complete, we bear in mind the following features:
               In such cases if there is insolvency, the project would remain
       incomplete. Common areas/common facilities would not become
       available. The feature which attract a buyer is the whole project which
 B     is completed. The apartment owner may very well refuse to accept
       delivery as he may insist upon the completion of the project with all its
       promised facilities. Section 17 of RERA contemplates the transfer of
       title to the common areas to the association of allottees. Obviously, such
       a thing would not be possible ordinarily unless the construction is
       complete. In other words, unlike an allottee of a different project under
 C     the same promoter the different allottees as contained in the definition
       of the word ‘allottee’ would have room for common complaints. A realistic
       and pragmatic approach is not to be eschewed or abandoned. Thus, we
       cannot see merit in the contention.
               123. We have noticed Section 11 (1) (b) of RERA. It contemplates
 D     details of booking qua apartments and plots. This is sufficient to reject
       the argument that it could be based on a total number of the units promised.
       What is required is allotment and not promised flats as per a brochure. It
       is also not the total constructed units. This is as what is relevant under
       the impugned provisos read with Section 5(8)(f) explanation and section
 E     2 (d) of RERA read with Section 11(1)(b) and the rules 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.
 F
              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
 G     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.
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1007
                 [K. M. JOSEPH, J.]

      THE PROBLEM OF DEFAULT AND LIMITATION                                    A
       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 lower, is unworkable and arbitrary having regard to the
provisions of the Code. There can only be one default in a complaint, it
is contended. When the required number of allottees may have to be             B
drawn from allottees who may have entered into agreements with the
builder on different dates, the date of default would be different. This
would adversely impinge on the absolute right which otherwise exist
with an allottee to make an application under Section 7 of the Code.
       126. Per contra, the learned Additional Solicitor General would         C
draw attention to Explanation to Section 7(1). She would further contend
that as long as there is a default which need not be qua the applicant or
applicants, an application would be maintainable and there is no merit in
this contention.
      127. In this context, it is necessary to recapture Section 4 of the      D
Code. It reads as follows:
      “4. (1) This Part shall apply to matters relating to the insolvency
      and liquidation of corporate debtors where the minimum amount
      of the default is one lakh rupees:
      Provided that the Central Government may, by notification, specify       E
      the minimum amount of default of higher value which shall not be
      more than one crore rupees.”
             The amount is now fixed at Rs.1 crore.
       128. It is thereafter that Section 6 declares that where any
                                                                               F
corporate debtor commits default, a financial creditor, an operational
creditor or a corporate debtor may itself initiate CIRP in the manner
provided in Chapter 2.
       129. Section 7 continues to declare that a financial creditor either
by itself or jointly by other creditors or any other central government
notified person, file an application before the Adjudicating Authority, when   G
a default has occurred. It is thereafter that the following Explanation is
present, no doubt, after the impugned provisions, after the amendment:
      “7. (1) xxx                  xxx                       xxx

                                                                               H
1008            SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A           Explanation.—For the purposes of this sub-section, a default
             includes a default in respect of a financial debt owed not only to
             the applicant financial creditor but to any other financial creditor
             of the corporate debtor.”
             130. The Explanation makes it clear that a financial debt, which is
 B     owed to any other financial creditor of the corporate debtor would suffice
       to make an application on the basis that the default has occurred. Default
       has been defined in Section 3(12) of the Code as follows:
             “3(12) “default” means non-payment of debt when whole or any
             part or instalment of the amount of debt has become due and
 C           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,
 D           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 sub-section (1) in such form and manner as is
 E           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,
 F           particulars of the proposed interim resolution professional in Part
             III, particulars of the financial debt in Part IV and documents,
             records and evidence of default in Part V. Under Rule 4(3), the
             applicant is to dispatch a copy of the application filed with the
             adjudicating authority by registered post or speed post to the
 G           registered office of the corporate debtor. The speed, within which
             the adjudicating authority is to ascertain the existence of a default
             from the records of the information utility or on the basis of evidence
             furnished by the financial creditor, is important. This it must do
             within 14 days of the receipt of the application. It is at the stage of
             Section 7(5), where the adjudicating authority is to be satisfied
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                1009
                 [K. M. JOSEPH, J.]

      that a default has occurred, that the corporate debtor is entitled to   A
      point out that a default has not occurred in the sense that the
      “debt”, which may also include a disputed claim, is not due. A
      debt may not be due if it is not payable in law or in fact. The
      moment the adjudicating authority is satisfied that a default has
      occurred, the application must be admitted unless it is incomplete,
                                                                              B
      in which case it may give notice to the applicant to rectify the
      defect within 7 days of receipt of a notice from the adjudicating
      authority. Under sub-section (7), the adjudicating authority shall
      then communicate the order passed to the financial creditor and
      corporate debtor within 7 days of admission or rejection of such
      application, as the case may be.”                                       C
                                                     (Emphasis supplied)
       132. It is true that Section 238A (inserted with effect from
06.06.2018) of the Code provides that the provisions of the Limitation
Act shall be applicable as far as may be to the proceedings or appeals
before the Adjudicating Authority and the NCLAT, as the case may be,          D
inter alia. Interpreting this provision, inter alia, this Court in B.K.
Educational Services Private Limited (supra), has held that Article 137
in Schedule I of the Limitation Act, 1963, will apply in regard to an
application under Sections 7 and 9 of the Code. This Court held, inter
alia, as follows:                                                             E
      “42. It is thus clear that since the Limitation Act is applicable to
      applications filed under Sections 7 and 9 of the Code from the
      inception of the Code, Article 137 of the Limitation Act gets
      attracted. “The right to sue”, therefore, accrues when a default
      occurs. If the default has occurred over three years prior to the       F
      date of filing of the application, the application would be barred
      under 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        G
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,
                                                                              H
1010                SUPREME COURT REPORTS                       [2021] 14 S.C.R.


 A     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
 B     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 the liquidation procedure is in all a proceeding, in rem. The
       Law Giver has envisaged in the Code, an action, merely for setting in
       motion the process initially. The litmus test on the anvil of which, the
 C     Adjudicating Authority will scrutinize the matter, is only the existence of
       the default, as defined in Section 4 of the Code. As on date, the amount
       of default is pegged at Rs.1 crore. Present a financial debt which has
       not been paid, the doors are thrown open for the processes under the
       Code to flow in and overwhelm the corporate debtor. The further barrier
 D     is limitation, no doubt, as noticed in B.K. Educational Services Private
       Limited v. Parag Gupta & Associates50. As with anything in life, not
       only will imperfections stand out and mathematical nicety be flouted, a
       law may end up seemingly trampling upon the interests of a few or even
       many. Since, the Code undoubtedly bears the brand of an economic
       measure upon its face, and in true spirit, being one of the most significant
 E     and dynamic economic experiments indulged in by the Law Giver, not
       by becoming servile to Parliament, but by way of time hallowed deference
       to the sovereign body experimenting in such matters, this Court will lean
       heavily in favour of such a law. The complaint of the petitioners that an
       increase in the required strength of applicants, will create legal knots
 F     which do not admit of solution, do not appeal to us and we intend lay
       bare how the law can indeed be worked, even with the extra burden
       which is cast on the persons covered by the provisos.
              135. It is indisputable that in order to successfully move an
       application under Section 7 that there must be a default which must be in
 G     a sum of Rs.1 crore. It is equally clear that the amount of Rs.1 crore
       need not be owed by the corporate debtor in favour of the applicant. It
       must be noted that the Explanation existed even prior to the provisos
       being inserted. It is open to a financial creditor, to move an application in
       the company of another financial creditor or more than one other financial
       50
            (2019) 11 SCC 633
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                    1011
                 [K. M. JOSEPH, J.]

creditor. In fact, a perusal of the Rules, which we have already extracted,       A
would indicate that irrespective of the number of applicants the Court
Fee would remain Rs. 25,000/-. This answers the alleged vagueness
about court fees where the provisos are given effect to. Thus, dehors
the impugned provisos in terms of the Explanation in sub-Section 7(1), a
financial debt need not be owed to the applicant and as joint application
                                                                                  B
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 Rs.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        C
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
                                                                                  D
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, if they are real estate
allottees, particularly knowing what the admission of application under           E
Section 7 entails, and the destiny of an application which has reached
the stage of compulsory winding up under Section 33. However, taking
a more likely example, viz., of the corporate debtor operating in the real
estate sector and an allottee moving an application upon there being
amounts due to him, prior to the amendment, undoubtedly, a single allottee        F
could set the ball in motion and all he had to satisfy is default to him or
any other financial creditor. The change that is brought about is only that
apart from establishing the factum of default, he must present the
application endorsed by the requisite number introduced by the proviso.
Since, default can be qua any of the applicants, and even a person, who
is not an applicant, and the action is, one which is understood to be in          G
rem, in that, the procedures, under the Code, would bind the entire set of
stakeholders, including the whole of the allottees, we can see no merit in
the contention of the petitioner based on the theory of default, rendering
the provisions unworkable and arbitrary.
                                                                                  H
1012             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A             137. In this regard, it is necessary to notice Form 1, in which, an
       application is to be maintained under Section 7 of the Code read with
       Rule 4 of the Rules. In the said Form, in Part IV, there are two columns.
       The first column is total amount of debt granted, dates of disbursement.
       Under the second column in Part IV, the applicant must show the amount
       claimed to be in default and the date on which the default occurred (the
 B
       applicant is required to attach the workings for computation of the amount
       and days of default in tabular form). Part V deals with particulars of the
       financial debt (documents, records and evidence of default). The applicant
       is called upon to attach copy of record of default with information utility,
       if any. The applicant may attach list of any other document to prove the
 C     existence of the default, as can be seen from clause 8 of Part V.
              138. In this regard, question may arise as to how the application
       would have to be filled-up, if there are hundred allottees in a given case
       to comply with the requirement of the proviso. In the very first place,
       we must notice that as far as the workability of this provision in such a
 D     situation is looked at, it cannot be called into question, having regard to
       one 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
 E     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 Rs.1 crore, being in default. The Authority is alerted. He verifies
 F     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
 G     as a sum in default in terms of the Explanation in Section 7(1).
       Undoubtedly, the record of default, as contemplated in the Code, which
       need not be the record of default with the information utility alone, has to
       be furnished. If the default is qua all the applicants, then also, as long as
       the statutory requirements regarding the amount, and it not being barred,
 H     are fulfilled, it will be open to the applicants to plead the same.
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                     1013
                 [K. M. JOSEPH, J.]

Undoubtedly, if the debt, in a sum of Rs.1 crore, happens to be set up,            A
which is barred, then, unless Section 5 of the Limitation Act is successfully
invoked, the applicants would risk rejection of the application, which
cannot be stated to be unfair as it is in accordance with law. What we
are indicating is that in view of the special provision, contained in the
Explanation to Section 7(1), the arguments appear to be farfetched. We
                                                                                   B
must bear in mind that when we reasonably contemplate, a state of
insolvency, while in law, the corporate debtor, being in default to a single
financial creditor in a sum of Rs. 1 crore, is sufficient, it is highly unlikely
that the corporate debtor would not be similarly financially in dire straits
towards the other creditors (allottees). Another aspect, which is raised,
is that in the example of a hundred allottees, if they have agreements,            C
under which, the date of default is different, how is the application to be
drafted and processed? What, if the debt is barred qua some of the
applicants, whereas, it is not so in regard to the other applicants. Taking
a cue from the Explanation to Section 7(1), all that would be required is,
to plead the default, no doubt, in the sum of Rs. 1 crore, which is not
                                                                                   D
barred as the cause of action. In other words, if a law contemplates that
the default in a sum of Rs.1 crore can be towards any financial creditor,
even if he is not an applicant, the fact that the debt is barred as against
some of the financial creditors, who are applicants, whereas, the
application by some others, or even one who have moved jointly, fulfill
the requirement of default, both in terms of the sum and it not being              E
barred, the application would still lie.
    ALLOTTEES TO BE FROM SAME REAL ESTATE
PROJECT: IS IT UNCONSTITUTIONAL?
        139. We have referred to the definition of the word ‘allotee’ in
Section 2(d) of the RERA. In regard to a real estate project, all persons,         F
who are treated as allottees, as per 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        G
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           H
1014             SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A     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
 B
       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 a
       Promoter of a real estate project, may be having, in one sense, it will
       make the task of the applicant himself, more cumbersome. It becomes a
       sword, which will cut both ways. This is for the reason that the complaints,
 C     relating to different projects, may be different. With regard to one project
       of a Promoter of real estate project, maybe, in the advanced stage, the
       allottees in a particular project, may not have much of a complaint. The
       complaint, in relation to yet another project, may be more serious. If the
       complaint in respect of the latter, attracts the attention of a critical mass
       of allottees, and the proposed applicant is part of that project in the said
 D
       project, then, it may be easier for the allottees to fulfil the statutory
       mantra in the impugned provisos, with the junction of likeminded souls.
       If, on the other hand, the requirement was to make a search for allottees
       of different projects, as would be the case, if the entirety of the allottees,
       under different projects, were to be reckoned, the task would have been
 E     much more cumbersome. The requirement of the allottees, being drawn
       from the same project, stands to reason and also does not suffer from
       any constitutional blemish, as pointed out.
          THE POINT OF TIME TO COMPLY WITH THE
       THRESHHOLD REQUIREMENTS
 F             141. The question, then arises, as to the alleged lack of clarity
       about the point of time, at which the requirements of the impugned
       provisos, are to be met. Is it sufficient, if the required number of allottees
       join together and file an application under Section 7 and fulfil the
       requirements, at the time of presentation? Or, is it necessary that the
 G     application must conform the numerical strength, under the new proviso,
       even after filing of the application, and till the date, the application is
       admitted under Section 7(5)? There can be no doubt that the requirement
       of a threshold under the impugned proviso, in Section 7(1), must be
       fulfilled as on the date of the filing of the application. In this regard, we
       find support from an early judgment of this Court, which was rendered
 H
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                             1015
                    [K. M. JOSEPH, J.]

under Section 153-C of the Companies Act, 1913. Section 153-C is the          A
predecessor to Sections 397 and 398 read with Section 399 of the
Companies Act, 1956. Its most recent avatar is contained in Sections
241 and 242 of the Companies Act, 2013 read with Section 244. In fact,
Section 399 (3) of the Companies Act, 1956, read as follows:
         “399(3) Where any members of a company are entitled to make          B
         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 others51, the provision in          C
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          D
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. Sixty-five members             E
consented to the application. The problem, however, arose as it was
contended that 13 of the members who had consented, had, subsequent
to the presentation of the application, withdrawn their consent. This Court
went on to hold as follows:
                “5         xxx              xxx              xxx              F
                We have no hesitation in rejecting this contention. The
         validity of a petition must be judged on the facts as they were at
         the time of its presentation, and a petition which was valid when
         presented cannot, in the absence of a provision to that effect in
         the statute, cease to be maintainable by reason of events            G
         subsequent to its presentation. In our opinion, the withdrawal of
         consent by 13 of the members, even if true, cannot affect either
         the right of the applicant to proceed with the application or the
         jurisdiction of the court to dispose of it on its own merits.”
51
     AIR 1956 SC 213                                                          H
1016             SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A             143. In the matter of presentation of an application under Section
       7, if the threshold requirement, under the impugned provisos, stands
       fulfilled, the requirement of the law must be treated as fulfilled. The
       contention, relating to the ambiguity and consequent unworkability and
       the resultant arbitrariness, is clearly untenable and does not appeal to us.
       If an allottee is able to, in other words, satisfy the requirements, as on
 B
       the date of the presentation, the requirement of the impugned law is
       fulfilled.
          HOLDINGS BY FAMILY MEMBERS ETC. AND JOINT
       HOLDINGS OF A UNIT; SINGLE ALLOTTEE?
 C              144. One of the contentions, which is raised is that in Section 399
       (2) of the Companies Act, 1956, it was provided that in applying the
       threshold test of requisite number of members, to join in an application
       under Sections 397 and 398, where any share or shares are held by two
       or more persons, they shall be counted only as one member. Section 244
       of the Companies Act, 2013, corresponds to Section 399 of the
 D     Companies Act, 1956. The Explanation in Section 241(1) contains an
       identical provision as in Section 399(2). It is, however, pointed out by the
       petitioners that in the matter of an allotment, being made to more than
       one person, of an apartment or other real estate property, it is not laid
       down as to how the matter is to be dealt with. It is vague. It is arbitrary.
 E     It is true that in the impugned proviso, introduced in Section 7(1), there
       is no indication as to how the number of allottees are to be reckoned in
       the case of more 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
 F     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
 G     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
 H     his name or in the name of his family, it will be treated as a single allotment.
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   1017
                 [K. M. JOSEPH, J.]

In the case of persons, such as companies or firms or association of             A
individuals, bookings in its name or in the name of associated entities or
related enterprises, are to be treated as a single allotment.
       146. Similarly, Section 15 of RERA interdicts transfer or assignment
of his majority rights and liabilities to a third party, without obtaining the
prior written consent of two-thirds of the allottees and also without the        B
prior written approval of the Authority. A similar Explanation, as is found
in Section 14, which we have already described, is to be found in Section
15. Such an Explanation is, however, not found in the definition of ‘allottee’
in Section 2(d) of RERA. The object of the Explanation, both in Sections
14 and 15, is apparent. It is to avoid defeating the object, which would
occur, if members of the same family, monopolises a project or associated        C
and related concerns of a company, firm or association, corner the
allotments. It is also possible that they may be hand-in-glove with the
Promoter, which would result in defeating the rights of the other allottees,
as the figure of two-thirds, would cease to represent the interest of the
actual two-third majority, which is intended by the Legislature, be it in a      D
matter or alterations or additions in the sanctioned plans or layout plans,
etc., or in the matter of the Promoter getting out of the project in regard
to his majority rights, by transfer or assignment. These Explanations are
intended to hold the Promoter responsible to the sanctioned plans as also
to prevent the Promoter from wriggling out of his majority rights, without
a real majority, as would be represented by two-thirds of the separate           E
allottees, agreeing to the same. We cannot read the Explanations in
Sections 14 and 15 into the definition of ‘allotee’ in Section 2(d), as, in
Sections 14 and 15, a perusal of Explanations, makes it clear that they
are enacted for the purpose of Sections 14 and 15, respectively. We
would have to take the definition of the ‘allottee’ from Section 2(d), as it     F
is. Therefore, it does not matter whether a person has one or more
allotments in his name or in the name of his family members. As long as
there are independent allotments made to him or his family members, all
of them would qualify as separate allottees and they would count both in
the calculation of the total allotments, as also in reckoning the figure of
hundred allottees or one-tenth of the allottees, whichever is less.              G

       147. As far as the situation projected about, there being no clarity
regarding whether, if there 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
                                                                                 H
1018             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     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
 B
       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
 C     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 allottee can be of
       any of the categories, fulfilling the description of an allottee in Section
       2(d) of RERA, as interpreted earlier by us joint allottees of a single
       apartment, will be treated as only one allottee. Any other view can lead
 D
       to clear abuse and defeating of the object of the Code. If, for instance, a
       single apartment is taken in the name of hundred persons, a single allottee,
       who in turn comprise of relatives or family members or friends, can
       move an application, even though the position ante would be restored,
       which means that only the allottee qua one apartment, plot or building, is
 E     before the Authority and it would not really represent a critical mass of
       the allottees in the real estate project concerned. Therefore, we have no
       hesitation in rejecting the contentions of the petitioner on having made
       the said interpretation.
           THE POWER OF WAIVER, BEING DENIED, UNLIKE
 F     THE COMPANIES ACTS
              148. There is another argument, which is pressed before us as
       one, which distinguishes the impugned provisions from those contained
       in the Companies Act. Section 399(4) of the Companies Act, 1956, read
       as follows:
 G           “399.(4) The Central Government may, if in its opinion
             circumstances exist which make it just and equitable so to do,
             authorise any member or members of the company to apply to
             the Tribunal under section 397 or 398, notwithstanding that the
             requirements of clause (a) or clause (b), as the case may be, of
 H           sub-section (1) are not fulfilled.”
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   1019
                 [K. M. JOSEPH, J.]

       149. It is, therefore, contended that the said provision rendered         A
the threshold requirement in Section 399(1), a fair one. This is for the
reason that where it was found just and equitable by the Central
Government, it could authorize any member or members to apply under
Section 397 or Section 398, even though the numerical strength of
members, as required in Section 399(1), did not come forward to present
                                                                                 B
the application.
        150. We are called upon to pronounce on the constitutionality of
the law. Having regard to the salutary object and the distinguishing features,
which clearly distinguish the allottees and also the creditors falling in the
first proviso from the other creditors, both financial and operational, we
see no merit in the contention. It is another matter that we may entertain       C
the belief that it would have been more wise on the part of the Legislature
to have incorporated a safety valve to 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.                                          D
       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             E
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            F
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 vividly different from that of the Companies Act.
Consequently, if the Legislature felt that threshold requirement                 G
representing a critical mass of allottees, alone would satisfy the
requirement of a valid institution of an application under Section 7, it
cannot be dubbed as either discriminatory or arbitrary.
    A LOOK AT ORDER I RULE 8 OF THE CODE OF CIVIL
PROCEDURE, 1908 (THE CPC) AND SECTION 12 OF THE                                  H
1020             SUPREME COURT REPORTS                             [2021] 14 S.C.R.


 A     CONSUMER PROTECTION ACT, 1986 and the contentions
       based on the same.
              152. The argument of the petitioners is that under Order I Rule 8
       of the CPC, where there are numerous persons having the same interest
       in one suit, one or more such persons can, with the permission of the
 B     court, sue or be sued or may defend such suit on behalf of or for the
       benefit of all persons so interested, at the instance of a single person
       with whom numerous persons share the same interest. The court, after
       giving permission, is to give notice of the institution of the suit as provided.
       Thereupon, any person, on whose behalf or for whose benefit the suit is
       instituted or defended, can apply to the court, to be made a party. Finally,
 C     Sub-Rule (6) of Order I Rule 8 declares that the Decree passed in the
       suit under Order I Rule 8, shall be binding on all persons, on whose
       behalf or for whose benefit, the suit is instituted or defended, as the case
       may be. The Explanation in Order I Rule 8 of CPC, reads as follows:
               “Explanation.— For the purpose of determining whether the
 D            persons who sue or are sued, or defend, have the same interest in
              one suit, it is not necessary to establish that such persons have the
              same cause of action as the persons on whose behalf, or for whose
              benefit, they sue or are sued, or defend the suit, as the case may
              be.”
 E            153. This provision is sought to be contrasted with the provisos
       inserted by the impugned amendment. It was sought to be contended
       that the procedure contemplated in Order I Rule 8, on the one hand,
       countenances the setting in motion of a civil suit by a single person, no
       doubt with the permission of the Court and after a Notice is given, as
       provided therein, any of the persons, who have the same interest, can
 F     come forward and seek to be made a party. By the device, embedded in
       Order I Rule 8, the interest of all the persons, who are having the same
       interests, is best safeguarded. Should he wish to oppose the applicant,
       he is free to 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
 G     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
 H
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                               1021
                    [K. M. JOSEPH, J.]

should muster the support of at least 99 other allottees or one-tenth of        A
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.
                                                                                B
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. Section 12 provides
for the manner in which a complaint is to be made. Section 12(1)(c)
reads as follows:
         “12(1)(c). One or more consumers, where there are numerous             C
         consumers having the same interest, with the permission of the
         District Forum, on behalf of, or for the benefit of, all consumers
         so interested; or
       154. The last provision, in a string of provisions, which provide
the scheme in regard to an action modelled on Order 1 Rule 8 of the             D
CPC, is found in Section 13(6) of the Consumer Protection Act, 1986. It
reads as follows:
         “13(6) Where the complainant is a consumer referred to in sub-
         clause (iv) of clause (b) of sub-section (1) of section 2, the
         provisions of rule 8 of Order I of the First Schedule to the Code of   E
         Civil Procedure, 1908 (5 of 1908) shall apply subject to the
         modification that every reference therein to a suit or decree shall
         be construed as a reference to a complaint or the order of the
         District Forum thereon.”
       155. Thus, the procedure, under Order I Rule 8, is squarely made         F
applicable to the proceedings under the Consumer Protection Act, in a
situation, where, there are more than one consumer, having the same
interest. It is true that the words “same interest”, has been understood in
the light of the Explanation under Order 1 Rule 8 of the CPC and
therefore, it is not necessary that all the numerous persons, within the
meaning of the Consumer Protection Act or in a civil suit, need establish       G
that they have the same cause of action. What is essential is that they
have the same interest. Interpreting the words “same interest”, it is still
further true that this Court, in Chairman, Tamil Nadu Housing Board v.
T. N. Ganapathy52, has held that what is required is only community of
52
     (1990) 1 SCC 608                                                           H
1022             SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A     interest. This was a case where a suit was filed by allottees of plots of
       low-income groups against the appellant-Housing Board seeking
       injunction from demanding and collecting any additional price and the
       suit was held maintainable under Order I Rule 8, even though separate
       demand notices were issued to each allottees.
 B             156. In appreciating this argument, it is important to not be oblivious
       to the scheme of the Code and to distinguish it from a civil suit laid
       invoking order I Rule 8 or the consumer complaint presented by one
       consumer, sharing the same interest with numerous others, again invoking
       Order I Rule 8. It is true that once Order I Rule 8 is made applicable, a
       single plaintiff or a consumer, in a civil suit or a consumer complaint
 C     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
 D     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).

 E            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,
 F     fixed a time limit, as contemplated in Section 12 of the Code, no doubt as
       explained by this Court. Once, the application is admitted under Section
       7(5), initially, the Interim Resolution Profession (IRP) would supplant
       the very management by virtue of the suspension of the powers of the
       management, as contemplated in the Code. The IRP may or may not
 G     continue as the Resolution Professional (RP) but a RP is, undoubtedly,
       to be appointed under the scheme of the Code. The management passes
       into the hands of the RP. Thereafter, depending upon the receipt of the
       Resolution Plan and its acceptability to the Committee of Creditors and
       finally the approval by the Adjudicating Authority of the Resolution Plan,

 H
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1023
                    [K. M. JOSEPH, J.]

which is approved by the Committee of Creditors, depends the Resolution            A
of the Insolvency. All of this is to be completed within a period of 330
days again subject to the limit not being ‘mandatory’ as explained by this
Court in Essar Steel(supra). Should this not happen, the Adjudicating
Authority is obliged, under Section 33, to pass an Order for winding up
of the Corporate Debtor. Section 53 provides for the priority in the matter
                                                                                   B
of payment of the amounts which are collected by way of liquidation
value. The allottees would rank as unsecured creditors. The inevitable
conclusion is that unlike in an ordinary civil suit or in a consumer complaint,
the drastic consequences, as the inexorable liquidation of the corporate
debtor, contemplated under the Code, is the inevitable consequence, of
the application reaching the stage of Section 33 of the Code. Liquidation          C
could take place even earlier under Section 33(4). As to whether the
procedure contemplated in Order I Rule 8 is suitable, more appropriate
and even more fair, is a matter, entirely in the realm of legislative choice
and policy. Having regard to the scheme of the Code, which we have
detailed above, there cannot be scintilla of doubt that what the petitioners
                                                                                   D
are seeking to persuade us to hold, is to make a foray into the forbidden
territory of legislative value judgment. This is all the more so, when the
dangers lurking behind full play to Order I Rule 8 being given appear to
be fairly clear. We have, therefore, no hesitation in rejecting this contention,
which no doubt, at first blush, may appear attractive. We only need add
that invalidating a law made by a competent Legislature, on the basis of           E
what the 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                 F
India and others53, 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            G
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:

53
     (2019) 8 SCC 416                                                              H
1024          SUPREME COURT REPORTS                        [2021] 14 S.C.R.


 A     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;
 B     iii.     The amendment by which the explanation was inserted in
                Section 5(8) was clarificatory in nature and allottees/home
                buyers were included in the main provision, i.e., Section
                5(8)(f) from the inception of the Code;
       iv.      The amending Act did not infringe Articles 14, 19(1)(g) read
 C              with Article 19(6) or 300A of the Constitution of India;
       v.       RERA and the Code must be held to co-exist, and in the
                event of a clash, RERA must give way to the Code. The
                Code and RERA operate in completely different spheres.

 D     vi.      Paragragraph-30 of the judgment in Pioneer Urban Land
                and Infrastructure Ltd.(supra) reads as follows:
       “30. As a matter of fact, the Code and RERA operate in completely
       different spheres. The Code deals with a proceeding in rem in
       which the focus is the rehabilitation of the corporate debtor. This
       is to take place by replacing the management of the corporate
 E
       debtor by means of a resolution plan which must be accepted by
       66% of the Committee of Creditors, which is now put at the helm
       of affairs, in deciding the fate of the corporate debtor. Such
       resolution plan then puts the same or another management in the
       saddle, subject to the provisions of the Code, so that the corporate
 F     debtor may be pulled out of the woods and may continue as a
       going concern, thus benefitting all stakeholders involved. It is only
       as a last resort that winding up of the corporate debtor is resorted
       to, so that its assets may be liquidated and paid out in the manner
       provided by Section 53 of the Code. On the other hand, RERA
       protects the interests of the individual investor in real estate
 G
       projects by requiring the promoter to strictly adhere to its provisions.
       The object of RERA is to see that real estate projects come to
       fruition within the stated period and to see that allottees of such
       projects are not left in the lurch and are finally able to realise their
       dream of a home, or be paid compensation if such dream is
 H     shattered, or at least get back monies that they had advanced
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1025
             [K. M. JOSEPH, J.]

 towards the project with interest. At the same time, recalcitrant         A
 allottees are not to be tolerated, as they must also perform their
 part of the bargain, namely, to pay instalments as and when they
 become due and payable. Given the different spheres within which
 these two enactments operate, different parallel remedies are given
 to allottees under RERA to see that their flat/apartment is
                                                                           B
 constructed and delivered to them in time, barring which
 compensation for the same and/or refund 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.      C
 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
                                                                           D
 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            E
 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 raised in this case. To quote:                           F

       “41. It is also important to remember that the Code is not
 meant to be a debt recovery mechanism (see para 28 of Swiss
 Ribbons [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4
 SCC 17]). It is a proceeding in rem which, after being triggered,
 goes completely outside the control of the allottee who triggers it.      G
 Thus, any allottee/home buyer who prefers an application under
 Section 7 of the Code takes the risk of his flat/apartment not
 being completed in the near future, in the event of there being a
 breach on the part of the developer. Under the Code, he may
 never get a refund of the entire principal, let alone interest. This is   H
1026      SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     because, the moment a petition is admitted under Section 7, the
       resolution professional must first advertise for and find a resolution
       plan by somebody, usually another developer, which has then to
       pass muster under the Code i.e. that it must be approved by at
       least 66% of the Committee of Creditors and must further go
       through challenges before NCLT and NCLAT before the new
 B
       management can take over and either complete construction, or
       pay out or refund amounts. Depending on the kind of resolution
       plan that is approved, such home buyer/allottee may have to wait
       for a very long period for the successful completion of the project.
       He may never get his full money back together with interest in
 C     the event that no suitable resolution plan is forthcoming, in which
       case, winding up of the corporate debtor alone would ensue. On
       the other hand, if such allottee were to approach the Real Estate
       Regulatory Authority under RERA, it is more than likely that the
       project would be completed early by the persons mentioned
       therein, and/or full amount of refund and interest together with
 D
       compensation and penalty, if any, would be awarded. Thus, given
       the bona fides of the allottee who moves an application under
       Section 7 of the Code, it is only such allottee who has completely
       lost faith in the management of the real estate developer who
       would come before NCLT under the Code hoping that some other
 E     developer takes over and completes the project, while always
       taking the risk that if no one were to come forward, corporate
       death must ensue and the allottee must then stand in line to receive
       whatever is given to him in winding up. Given the reasons of the
       Insolvency Committee Report, which show that experience of
       the real estate sector in this country has not been encouraging, in
 F
       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
 G     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]
 H
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1027
             [K. M. JOSEPH, J.]

 , Venkateshwara Theatre [Venkateshwara Theatre v. State of                 A
 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:                               B

         “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 their flats/apartments
 constructed so that they may occupy and live in their flats/
 apartments, will be jeopardised, as a single allottee who does not         C
 want the flat/apartments, but wants a refund of amounts paid for
 reasons best known to him, can trigger the Code and upset the
 construction and handing over of such flats/apartments to the vast
 bulk of allottees of a project who may be genuine buyers who
 wish to occupy such flats/apartments as roofs over their heads.            D
 Another facet of this argument is that the bulk of such persons
 will never be on the Committee of Creditors, as they may not be
 persons who trigger the Code at all. These arguments are met by
 the fact that all the allottees of the project in question can either
 join together under the Explanation to Section 7(1) of the Code, or
 file their own individual petitions after the Code gets triggered by       E
 a single allottee, stating that in addition to the construction of their
 flat/apartment, they are also entitled to compensation under RERA
 and/or under the general law, and would thus be persons who
 have a “claim” i.e. a right to remedy for breach of contract which
 gives rise to a right to compensation, whether or not such right is        F
 reduced to judgment, and would therefore be persons to whom a
 liability or obligation in respect of a “claim” is due. Such persons
 would, therefore, have a voice in the Committee of Creditors as
 to future plans for completion of the project, and compensation
 for late delivery of the flat/apartment. This contention, therefore,
 also has no legs to stand upon.”                                           G
 ix. This Court also held that the erstwhile Management is free
     to offer a resolution plan in the event of an Application under
     Section 7, being admitted in favour of an allottee, subject, no
     doubt, to Section 29 (A) of the Code, which may be accepted.
                                                                            H
1028             SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A            160. It is clear that impugned provisos do not set at nought the
       ruling of this Court in Pioneer (supra). In a challenge by real estate
       developers upholding the provisions in the manner done including the
       explanation in Section 5 (8)(f) and allaying the apprehension about abuse
       by individual allotees cannot detract from the law giver amending the
       very law on its understanding of the working of the Code at the instance
 B
       of certain groups of applicants and impact it produces on the economy
       and the frustration of the sublime goals of the law.
              INFORMATION ASYMMETRY
               161. The contention on behalf of the petitioner’s both in regard to
 C     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
 D     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
 E     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 allottees are also obliged to take
 F     interest in the formation of the Association. Once the association is
       formed, the law giver contemplates naturally that information relating to
       allotment would become available. The provisions of the Act, which we
       have referred to earlier, are emphasised. Secondly, it is pointed out that
       under Section 11 of the Act as also the rules the promoter is bound to
       open a webpage and post information relating to allotments. This is to be
 G     updated. Therefore, there is no merit in the contention. Similar submissions
       are made in regard to debenture holders and security holders. It is
       submitted that information is available in terms of section 88 of the
       Companies Act, 2013. It is open to any of the security holders or debenture
       holders to inspect the registers and ascertain about security holders and
 H     debenture holders.
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                    1029
                 [K. M. JOSEPH, J.]

        163. As far as allottees are concerned in regard to apartments            A
and plots, Section 11(1)(b) of the RERA makes it mandatory for the
promoter to make available information regarding the bookings. We have
conflated bookings with allotments. We cannot proceed on the basis of
the contention of the petitioners that the impugned provisos are
unworkable and arbitrary on the basis that the court must take notice of
                                                                                  B
the ‘reality’ which is that the promoters do not make available information
as required of them. The burden it is well settled to prove all facts to
successfully challenge the statute is always on the petitioner. There
cannot be a priori reasoning, and there is no burden on the state. If there
is defiance of the law by promoters, the allottees are not helpless. They
can always seek proper redress in the appropriate forum. No doubt, we             C
also would observe that it becomes the duty of all the authorities to
ensure that the promoters will stringently abide by their duties under the
act. Section 11(1)(b) of the RERA speaks about information being made
available regarding bookings which can be understood as the ‘allotments’.
The word ‘allottee’ as defined in Section 2(d) also takes in a person
                                                                                  D
who subsequently acquires the allotment through sale, transfer or
otherwise. In Section 11(1)(b) there is reference to bookings. If the
information is to be limited to the original booking then the information
about assignment just mentioned may not be made available. In this
regard we may notice the Haryana Real Estate Regulatory Authority,
Gurugram (Quarterly Progress Report) Regulations 2018. Regulation 4               E
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
                                                                                  F
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   G
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 to complain otherwise under the
                                                                                  H
1030             SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A     Act. This aspect of the association of allottees is not a matter of mere
       trifle. The allottees cannot truly possess and enjoy their properties be it
       an apartment or building without their having right of common areas.
       The promoter is bound under Section 17 to transfer title to the common
       areas to the association. Section 19(9) of RERA makes it a duty on the
       part of the allottee to participate towards the formation of the association
 B
       or cooperative society or the federation of the same. The possession of
       the common areas is also to be handed over to the association of the
       allottees. The law giver has therefore created a mechanism, namely, the
       association of allottees through which the allottees are expected to gather
       information about the status of the allotments including the names and
 C     addresses of the allottees. We cannot proceed on the basis in a case
       which involves a challenge to a statute that the information to be gathered
       under the statute will not be available on the basis that the statute will
       not be worked as contemplated by the law giver. Hence, we reject the
       contentions of the allottees.
 D           164. In regard to the debenture holders and security holders also
       we would see no merit in the contentions. There is a statutory mechanism,
       which is comprised in the provisions of the Companies act 2013, namely
       Section (88). Section 88 (1) reads as follows:
             “88. Register of members, etc
 E           (1) Every company shall keep and maintain the following registers
                 in such form and in such manner as may be prescribed,
                 namely:—
                   (a) register of members indicating separately for each class
                   of equity and preference shares held by each member residing
 F                 in or outside India;
                   (b) register of debenture-holders; and
                   (c) register of any other security holders.
              165. Violation of Section 88 (1) is made punishable under Section
 G     88 (3).
             166. There is no case established that the version of the Union
       about availability of information contained in the registers which can be
       perused is not correct. Again, the burden is on the petitioners and they
       have not discharged their burden.
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                    1031
                 [K. M. JOSEPH, J.]

      THE FIRST AND SECOND PROVISOS CLASSIFICATION                                A
    DOWN MEMORY LANE:                            ARTICLE          14    AND
REASONABLE CLASSIFICATION
       167. Both sides have placed reliance on a large number of
decisions in relation to reasonable classification under Article 14 of the
Constitution. Even in the first decade of the Republic, this Court has, in        B
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.                                     C
      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                D
      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             E
      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 treatment does not per se amount
      to discrimination within the inhibition of the equal protection clause.
      To attract the operation of the clause it is necessary to show that
      the selection or differentiation is unreasonable arbitrary; that it         F
      does not rest on any rational basis having regard to the objects
      which the legislature has in view.”
       169. In Nagpur Improvement Trust (supra), the petitioner before
the High Court alleged discriminatory proceedings for acquiring his land
under the Improvement Trust Act instead of the Land Acquisition Act.              G
This Court while dismissing the appeal and affirming the view of the
High Court that there was hostile discrimination proceeded to lay down
as follows:
      “26. It is now well-settled that the State can make a reasonable
      classification for the purpose of legislation. It is equally well-settled   H
1032      SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A     that the classification in order to be reasonable must satisfy two
       tests: (i) the classification must be founded on intelligible differentia
       and (ii) the differentia must have a rational relation with the object
       sought to be achieved by the legislation in question. In this
       connection it must be borne in mind that the object itself should be
       lawful. The object itself cannot be discriminatory, for otherwise,
 B
       for instance, if the object is to discriminate against one section of
       the minority the discrimination cannot be justified on the ground
       that there is a reasonable classification because it has rational
       relation to the object sought to be achieved.
                  xxx      xxx      xxx       xxx
 C
       28. It would not be disputed that different principles of
       compensation cannot be formulated for lands acquired on the basis
       that the owner is old or young, healthy or ill, tall or short, or whether
       the owner has inherited the property or built it with his own efforts,
       or whether the owner is politician or an advocate. Why is this sort
 D     of classification not sustainable? Because the object being to
       compulsorily acquire for a public purpose, the object is equally
       achieved whether the land belongs to one type of owner or another
       type.
       29. Can classification be made on the basis of the public purpose
 E     for the purpose of compensation for which land is acquired? In
       other words can the Legislature lay down different principles of
       compensation for lands acquired say for a hospital or a school or
       a Government building? Can the Legislature say that for a hospital
       land will be acquired at 50% of the market value, for a school at
 F     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
 G     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
 H     compensation. Can classification be made on the basis of the
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1033
                    [K. M. JOSEPH, J.]

         authority acquiring the land? In other words can different principles    A
         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 acquired by one authority or the other.”
                                                                                  B
      170. It is also correct that this decision has come to be relied upon
by this Court recently in Union of India vs. Tarsem Singh54.
       171. What is emphasized before us by the petitioners is the principle
that the object itself cannot be discriminate. It is pointed out that the
object in the case of impugned provisos between different sections of             C
financial creditors is such discrimination. Further the corporate debtors
are discriminated again in that builders are accorded special treatment
qua other corporate debtors.
      172. In Triloki Nath Khosa(supra), this Court was called upon to
pronounce on subordinate legislation which according to writ petitioners          D
denied them the guarantee of Article 14. This Court held, inter-alia, as
follows:
                “18. This submission is erroneous in its formulation of a
         legal proposition governing onus of proof and it is unjustified in the
         charge that the record discloses no evidence to show the necessity       E
         of the new Rule. There is always a presumption in favour of the
         constitutionality of an enactment and the burden upon him who
         attacks it to show that there has been a clear transgression of the
         constitutional principles. [Ram Krishan Dalmia v. Justice S. R.
         Tendolkar AIR 1958 SC 538: 1959 SCR 279, 297(b): 1959 SCJ
         147] A rule cannot be struck down as discriminatory on any a             F
         priori reasoning. “That where a party seeks to impeach the validity
         of a rule made by a competent authority on the ground that the
         Rules offend Act. 14 the burden is on him to plead and prove the
         infirmity is too well established to need elaboration.” The burden
         thus is on the respondents to set out facts necessary to sustain the     G
         plea of discrimination and to adduce “cogent and convincing
         evidence” to prove those facts for “there is a presumption that
         every factor which is relevant or material has been taken into
         account in formulating the classification”. [State of U. P. v. Kartar
54
     (2019) 9 SCC 304                                                             H
1034            SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A           Singh AIR 1964 SC 1135 : (1964) 6 SCR 679, 687 : (1964) 2 SCJ
             666.] In G.D. Kelkar v. Chief Controller of Imports and
             Exports [AIR 1967 SC 839 : (1967) 2 SCR 29, 34 : (1967) 2 SCJ
             182] Subba Rao, C.J., speaking for the Court has cited three other
             decisions of the Court in support of the proposition that “unless
             the classification is unjust on the face of it, the onus lies upon the
 B
             party attacking the classification to 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.
 C
             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
 D           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
 E           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
 F           it bears nexus with the object in view. It cannot extend to embarking
             upon a nice or mathematical evaluation of the basis of classification,
             for were such an inquiry permisible it would be open to the Courts
             to substitute their own judgment for that of the legislature or the
             Rule-making authority on the need to classify or the desirability of
 G           achieving a particular object.”
                                                             (Emphasis supplied)
              173. Justice Krishna Iyer in his concurring judgement laid down
       inter-alia as follows:

 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1035
                 [K. M. JOSEPH, J.]

      “Mini-classifications based on micro-distinctions are false to our        A
      egalitarian faith and only substantial and straightforward
      classifications plainly promoting relevant goals can have
      constitutional validity. To overdo classification is to undo equality.”
       174. The case in Murthy Match Works (supra), involved a challenge
to the levy of Excise duty on match box directed against medium sized           B
manufacturers and it was impugned as being discriminatory. This Court’s
conclusions are apposite and are as follows:
      “There can be hostile discrimination while maintaining façade of
      equality.
      13. Right at the threshold we must warn ourselves of the limitations      C
      of judicial power in this jurisdiction. Mr Justice Stone of the
      Supreme Court of the United States has delineated these limitations
      in United States v. Butler [(1936) 297 US 1: Tresolini and Shapiro:
      American Constitutional Law, 3rd Edn.] thus:
             “The power of Courts to declare a statute unconstitutional         D
      is subject to two guiding principles of decision which ought never
      to be absent from judicial consciousness. One is that Courts are
      concerned only with the power to enact statutes, not with their
      wisdom. The other is that while unconstitutional exercise of power
      by the executive and legislative branches of the government is            E
      subject to judicial restraint, the only check upon our exercise of
      power is our own sense of self-restraint for the removal of unwise
      laws from the statute books appeal lies not to the Courts but to
      the ballot and to the processes of democratic Government.”
      14. In short, unconstitutionality and not unwisdom of a legislation       F
      is the narrow area of judicial review. In the present case
      unconstitutionality is alleged as springing from lugging together
      two dissimilar categories of match manufacturers into one
      compartment for like treatment.
      15. Certain principles which bear upon classification may be
                                                                                G
      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
                                                                                H
1036                SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A              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.
 B
                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
 C              accomplished. In this context, we have to remember the relationship
                between the legislative and judicial departments of Government
                in the determination of the validity of classification. Of course, in
                the last analysis Courts possess the power to pronounce on the
                constitutionality of the acts of the other branches whether a
                classification is based upon substantial differences or is arbitrary,
 D
                fanciful and consequently illegal. At the same time, the question
                of classification is primarily for legislative judgment and ordinarily
                does not become a judicial question. A power to classify being
                extremely broad and based on diverse considerations of executive
                pragmatism, the Judicature cannot rush in where even the
 E              Legislature warily treads. All these operational restraints on judicial
                power must weigh more emphatically where the subject is taxation.
                18. Another proposition which is equally settled is that merely
                because there is room for classification it does not follow that
                legislation without classification is always unconstitutional. The
 F              Court cannot strike down a law because it has not made the
                classification which commends to the Court as proper. Nor can
                the legislative power be said to have been unconstitutionally
                exercised because within the class a sub-classification was
                reasonable but has not been made.”
 G                                                              (Emphasis supplied)
               175. In State of Gujarat and Another v. Shree Ambica Mills
       Ltd.55, this Court has laid down certain principles relating to under inclusive
       and over inclusive classification. This is, no doubt, apart from holding
       that a law which contravenes fundamental rights of the citizens may
       55
 H          (1974) 4 SCC 656
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1037
                 [K. M. JOSEPH, J.]

continue to be valid as regards non-citizens. As regards classification        A
and the vice of under inclusive and over inclusive classification we may
notice the following statement of the law:
             “54. A reasonable classification is one which includes all
      who are similarly situated and none who are not. The question
      then is: what does the phrase “similarly situated” mean? The             B
      answer to the question is that we must look beyond the classification
      to the purpose of the law. A reasonable classification is one which
      includes all persons who are similarly situated with respect to the
      purpose of the law. The purpose of a law may be either the
      elimination of a public mischief or the achievement of some positive
      public good.                                                             C

             55. A classification is under-inclusive when all who are
      included in the class are tainted with the mischief but there are
      others also tainted whom the classification does not include. In
      other words, a classification is bad as under-inclusive when a
      State benefits or burdens persons in a manner that furthers a            D
      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    E
      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.
                                                                               F
            58. The piecemeal approach to a general problem permitted
      by under-inclusive 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         G
      attempt. Administrative expedients must be forged and tested.
      Legislators, recognising these factors, may wish to proceed
      cautiously, and courts must allow them to do so. [ See Joseph
      Tussman and Jacobusten Brook The Equal Protection of the Law,
      37 California Rev 341]                                                   H
1038                SUPREME COURT REPORTS                         [2021] 14 S.C.R.


 A              62. In short, the problem of legislative classification is a perennial
                one, admitting of no doctrinaire definition. Evils in the same field
                may be of different dimensions and proportions requiring different
                remedies. Or so the legislature may think (see Tigner v. Texas).
                [310 US 141]
 B              64. Laws regulating economic activity would be viewed differently
                from laws which touch and concern freedom of speech and religion,
                voting, procreation, rights with respect to criminal procedure, etc.
                The prominence given to the equal protection clause in many
                modern opinions and decisions in America all show that the Court
                feels less constrained to give judicial deference to legislative
 C              judgment in the field of human and civil rights than in that of
                economic regulation and that it is making a vigorous use of the
                equal protection clause to strike down legislative action in the
                area of fundamental human rights. [See “Developments Equal
                Protection”, 32 Harv, Law Rev 1065, 1127]
 D              65. The question whether, under Article 14, a classification is
                reasonable or unreasonable must, in the ultimate analysis depend
                upon the judicial approach to the problem. The great divide in this
                area lies in the difference between emphasising the actualities or
                the abstractions of legislation. The more complicated society
 E              becomes, the greater the diversity of its problems and the more
                does legislation direct itself to the diversities.
                66. That the legislation is directed to practical problems, that the
                economic mechanism is highly sensitive and complex, that many
                problems are singular and contingent that laws are not abstract
 F              propositions and do not relate to abstract units and are not to be
                measured by abstract symmetry, that exact wisdom and nice
                adaption of remedies cannot be required, that judgment is largely
                a prophecy based on meagre and uninterpreted experience, should
                stand as reminder that in this area the Court does not take the
                equal protection requirement in a pedagogic manner [See “General
 G              theory of law and state” P-161].”
                                                                (Emphasis supplied)
             176. In the decision of this Court in In Re The Special Courts Bill,
       197856, a bench of seven learned judges of this Court laid down certain
 H     56
            (1979) 1 SCC 380
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1039
                 [K. M. JOSEPH, J.]

propositions. We need only allude to those propositions which are apposite      A
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      B
      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.                            C

      (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 persons or things to       D
      be subjected to such laws.
      (3) The constitutional command to the State to afford equal
      protection of its laws sets a goal not attainable by the invention
      and application of a precise formula. Therefore, classification need
      not be constituted by an exact or scientific exclusion or inclusion       E
      of persons or things. The courts should not insist on delusive
      exactness or apply doctrinaire tests for determining the validity of
      classification in any given case. Classification is justified if it is
      not palpably arbitrary.
      (4) The principle underlying the guarantee of Article 14 is not that      F
      the same rules of law should be applicable to all persons within
      the Indian territory or that the same remedies should be made
      available to them irrespective of differences of circumstances. It
      only means that all persons similarly circumstanced shall be treated
      alike both in privileges conferred and liabilities imposed. Equal         G
      laws would have to be applied to all in the same situation, and
      there should be no discrimination between one person and another
      if as regards the subject-matter of the legislation their position is
      substantially the same.

                                                                                H
1040      SUPREME COURT REPORTS                             [2021] 14 S.C.R.


 A     (5) By the process of classification, the State has the power of
       determining who should be regarded as a class for purposes of
       legislation and in relation to a law enacted on a particular subject.
       This power, no doubt, in some degree is likely to produce some
       inequality; but if a law deals with the liberties of a number of well
       defined classes, it is not open to the charge of denial of equal
 B
       protection on the ground that it has no application to other persons.
       Classification thus means segregation in classes which have a
       systematic relation, usually found in common properties and
       characteristics. It postulates a rational basis and does not mean
       herding together of certain persons and classes arbitrarily.
 C     (6) The law can make and set apart the classes according to the
       needs and exigencies of the society and as suggested by
       experience. It can recognise even degree of evil, but the
       classification should never be arbitrary, artificial or evasive.
       (7) The classification must not be arbitrary but must be rational,
 D     that is to say, it must not only be based on some qualities or
       characteristics which are to be found in all the persons grouped
       together and not in others who are left out but those qualities or
       characteristics must have a reasonable relation to the object of
       the legislation. In order to pass the test, two conditions must be
 E     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
 F     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
 G     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
 H
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   1041
                    [K. M. JOSEPH, J.]

          not members of that class. It is the essence of a classification that     A
          upon the class are cast duties and burdens different from those
          resting upon the general public. Indeed, the very idea of
          classification is that of inequality, so that it goes without saying
          that the mere fact of inequality in no manner determines the matter
          of constitutionality.
                                                                                    B
          (12) Whether an enactment providing for special procedure for
          the trial of certain offences is or is not discriminatory and violative
          of Article 14 must be determined in each case as it arises, for, no
          general rule applicable to all cases can safely be laid down. A
          practical assessment of the operation of the law in the particular
          circumstances is necessary.                                               C

          (13) A rule of procedure laid down by law comes as much within
          the purview of Article 14 as any rule of substantive law and it is
          necessary that all litigants, who are similarly situated, are able to
          avail themselves of the same procedural rights for relief and for
          defence with like protection and without discrimination.”                 D

        177. In Ajoy Kumar Banerjee and ors. v. Union of India and
ors.57, this Court, inter-alia, held, while dealing with the challenge to a
scheme, as amended by employees of Insurance Companies, on the
grounds that it violated the fundamental rights of Article 14, 19 (1)g and
31 of the Constitution. This Court held inter-alia as follows:                      E

          “Whether the same results or better results could have been
          achieved and better basis of differentiation evolved is within the
          domain of legislature and must be left to the wisdom of the
          legislature.”
                                                                                    F
       178. In the Constitution Bench decision of this Court in
Subramanian Swami vs. Director, CBI and ors.58 the issue was the
constitutional validity of Section 6A of the Delhi Special Police
Establishment Act, 1946. Section 6A declared that the CBI shall not
conduct any inquiry or investigation into any offence alleged to have
been committed under the Prevention of Corruption Act 1988 except                   G
with the previous approval of the Central Government where the allegation
was in relation to employees of the Central government of the level of
Joint Secretary and above and also officers appointed by the Central
57
     1984) 3 SCC 127
58
     (2014) 8 SCC 682                                                               H
1042            SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A     Government in public sector corporations controlled by the Central
       Government. It is dealing with this challenge that this Court went on to
       hold after refering to the earlier case law including 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:
 B
                    “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
 C           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
 D           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 on the executive, whether in the form of
 E           delegated legislation or by way of conferment of authority to pass
             administrative orders—if such conferment is without any guidance,
             control or checks, it is violative of Article 14 of the Constitution.
             The Court also needs to be mindful that a legislation does not
             become unconstitutional merely because there is another view or
 F           because another method may be considered to be as good or
             even more effective, like any issue of social, or even economic
             policy. It is well settled that the courts do not substitute their views
             on what the policy is.”
                                                                     (Emphasised)
 G             179. It was found that the classification made in Section 6A on
       the basis of status in Central Government service is not permissible under
       Article 14 of the Constitution. The Court posed the question as to whether
       there is sound differentiation between corrupt public servant based on
       their status. As noted, the provision was found to be unconstitutional.
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   1043
                 [K. M. JOSEPH, J.]

       180. In the context of the argument that a sub-class cannot be            A
created within a class, the following decisions of this Court were relied
upon by the Union to contend that it depends on the availability or absence
of a rational basis.
       181. In 1960 1 SCR 39/AIR 1959 SC 1124, the petitioners
challenged the constitutionality of the Sugar Export Promotion Act, 1958         B
apart from certain orders passed thereunder. The contention taken by
the petitioners was that since the declared object of the Act was to earn
foreign exchange, compelling only sugar manufacturers which
manufactured by vacuum pan process to export sugar was discriminatory.
They also pointed out that manufactures of commodities other than sugar
were not compelled to export in the same manner and there was further            C
discrimination. It was while repelling this contention that the Court laid
down as follows:
      “21. In our opinion, this argument is without substance. The power
      of Parliament to make laws in relation to foreign exchange is
                                                                                 D
      manifest. Entry No. 36 of the Union List specifically confers
      jurisdiction on Parliament to legislate in relation to foreign
      exchange. That Entry, if interpreted widely, would embrace within
      itself not only laws relating to the control of foreign exchange but
      also to its acquisition to better the economic stability of the country.
      The need for foreign exchange to finance the various development           E
      schemes was, very 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                   F
      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            G
      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
                                                                                 H
1044            SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A           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 which there
             is an easy and readily available market abroad. For this reason
             also, sugar produced by the vacuum pan process may have been
             selected, because such sugar is perhaps in demand abroad and
 B
             not sugar produced by any other process. It must be realised that
             goods manufactured in our country have to stand heavy competition
             from goods produced abroad, and even this export can only be
             made at great sacrifice, and is made only to earn foreign exchange,
             which would not, otherwise, be available.
 C
              182. In 1976 2 SCC 310, this Court was dealing with the challenge
       to the judgment of the High Court by which it had upheld the challenge
       by the respondent to a rule which granted power to the appellant State
       to grant further exemption to the members of scheduled castes and
       scheduled tribes to pass the departmental test necessary for being
 D     considered for promotion. The learned ASG drew support from the
       following statement in the judgement by Justice K.K. Mathew:
                    “83. A classification is reasonable if it includes all persons
             who are similarly situated with respect to the purpose of the law.
             In other words, the classification must be founded on some
 E           reasonable ground which distinguishes persons who are grouped
             together and the ground of distinction must have rational relation
             to the object sought to be achieved by the rule or even the rules in
             question. It is a mistake to assume a priori that there can be no
             classification within a class, say, the lower division clerks. If there
 F           are intelligible differentia which separates a group within that class
             from the rest and that differentia have nexus with the object of
             classification, I see no objection to a further classification within
             the class. It is no doubt a paradox that though in one sense
             classification brings about inequality, it is promotive of equality if
             its object is to bring those who share a common characteristic
 G           under a class for differential treatment for sufficient and justifiable
             reasons. In this view, I have no doubt that the principle laid down
             in All India Station Masters and Assistant Station Masters
             Association v. General Manager, Central Railway [(1960) 2 SCR
             311 : AIR 1960 SC 384.] ; S.G. Jaisinghani v. Union of
 H           India and State of J&K. v. Triloki Nath Khosa [(1974) 1 SCR 771
     MANISH KUMAR v. UNION OF INDIA AND ANOTHER                              1045
                  [K. M. JOSEPH, J.]

      : (1974) 1 SCC 19 : 1974 SCC (L&S) 49.] has no application             A
      here.”
      183. In Indira Sawney v. Union of India59, this Court held, “This
merely sees goes to show that even among backward classes, there can
be sub-classification on a reasonable basis.”
                                                                             B
      184. In State of West Bengal and ors. v. Rash Bihari Sarkar
and ors.60, 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           C
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             D
      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 are likes but the distinction between the two
                                                                             E
      on monetary gains and otherwise is real and intelligible. So long
      the classification is reasonable it cannot be struck down as
      arbitrary. Likes can be treated differently for good and valid
      reasons. The State in treating the group performing theatrical
      shows for advancement of social and educational purpose,
      differently, on basis of profit-making from those formed exclusively   F
      for cultural activities cannot be said to have acted in violation of
      Article 14.”
      185. In State of Kerala v. Aravind Ramakant Modawdakar
and ors.61, reduction in taxes was given to inter-state stage carriage
operators which benefit was not extended to intra-state stage carriage       G
operators. The Court though noted, that both the inter-state operators
and intra-state operators were, in a generic sense, state carriage
59
   1992 Supp 3 SCC 217
60
   (1993) 1 SCC 479
61
   1999 7 SCC 400                                                            H
1046                SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     operators, there was a distinction between the two. It is apposite to
       refer to what this Court laid down in para 10 of the judgement.
                “10.The validity of Section 22 of the Act has not been questioned
                which section empowers the State in public interest to grant
                exemptions in such a manner as it deems fit to a class of people.
 B              Once we hold that the contract carriages covered by intra-State
                permits and inter-State permits can form two distinct and separate
                classes within the larger class of contract carriages, we find it
                difficult to hold that this classification is either unreasonable or it
                lacks a nexus to the object or is violative of Article 14.”
 C            186. In Sansar Chand Atri v. State of Punjab and another62, relied
       upon by the petitioners, for contending that Article 14 frowns upon
       creation of a sub-class within a class, the case turned on its facts. What
       is significant, however, is the reasoning. The question, in short, was
       whether the appellant was an ex-serviceman or not, on the basis of the
       provisions of the Punjab Recruitment of Ex-Servicemen Rules, 1982, as
 D     amended by Notification dated 22.09.1992. The contention of the
       respondent was that since the appellant was discharged from the army
       on his own request, he could not be treated as an ex-serviceman. After
       considering the Rules, as amended and on the facts, it was held as follows:
                “8. …If the contention raised on behalf of the Service Commission
 E              and the State Government that since the appellant has been
                discharged from the army 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
 F              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
 G     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
       62
 H          (2002) 4 SCC 154
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1047
                 [K. M. JOSEPH, J.]

the inevitable result of an analysis of the judgments relied upon by the        A
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, is indeed not antithetical to the guarantee of equality under
Article 14.
                                                                                B
       189. Now, let us apply the principles, which are indisputable to the
facts before us. Allottees are, indeed, financial creditors. They do possess
certain characteristics, however, which appear to have appealed to the
Legislature as setting them apart from the generality of financial creditors.
These features, which set them apart, have been clearly indicated in the
stand of the Union. They are:                                                   C

      i. Numerosity;
      ii. Heterogeneity;
      iii. The individuality in decision making.
                                                                                D
       190. Section 21(6A) and Section 25A, constitutionality of which
has been upheld by this Court in Pioneer (supra), would go to show that
the debenture holders and security holders would be covered by
21(6A)(a). As far as the allottees of a real estate project are concerned,
they would be governed by 21(6A)(b). Both these categories, have a
common feature. The distinguishing hallmark which separates them from           E
the generality of the financial creditor is numerosity. In fact this aspect
has been noticed by this Court in Swiss Robbins (supra)(para 49). By
the sheer numbers of these creditors, they have come in for special
treatment under Section 21(6A). Another feature, which is to be noticed
in this regard in heterogeneity. Lastly, there is also the aspect of            F
individualized decision-making. Authorized representatives are
contemplated in regard to these categories of financial creditors under
Section 21(6A). The manner in which these authorized representatives
are to vote is also provided in Section 25A. There is another aspect also
to be noticed. Section 7 always contemplated the possibility of a joint
application. The impugned amendments incorporating the provisos 1 and           G
2 only builds upon the edifice erected already by way of Section 21(6A)
and 25A based on the experience of the Legislature as also the Report
of the Expert Body. This certainly is a highly important input which
persuades us further that the classification in regard to these classes of
financial creditors does not represent forbidden classification.
                                                                                H
1048      SUPREME COURT REPORTS                             [2021] 14 S.C.R.


 A     191. Section 25A of Code, reads as follows:
       “25A. Rights and duties of authorised representative of financial
       creditors.- (1) The authorised representative under sub-section
       (6) or sub-section (6A) of section 21 or sub-section (5) of section
       24 shall have the right to participate and vote in meetings of the
 B     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
 C     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
 D     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
 E     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
 F     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
 G     vote in accordance with the provisions of sub-section (3).]
       (4) The authorised representative shall file with the committee of
       creditors any instructions received by way of physical or electronic
       means, from the financial creditor he represents, for voting in
       accordance therewith, to ensure that the appropriate voting
 H     instructions of the financial creditor he represents is correctly
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                         1049
                 [K. M. JOSEPH, J.]

       recorded by the interim resolution professional or resolution                   A
       professional, as the case may be.
       Explanation.- For the purposes of this section, the “electronic
       means” shall be such as may be specified.]”
        192. We will expatiate on these aspects. In the case of the allottees
of a real estate project, it is the approach of the Legislature that in a real         B
estate project there would be 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. This is for the
reason that as stakeholders in the real estate project, having invested                C
money and time and looking forward to obtaining possession of the flat
or apartment and faced with the same state of affairs as the allottee,
who moves the application under Section 7 of the Code, the other allottees
may have a different take of the whole scenario. Some of them may
approach the Authority under the RERA. Others may, instead, resort to
the Fora under the Consumer Protection Act, though, the remedy of a                    D
civil suit is, no doubt, not ruled out. Ordinarily, the allottee would have
the remedies available under RERA or the Consumer Protection Act, as
the more effective option. In such circumstances, if the Legislature,
taking into consideration, the sheer numbers of a group of creditors, viz.,
the allottees of real estate projects, finds this to be an intelligible differentia,   E
which distinguishes the allottees from the other financial creditors, who
are not found to possess the 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           F
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                G
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                  H
1050             SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A     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 business, elevating the rate of recovery of loans, maximization of
       the assets of ailing concerns and also, the balancing the interests of all
       stakeholders. The Code purports to achieve the object of maximization
 B
       of the assets of corporate bodies, inter alia, which have slipped into
       insolvency. Present a default, which, no doubt, is not barred by time
       (subject to the power of the Authority under Section 5 of the Limitation
       Act), the Insolvency Resolution Process can be triggered. It falls into
       two stages. In the first stage or the calm period, every attempt is
 C     contemplated to rescue the corporate debtor from falling into liquidation.
       No doubt the moratorium under section 14 is inevitable. The most
       significant feature of the Code is the seemingly inexorable time limit,
       which is fixed under Section 12. On the application being admitted under
       Section 7(5), an Interim Resolution Professional makes his appearance.
       In him, vests the powers to manage the affairs of the corporate debtor.
 D
       He may be replaced by a Resolution Professional or he may be appointed
       as a Resolution Professional. The most striking feature of the Code is
       the constitution of the Committee of Creditors and the role, which it
       plays. In short, the show is run by the Resolution Professional, subject to
       the control of the Committee of Creditors. The Resolution of Insolvency
 E     is essentially sought through the instrument of a Resolution Plan to be
       submitted by a Resolution Applicant. Various restrictions are cast, in
       regard to a Resolution Applicant, through the device of Section 29A of
       the Code. A Resolution Plan is intended to resuscitate an ailing corporate
       debtor and keep it going as a going concern. The importance of rescuing
       ailing businesses in the form of infusing new life in such concerns, cannot
 F
       be understated. Its significance lies in various directions. There would
       be various categories of creditors, of which, the legislative choice appears
       to show some degree of preference for the financial creditors, particularly
       in the form of banks and financial institutions. One of the chief goals of
       the Code is to prevent the loss of the value of capital. If the recovery of
 G     the loan is effected at the earliest, it translates into the availability of the
       recovered capital for being lent to other entrepreneurs, and this is an
       aspect, which goes to the root of the matter. With every passing hour,
       not unnaturally, 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
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   1051
                 [K. M. JOSEPH, J.]

a loss for the Nation. This is, undoubtedly, apart from the impairment of        A
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.
                                                                                 B
       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           C
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 shall prejudice no man. This Court
has not undermined the timeline fixed by the Legislature and, in fact, it
has underlined the importance of conforming to the time limit. Speed,            D
indeed, continues to be of the essence of the Code.
        196. The speed, with which the processes can be conducted and
completed, is based on the volume of the litigation. The Adjudicating
Authorities and the Appellate Bodies, viz., N.C.L.A.T., are authorities
under other enactments, as well. They are hard-pressed for time. The             E
matters, which are covered by the Code, may present convoluted facts.
The issues may bristle with complications, both in points of law and also
facts. If, out of a large body of financial creditors belonging to a sub-
group, as for instance allottees of a real estate project, were to be given
the freedom to activise the Code, then, the possibility of multiple individual
actions, is a spectre, which the Legislature, must be presumed to be             F
aware of. In other words, the Legislature became alive to the peril of
entire object of the Code, being derailed by permitting the individual
players crowding the docket of the Authorities under the Code, and
resultantly, reviving the very state of affairs, which compelled the
Legislature to script a new dawn in this area of law. Instead, having            G
regard to the numerosity, the Legislature has thought it fit to adopt a
balanced approach by not taking the allottee out of the fold of the financial
creditors altogether. The allottee continues to be a financial creditor. All
that is envisaged is the legislative value judgment that a critical mass is
indispensable for allottees to be present before the Code, can be activised.
                                                                                 H
1052             SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A     The purport of the critical mass of applicants would ensure that a
       reasonable number of persons similarly circumstanced, form the view
       that despite the remedies available under the RERA or the Consumer
       Protection Act or a civil suit, the invoking of the Code is the only way
       out, in a particular case. As held by this Court, in Pioneer (supra), after
       having analyzed, what awaits an allottee, moving an application under
 B
       Section 7 of the Code, as contrasted with what he could get under RERA
       or what we note under the Consumer Protection Act and finding that the
       Code would be ordinarily activised by an allottee, when he feels that the
       solution lies in the remedy provided under the Code, viz., replacing the
       management of the real estate project with a new management, this
 C     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
 D
       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
 E     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 the prompt and effective
       completion of the real estate project. We must proceed on the basis that
 F
       what the allottee would legitimately look forward is the completion of
       the project and the handing over of the possession of the flat or apartment
       in due time. The achievement of this object, which must be attributed
       reasonably to each and every allottee, as his goal, may be possible in the
       views of different allottees differently. As noted, there is a plurality of
 G     remedies, which the law provides. More importantly, the outcome of
       activising the Code, is almost like an uncertain wager. The outcome of
       invoking the Code by individual allottees would be apart from clogging
       the dockets of the Adjudicating Authorities with even more voluminous
       files leading to greater delay, that at the instance of such individual
       allottees, what would be perceived as an avoidable calamity, is
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   1053
                 [K. M. JOSEPH, J.]

perpetuated. In other words, while a vast majority of allottees may see          A
reason in either giving time and reposing faith in existing management of
real estate project or successfully invoking the other remedies available
to them, an individual allottee, out of the heterogenous group, would
throw the spanner in the works and bring the entire real estate project
itself to a possible doom. Under the newly added Explanation to Section
                                                                                 B
33(2), at any time, after the constitution of the Committee of Creditors,
there can be liquidation.
       197. The third distinguishing feature, which has been projected by
the Union, is the difference in individuality in decision-making process,
attributed to the allottees. This means that unlike a bank or a financial
institution, where the decision-making process is more institutionalized,        C
an individual allottee, left free to file an application under Section 7,
would exhibit a high-level of subjectivity. As the learned ASG points out,
and which is also part of the argument, based on both, numerosity and
heterogeneity, what Parliament has instated upon is, the presence of the
commendable value of exhibiting concern for the other allottees, who             D
may think completely differently about the wisdom of invoking the Code.
Here again, this distinguishing feature, which becomes an intelligible
differentia, in the view of the Legislature, and which cannot be shown
to be demonstrably a mere pretense, it bears a rational nexus with the
objects of the Code, which we have already delineated. To recapitulate,
the individual allottee, with a high-level of subjectivity in decision-making,   E
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;                              F

       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      G
            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
                                                                                 H
1054             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A                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 Rs.1 crore, as thing stand. It is also the argument
                  of the petitioners that since what is relevant for the other
                  financial creditors, is proving the default of Rs.1 crore, the
 B
                  insistence on a threshold for allottees alone, makes it
                  discriminatory. Allottees being financial creditors, must be
                  assumed to know what is in their best interest. What is given
                  through one hand, cannot be taken away by another, is another
                  allied submission. It is also contended that there is no empirical
 C                evidence of there being misused, after the judgment of this
                  Court in Pioneer (supra), upholding the rights of the allottees,
                  including debunking the argument that a lone ranger will end
                  up abusing the system;
              198. This aspect, in fact, is countered by the learned ASG, by
 D     reeling out facts. Between 2016, when the Code was enacted and June,
       2018, there were 241 applications by the allottees. In the aftermath of
       the amendment, i.e., from 06.06.2018, there was a sudden spurt of
       applications by allottees (2201 cases in a short span of about eighteen
       months). This is again sought to be contrasted by a mere 130 applications,
       which came to be filed from 29.12.2019, over a period of eight months
 E     till August, 2020. There is also the case for the Union that an Expert
       Body, viz., the Committee has recommended for the threshold. This
       recommendation was born out of experience of the pitfalls, which follow,
       allowing a completely free hand to individual allottees to move the
       application. We are not impressed by reference to the discordant notes
 F     struck, both by reason of the nature of jurisdiction we exercise as also
       the merit we see otherwise in the rationale behind the law.
              199. We see considerable merit in the stand of the Union. This is
       not a case where there is no intelligible differentia. The law under scrutiny
       is an economic measure. As laid down by this Court, in dealing with the
 G     challenge on the anvil of Article 14, the Court will not adopt a doctrinaire
       approach. Representatives of the people are expected to operate on
       democratic principles. The presumption is that they are conscious of
       every fact, which would go to sustain the constitutionality of the law. A
       law cannot operate in a vacuum. In the concrete world, when the law is
       put into motion in practical experiences, bottlenecks that would flow
 H
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   1055
                    [K. M. JOSEPH, J.]

from its application, are best envisaged by the Law Givers. Solutions to            A
vexed problems made manifest through experience, 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
                                                                                    B
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 another63). In any case, the Court
errs in the judicial veto of legislation, in a manner of speaking, it is usurping   C
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          D
hostile discrimination between petitioner (allottees) and operational
creditors. The advantages which, financial creditor have over operational
creditors is referred to.
       201. In regard to the advantages, which the financial creditors
enjoyed over operational creditors, which constituted also differences              E
between them, the following are highlighted, apart from the difference
in procedure, by which, the operational creditor could stand ousted, if
the corporate debtor could set up a plausible dispute:
         i.   Firstly, it is pointed out that the financial creditor is on the
              Committee of Creditors and manages the affairs of the debtor          F
              with the Resolution Professional; The operational creditors
              have no such power.
         ii. Financial creditors decide who is to be the Resolution
             Professional;
                                                                                    G
         iii. The financial creditors approve or disapprove the resolution
              plan.
         iv. Almost, all, major decisions require the sanction of financial
             creditors.
63
     (1973) 4 SCC 225                                                               H
1056                SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A              v. Financial debts enjoy priority over third party, operational claims
                   under Section 53 in liquidation. It is despite all this, post the
                   impugned amendment, a large number of financial creditors
                   covered by the provisos are required to initiate a proceeding.
                   It is palpably arbitrary. The financial creditor in the category
                   of the allottees are now worse off.
 B
              202. As far as the argument relating to violation of Article 14 qua
       operational creditor is concerned, we are of the view that there is no
       merit in the same. Quite apart from the fact that under the code they are
       dealt with under different provisions and a different procedure is entailed
       thereunder, even the decisions of this Court relied on by the allottees
 C     have treated the financial creditor differently from the operational creditor.
              203. In Innoventive Industries Limited v. ICICI Bank and another64,
       this Court elaborately analysed the scheme of the Code and the distinction
       between the financial creditors and the operational creditors. This Court
       noticed that in the case of application, under Section 8, by an operational
 D     creditor, the corporate debtor within ten days of the notice, issued under
       Section 8 can bring to the notice of the operational creditor, the existence
       of the dispute or a record of a proceeding in a court or before an
       Arbitrator. This exercise, successfully carried out by the corporate debtor,
       will enable it to get out of the purview of the Code. In case of a financial
 E     creditor, if the debt is due, that it is payable unless it is interdicted by
       some law or it has not become due, 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
 F     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
 G              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
       64
 H          (2018) 1 SCC 407
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                               1057
             [K. M. JOSEPH, J.]

 of goods or services, including employment, or a debt in respect        A
 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 Central Government when a “default” occurs. The         B
 Explanation to Section 7(1) also makes it clear that the Code may
 be triggered by such persons in respect of a default made to any
 other financial creditor of the corporate debtor, making it clear
 that once triggered, the resolution process under the Code is a
 collective proceeding in rem which seeks, in the first instance, to
 rehabilitate the corporate debtor. Under Section 7(4), the              C
 adjudicating authority shall, within the prescribed period, ascertain
 the existence of a default on the basis of evidence furnished by
 the financial creditor; and under Section 7(5), the adjudicating
 authority has to be satisfied that a default has occurred, when it
 may, by order, admit the application, or dismiss the application if     D
 such default has not occurred. On the other hand, under Sections
 8 and 9, an operational creditor may, on the occurrence of a default,
 deliver a demand notice which must then be replied to within the
 specified period. What is important is that at this stage, if an
 application is filed before the adjudicating authority for initiating
 the corporate insolvency resolution process, the corporate debtor       E
 can prove that the debt is disputed. When the debt is so disputed,
 such application would be rejected.
 49. It is obvious that debenture-holders and persons with home
 loans may be numerous and, therefore, have been statutorily dealt
 with by the aforesaid change made in the Code as well as the            F
 Regulations. However, as a general rule, it is correct to say that
 financial creditors, which involve banks and financial institutions,
 would certainly be smaller in number than operational creditors of
 a corporate debtor.
 50. According to us, it is clear that most financial creditors,         G
 particularly banks and financial institutions, are secured creditors
 whereas most operational creditors are unsecured, payments for
 goods and services as well as payments to workers not being
 secured by mortgaged documents and the like. The distinction
 between secured and unsecured creditors is a distinction which          H
1058      SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     has obtained since the earliest of the Companies Acts both in the
       United Kingdom and in this country. Apart from the above, the
       nature of loan agreements with financial creditors is different from
       contracts with operational creditors for supplying goods and
       services. Financial creditors generally lend finance on a term loan
       or for working capital that enables the corporate debtor to either
 B
       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
 C     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
 D
       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
 E     financial debts. A simple example will suffice. Goods that are
       supplied may be substandard. Services that are provided may be
       substandard. Goods may not have been supplied at all. All these
       qua operational debts are matters to be proved in arbitration or in
       the courts of law. On the other hand, financial debts made to
       banks and financial institutions are well documented and defaults
 F
       made are easily verifiable.
       51. Most importantly, financial creditors are, from the very
       beginning, involved with assessing the viability of the corporate
       debtor. They can, and therefore do, engage in restructuring of the
       loan as well as reorganisation of the corporate debtor’s business
 G     when there is financial stress, which are things operational creditors
       do not and cannot do. Thus, preserving the corporate debtor as a
       going concern, while ensuring maximum recovery for all creditors
       being the objective of the Code, financial creditors are clearly
       different from operational creditors and therefore, there is
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1059
                 [K. M. JOSEPH, J.]

      obviously an intelligible differentia between the two which has a         A
      direct relation to the objects sought to be achieved by the Code.
                 xxx               xxx               xxx               xxx
      119. It will be seen that the reason for differentiating between
      financial debts, which are secured, and operational debts, which
      are unsecured, is in the relative importance of the two types of          B
      debts when it comes to the object sought to be achieved by the
      Insolvency Code. We have already seen that repayment of
      financial debts infuses capital into the economy inasmuch as banks
      and financial institutions are able, with the money that has been
      paid back, to further lend such money to other entrepreneurs for          C
      their businesses. This rationale creates an intelligible differentia
      between financial debts and operational debts, which are
      unsecured, which is directly related to the object sought to be
      achieved by the Code. In any case, workmen’s dues, which are
      also unsecured debts, have traditionally been placed above most
      other debts. Thus, it can be seen that unsecured debts are of             D
      various kinds, and so long as there is some legitimate interest
      sought to be protected, having relation to the object sought to be
      achieved by the statute in question, Article 14 does not get
      infracted. For these reasons, the challenge to Section 53 of the
      Code must also fail.”                                                     E
       205. It must be remembered that the principles laid down came to
be made in the context of challenge to the provisions of the Code pointing
out violation of Article 14 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       F
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,           G
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
                                                                                H
1060      SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A     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 with the challenge to the amendment
 B
       to the Code on the ground that there is violation of Article 14 on
       the basis that the equals are being treated unequally and unequals
       are being treated equally this Court found it unacceptable. This
       Court found the amendment to be an economic measure. This
       Court also pointed out the perils associated with an allottee pursuing
 C     remedy under the Code in paragraph 41 and thereafter went on
       to hold as follows:
       “42. It is impossible to say that classifying real estate developers
       is not founded upon an intelligible differentia which distinguishes
       them from other operational creditors, nor is it possible to say that
 D     such classification is palpably arbitrary having no rational relation
       to the objects of the Code. It was vehemently argued by the
       learned counsel on behalf of the petitioners that if at all real estate
       developers were to be brought within the clutches of the Code,
       being like operational debtors, at best they could have been brought
       in under this rubric and not as financial debtors. Here again, what
 E     is unique to real estate developers vis-à-vis operational debts, is
       the fact that, in operational debts generally, when a person supplies
       goods and services, such person is the creditor and the person
       who has to pay for such goods and services is the debtor. In the
       case of real estate developers, the developer who is the supplier
 F     of the flat/apartment is the debtor inasmuch as the home buyer/
       allottee funds his own apartment by paying amounts in advance
       to the developer for construction of the building in which his
       apartment is to be found. Another vital difference between
       operational debts and allottees of real estate projects is that an
       operational creditor has no interest in or stake in the corporate
 G     debtor, unlike the case of an allottee of a real estate project, who
       is vitally concerned with the financial health of the corporate debtor,
       for otherwise, the real estate project may not be brought to fruition.
       Also, in such event, no compensation, nor refund together with
       interest, which is the other option, will be recoverable from the
 H     corporate debtor. One other important distinction is that in an
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                              1061
             [K. M. JOSEPH, J.]

 operational debt, there is no consideration for the time value of      A
 money—the consideration of the debt is the goods or services
 that are either sold or availed of from the operational creditor.
 Payments made in advance for goods 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
                                                                        B
 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-à-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          C
 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
                                                                        D
 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 the fact that such instalment payments      E
 are used as a means of finance qua the real estate project. One
 other vital difference with operational debts is the fact that the
 documentary evidence for amounts being due and payable by the
 real estate developer is there in the form of the information
 provided by the real estate developer compulsorily under RERA.
                                                                        F
 This information, like the information from information utilities
 under the Code, makes it easy for homebuyers/allottees to
 approach NCLT under Section 7 of the Code to trigger the Code
 on the real estate developer’s own information given on its
 webpage as to delay in construction, etc. It is these fundamental
 differences between the real estate developer and the supplier of      G
 goods and services that the legislature has focused upon and
 included real estate developers as financial debtors. This being
 the case, it is clear that there cannot be said to be any infraction
 of equal protection of the laws.
                                                                        H
1062      SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A     43. Shri Shyam Divan relying upon Nagpur Improvement
       Trust v. Vithal Rao [Nagpur Improvement Trust v. Vithal Rao,
       (1973) 1 SCC 500] SCC para 26 and Subramanian swamy v.
       CBI [Subramanian Swamy v. CBI, (2014) 8 SCC 682 : (2014) 6
       SCC (Cri) 42 : (2014) 3 SCC (L&S) 36] SCC paras 44, 58 and 68
       argued that the object of the amendment is itself discriminatory in
 B
       that it seeks to insert into a “means and includes” definition a
       category which does not fit therein, namely, real estate developers
       who do not, in the classical sense, borrow monies like banks and
       financial institutions. According to him, therefore, the object itself
       being discriminatory, the inclusion of real estate developers as
 C     financial debtors should be struck down. We have already pointed
       out how real estate developers are, in substance, persons who
       avail finance from allottees who then fund the real estate
       development project. The object of dividing debts into two
       categories under the Code, namely, financial and operational debts,
       is broadly to sub-divide debts into those in which money is lent
 D
       and those where debts are incurred on account of goods being
       sold or services being rendered. We have no doubt that real estate
       developers fall squarely within the object of the Code as originally
       enacted insofar as they are financial debtors and not operational
       debtors, as has been pointed out hereinabove. So far as unequals
 E     being treated as equals is 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
 F
       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
 G     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
 H
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1063
             [K. M. JOSEPH, J.]

 of real estate developers — is a debt due in fact or in law? Thus,        A
 allottees, being individual financial creditors like debenture holders
 and fixed-deposit holders and classified as such, show that they
 are within the larger class of financial creditors, there being no
 infraction of Article 14 on this score.”
 207. Thus, we notice the following aspects:                               B
        In Swiss Robbins (supra) on the basis of the challenge
 involved to the legislation, this Court noted that a financial creditor
 can trigger the Code either by itself or jointly with other financial
 creditors when a default occurs. The procedure in regard to
 operational creditors is however different. At the stage prior to         C
 admission of the application, it is open to the corporate debtor to
 show that the debt is disputed in which event the application stands
 rejected. In paragraph-49, this Court took the view that the
 debenture holder and the persons with home loans may be
 numerous and therefore have been statutorily dealt with by the
 changes made in the Code. But as a general rule it was found that         D
 financial creditors which involved banks and financial institutions
 will be certainly smaller than the operational creditors. Further it
 was held that most financial creditors particularly Banks and
 financial institutions are secured creditors whereas most
 operational creditors are unsecured. In para 50 of Swiss Ribbon           E
 this Court distinguished between secured and unsecured creditors
 and noted that a divide existed from the earliest of the Companies
 Acts both in U.K. and in India. Financial creditors generally lend
 on a term loan or for working capital. Operational creditors are
 creditors on account of supply of goods and services. The sums
 involved in the financial contracts are generally large sums in           F
 contrast with amounts involved in operational credit which are
 generally less. Repayment schedules are different. Other
 distinctions are noticed between the two. It is further found that
 even more importantly financial creditors are involved with the
 assessing of viability of the corporate debtor from the very              G
 beginning. This enables the financial creditor to indulge in
 restructuring of the loan. Preserving the corporate debtor as a
 going concern while securing the highest recovery for all creditors
 is the objective of the Code. Financial creditors were therefore
 clearly different from operational creditors. There is obviously an
                                                                           H
1064             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A           intelligible differentia between the two which has the direct relation
             with 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
 B
             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
 C           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
 D     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 sums involved, the method
       of repayment, the re-arrangement of the repayment of the loan, the
       study conducted, in fact, before the loan is given the control, which the
 E     banks and the financial institutions retain over the debtor, and finally, the
       importance of the repayment to such institutions, for the economic stability
       and progress of the country, by way of the recovered amounts being
       infused a fresh capital for other entrepreneurs, was contrasted with the
       operational debtors, who were, in the first place, unsecured creditors,
 F     generally. Operational creditors are creditors to whom the corporate
       debtor owes money for having availed goods and services. The features
       which mark out the banks and financial institution were found in applicable
       to the operational creditors.
              209. Coming to Pioneer (supra), this Court has recognized that
 G     allottees under a real estate project are unsecured creditors (See
       paragraph-61, wherein it is so found). Equally, it is noted in paragraph-
       43 as follows:
                   “43. for example, fixed deposit holders, though financial
             creditors, would be like real estate allottees in that they are
 H           unsecured creditors.”
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                     1065
                 [K. M. JOSEPH, J.]

        210. It is further found that financial contracts in the case of           A
these individuals, (allottees) need not involve large sums of money [See
paragraph-43 of Pioneer (supra)].
        211. It could be urged, therefore, that the real foundation on the
basis of which, this Court justified the difference in procedure under
Section 7 on the one hand and Sections 8 and 9 on the other hand between           B
financial creditors and operational creditors, is that after conflating
financial creditors with banks and financial institutions and noting them
to be secured creditors, lending large sums of money, both of which
features are not present in the case of an allottees under a real estate
project as allottees remain unsecured creditors and also their contract
need not involve large sums of money, they should, therefore, fall to be           C
treated at least like the operational creditors with whom they bear the
greater resemblance. What is complained of is before the impugned
amendments, allottees being treated as part of the larger group of financial
creditors, could invoke the provisions of Section 7 singly and without
having to garner the support of any fellow traveller. The operational              D
debtor could also, likewise, file such an application without having to
search 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           E
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            F
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   G
in paragraph-42 of the judgment of this Court in Pioneer (supra) which
we have already adverted to. As noticed by this Court, what is unique to
the real estate developer vis-a-vis operational debts is that the developer
is the debtor as an allottee funds his own apartment by paying amounts
in advance. On the other hand, in case of operational debt, the person
                                                                                   H
1066             SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A     who has supplied the goods and services, becomes the creditor and the
       corporate debtor is one who has availed such services. Another distinction
       noticed is that an operational creditor has no interest or stake in the
       corporate debtor. The allottee is, on the other hand, vitally concerned
       with the financial health of the corporate debtor. Should financial ruin
       occur, the real estate project will come to a nought. Should such an
 B
       event take place also, the allottee would not be in a position to either
       claim or get compensation or even refund with interest. Thirdly, as again
       noticed by this Court, there is no consideration for the time value of
       money in the operational debt. This is not so in the case of an allottee.
       The non-availability of documentary evidence in respect of operational
 C     debts as against information available under the RERA qua real estate
       developers is yet another feature which was noticed in Pioneer (supra)
       dealing with the differences between an operational debtor and an allottee.
               213. The operational debtor, is concerned with the payment of the
       amount due to it for the goods and services supplied. When an allottee
 D     invests money in a real estate project, his primary and principal concern
       is that the project is completed and he gets possession of the apartment
       or the flat. The problem really arises as there are many stakeholders
       whose interests are affected. It cannot be in dispute that under the law,
       an allottee can seek remedies under the RERA. An allottee can also
       seek remedies under the Consumer Protection Act or even file a suit.
 E     No doubt, Section 71 of the RERA permits a person who has filed a
       complaint in respect of matters governed by Sections 12, 14, 18 and 19
       of RERA to withdraw the complaint and file the same before the
       Adjudicating Officer under RERA. There are large number of cases
       where allottee seek refuge either under the RERA or under the Consumer
 F     Protection Act. An action under the Code by way of an application under
       Section 7 is an action in rem. The recovery of the amounts paid is not
       what is primarily contemplated under the Code. In paragraph-41 of
       judgment of this Court 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
 G     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
 H     and the allottee would stand reduced to receiving whatever little may
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1067
                 [K. M. JOSEPH, J.]

remain and found on the basis that he is a mere unsecured creditor in the       A
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
                                                                                B
a blind eye to the distinction between the wisdom and the legislative
value judgment behind the Statute being immune from judicial scrutiny
on the one hand and a hostile discrimination falling foul of the mandate
of equality under Article 14, being fatal to the Statute. In this case, while
it may be true that the allottees are unsecured creditors and in that regard,
they are similar to the operational creditors and it also may be true that      C
many contracts under real estate projects, may not involve large sums
as the subject matter of advances by banks and other financial institutions,
the similarity between the two ends there. What is of greater importance
is the distinctions which we have already noted and the most vital point
which sets them apart, in the matter of pronouncing on the vires of the
                                                                                D
provisos under Section 7 is the numerosity of the allottees, and what is
more not being homogeneous in what they want in a particular situation,
since the law has indeed endowed the allottees with different remedies,
having different implications, be it under the Consumer Protection Act
or under RERA. If the Legislature felt that having regard to the
consequences of an application under the Code, when such a large group          E
of persons, pull at each other, an additional threshold be erected for
exercising the right under Section 7, certainly, it cannot suffer a
constitutional veto at the hands of Court exercising judicial review of
legislation. In fact, this Court in Pioneer was invited to hold that the
allottees were more like operational creditors than financial creditors
                                                                                F
and many aspects were pointed out and this Court after referring to the
differences pointed out to it in a tabular form in [para 48], rejected the
contentions. The rejection is supported with reference to the findings in
Swiss Robbin (supra) which is alluded to in para 32 of Pioneer (supra).
       214. It is to be noted also that it is not a case where the right of
the allottee is completely taken away. All that has happened is a half-         G
way house is built between extreme positions, viz., denying the right
altogether to the allottee to move the application under Section 7 of the
Code and giving an unbridled license to a single person to hold the real
estate project and all the stakeholders thereunder hostage to a proceeding
under the Code which must certainly pass inexorably within a stipulated         H
1068                SUPREME COURT REPORTS                        [2021] 14 S.C.R.


 A     period of time should circumstances exists under Section 33 into corporate
       death with the unavoidable consequence of all allottees and not merely
       the applicant under Section 7 being visited with payment out of the
       liquidation value, the amounts which are only due to the unsecured
       creditor.
 B             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
 C     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
 D     mere one-tenth 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 PROVISO
 E            215. Shri Rana Mukherjee, learned senior counsel in W.P.(C)
       No.579 of 2020 would submit that the first proviso appears to be clearly
       the result of a mistake. It is contended that the target of the legislature
       was the problem created by individual allottees invoking section 7 of
       IBC. As far as his clients are concerned, they are debenture holders and
 F     other security holders to whom debt is owed by the corporate debtor.
       There is no rational basis for imposing a threshold requirement upon the
       security holders. Reference is made to the mention of ‘class’.
              216. Learned counsel would commend to us the principle of
       absurdity. It is pointed out that the principle of absurdity should guide this
 G     Court to read down the first proviso to not apply it in regard to security
       holders and debenture holders. In this regard our attention has been
       drawn to the decision of this court in Vasant Ganpat Padave (D) by
       L.Rs. and Ors. v. Anant Mahadev Sawant (D) through L.Rs. and
       Ors.65. It is further brought to the notice of the court that the provision
       65
 H          (2019) 12 SCALE 579
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                1069
                    [K. M. JOSEPH, J.]

suffers from manifest arbitrariness. Counsel relies upon the judgement           A
of this Court in Shayara Bano v. Union of India and others66 decision
which witnessed the striking down of the law relating to triple talak. Per
contra, it is the stand of the Union that Section 21(6A)(a) and (b) read
with Section 25A of the Code contemplated certain classes of financial
creditors as falling in a separate class by themselves.
                                                                                 B
       217. It is the stand of the Union that in regard to certain classes of
creditors, financial creditors, i.e., having regard to the large numbers,
they were to be treated differently. It is accordingly that with the insertion
of sub-section (6A) in section 21 with clause (a) dealing with security
holders including debenture holders which would cover the petitioners
that an authorised representative was to be appointed to be on the               C
committee of creditors.
       218. Section 25A provides for the rights and liabilities of the
authorised representatives who include the authorised representatives
of debenture holders, security holders and finally the allottees. As far as
allottees are concerned, it is the stand of the Union that they would fall       D
under Section 21 (6A)(b) whereas the security holders including debenture
holders to whom the corporate debtor owes money would fall 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      E
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      F
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               G
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 case of the Union that the principle of heterogeneity
applies. Equally, it is the case of the Union that the individual creditor in
66
     (2017) 9 SCC 1                                                              H
1070             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     the said class would make a highly individualised and subjective decision
       in regard to whether an application under Section 7 must be moved and
       this is sought to be contrasted with the institutional decision-making which
       would come into play in regard to banks and other financial institutions.
              219. We are of the view that the first proviso is invulnerable. As
 B     pointed out by the learned Additional Solicitor General with the insertion
       of sub-section 6A in section 21 as also Section 25A, the intention of the
       legislature is to treat the financial creditors differently. They are marked
       by unique features in terms of numerosity and heterogeneity is clear.
       Section 21 (6A) (a)reads as follows:
 C           “(6A) Where a financial debt –
             (a) is in the form of securities or deposits and the terms of the
             financial debt provide for appointment of a trustee or agent to act
             as authorised representative for all the financial creditors, such
             trustee or agent shall act on behalf of such financial creditors;
 D           (b) xxx    xxx      xxx
             (c) xxx    xxx      xxx
             Section 25A provides as follows:
                   “ 25A. Rights and duties of authorised representative of
 E           financial creditors.
             (1) The authorised representative under sub-section (6) or sub-
             section (6A) of section 21 or sub-section (5) of section 24 shall
             have the right to participate and vote in meetings of the committee
             of creditors on behalf of the financial creditor he represents in
 F           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.
 G           (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 intructions:
             Provided that if the authorised representative represents several
             financial creditors, then he shall cast his vote in respect of each
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                      1071
                 [K. M. JOSEPH, J.]

       financial creditor in accordance with instructions received from             A
       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-              B
       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:                           C
       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           D
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 rights             E
and the liabilities of authorised representative of creditors like debenture
holders and allottees. After the insertion of sub-section 3A in section
25A, the majority of the creditors of a class is permitted to call the shots.
It’s view, in other words, will hold sway. This is subject to the Code
otherwise. The legislative understanding is clear that in regard to such
creditors bearing the hallmark of large numbers they are required to be             F
treated differently. If they are not treated differently it would spell chaos
and the objects of the Code would not be fulfilled. It is an extension of
this basic principle which has led to the insertion of the impugned proviso.
Insisting on a threshold in regard to these categories of creditors would
lead to the halt to indiscriminate litigation which would result in an              G
uncontrollable docket explosion as far as the authorities which work the
Code are concerned. The debtor who is apparently stressed is relieved
of the last straw on the camel’s back, as it were, by halting individual
creditors whose views are not shared even by a reasonable number of
its peers rushing in with applications. Again, as in the case of the allottees,
                                                                                    H
1072             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     this is not a situation where while treating them as financial creditors
       they are totally deprived of the right to apply under Section 7 as part of
       the legislative scheme. The legislative policy reflects an attempt at
       shielding the corporate debtor from what it considers would be either for
       frivolous or avoidable applications. What we mean by avoidable
       applications is a decision which would not be taken by similarly placed
 B
       creditors keeping in mind the consequences that would ensue not only in
       regard to persons falling in the same category but also the generality of
       creditors and other stakeholders. All that the amendment is likely to
       ensure is that the filing of the application is preceded by a consensus at
       least by a minuscule percentage of similarly placed creditors that the
 C     time has come for undertaking a legal odyssey which is beset with perils
       for the applicants themselves apart from others. As far as the percentage
       of applicants contemplated under the proviso it is clear that it cannot be
       dubbed as an arbitrary or capricious figure. The legislature is not wanting
       in similar requirements under other laws. The provisions of the Companies
       Act, 2013 and its predecessors contained similar provisions. Allowing
 D
       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
 E     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
 F     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.
 G
              222. There is no scope also having regard to their identification in
       paragraph-49 of Pioneer (supra) with reference to their numerosity. They
       cannot be heard to complain about their inclusion within the terms of the
       1st proviso. Also Section 21(6A)(a) read with Section 25(A) puts the
       matter beyond the pale of doubt.
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                               1073
                 [K. M. JOSEPH, J.]

       223. There is no basis for the petitioners to draw any support        A
from the decision of this Court in 2019(12) SCALE.579. The facts in the
said case presented a clear situation which invited the application of the
Principle.
     THE CHALLENGE TO EXPLANATION-II TO SECTION
11 OF THE CODE.                                                              B
       224. The Petitioner, in Writ Petition No. 267 of 2020, challenges
the aforesaid Explanation.
      225. As already noticed, the Amendment Act, 2020 received the
assent of the President of India on 13.03.2020 and it is deemed to have
come into force on the 28.12.2019 (be it remembered that the Ordinance,      C
inserting the same Explanation, had been brought into force on
28.12.2019).
      226. The case of the Petitioner, in brief, is as follows:
              Respondent No.3 is a subsidiary company of the Petitioner.     D
      Respondent No. 2 is also a corporate body. There were certain
      transactions between Respondent Nos.2 and 3. Alleging default
      by Respondent No.3, Respondent No.2 had filed an Application
      under Section 9 (the application to be filed by an operational
      creditor) against Respondent No.3. Respondent No.2 had filed
      the application under Section 9 of the Code on 24.08.2018. It is       E
      the further case of the Petitioner that Respondent No.2, on the
      other hand, was itself undergoing a CIRP and the CIRP Application
      had been admitted against the Second Respondent on 12.09.2017.
      It is pointed out that the Respondent No.3 has taken a contention
      that Respondent No.2 was disentitled to file an application under      F
      Section 11(a) of the Code as Respondent No.2 was itself facing a
      CIRP. It is further contended that during the pendency of the
      proceeding against the second Respondent, the Adjudicating
      Authority has passed an Order on 19.11.2018 to liquidate
      Respondent No.2 under Section 34 of the Code. This development
      invites the wrath of Section 11(d) as well. However, the               G
      Adjudicating Authority had, on 24.08.2019, erroneously admitted
      the Application filed by Respondent No.2 under the Code. An
      Appeal was carried by the Petitioner against the same, which is
      pending. It is while so, that the Ordinance came to be promulgated
      on 28.12.2019 adding Explanation-II to Section 11 vis-à-vis
                                                                             H
1074             SUPREME COURT REPORTS                         [2021] 14 S.C.R.


 A            followed by passing 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.
 B
              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.
 C            Pattabiraman and others67 and Sonia Bhatia v. State of U.P. and
              others68. 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
 D     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
 E     Explanation, which is impugned, is that the intention of the law was to
       only bar an Application for CIRP by a Corporate Debtor against itself,
       then, it will be unworkable and practically impossible. Explanation-II is
       manifestly arbitrary. Support is sought to be drawn from Shayara Bano
       (supra). It was further contended that the amendment cannot be used
       retrospectively and take away the vested right. In fact, it is contended
 F     that a clarificatory amendment is prospective but Explanation II is in
       reality a substantive provision. Attempt is made to lay store by the
       Judgment of this Court in Virtual Soft Systems Ltd. v. Commissioner of
       Income Tax, Delhi-I69, wherein this Court was dealing with Section 271
       of the Income-Tax Act, 1961, in which, an Explanation was added. The
 G     Section in question, was a penal provision.
             229. It was further contended that the law has been settled by
       National Company Law Tribunal (NCLT) and National Company Law
       67
          (1985) 1 SCC 591
       68
          (1981) 2 SCC 585
 H     69
          (2007) 9 SCC 665
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                1075
                 [K. M. JOSEPH, J.]

Appellate Tribunal (NCLAT) that a Corporate Debtor, covered by Section        A
11(a) and 11(d), cannot file application for CIPR against another Corporate
Debtor. The impugned amendment cannot be used retrospectively in
cases instituted before 28.12.2019, which is the day on which the
impugned amendment came into force. It is submitted that the amendment
is violative of Article 14 and the relevant law.
                                                                              B
      230. Respondent No.2, in its submissions, contends as follows:
            Respondent No. 3 owes Respondent No.2, more than a
      sum of Rs. 26 crores, which is 20 per cent of the liquidation value
      of Respondent No.2. It is further contended that the notes on
      clause explains the purpose of the provision. The amendment is          C
      defended as reasonable and not arbitrary. It is pointed out that it
      will be contrary to the object of the Code if the debt due to the
      Corporate Debtor cannot be secured. The duties of the Resolution
      Professional under the Code to protect and preserve the assets of
      the Corporate Debtor are pointed out. An order of the Appellate
      Adjudicating Authority in support of Respondent No.2 is also            D
      pointed out. Explanation-II, it is pointed out, only clarifies what
      was always the correct position.
      231. Learned Additional Solicitor General, appearing on behalf of
the Union of India would also support the amendment. Reference is
made to the Report dated February, 2020 of the Insolvency Law                 E
Committee, which, inter alia, reads as follows:
      “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         F
      “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        G
      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      H
1076             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A           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 dismissed the appeals
 B
             filed against some of these orders without endorsing either of
             these approaches, in Abhay N. Manudhane v Gupta Coal India
             Pvt. Ltd., it had taken the latter approach and denied the liquidator
             the right to file an application to initiate CIRP against other
             corporate debtors (in the context of Section 11(d)).
 C           6.3. However, according to the Notes on Clauses to Section 11,
             the section was enacted to prevent “repeated recourse to the
             corporate insolvency resolution process in order to delay
             repayment of debts due or to keep assets out of the reach of
             creditors” and to “ensure finality of the liquidation order” by
 D           preventing a corporate debtor to initiate CIRP after a liquidation
             order is passed. Thus, it is clear that Section 11 aims at preventing
             a corporate debtor from abusing the statutory process under
             Chapter II of Part II of the Code by repeatedly initiating CIRP
             against itself or by initiating CIRP even after a liquidation order is
             passed against it. The Committee discussed that if Section 11
 E           were instead, interpreted to prevent the resolution professional or
             the liquidator of a corporate debtor from initiating CIRP against
             other defaulting entities, it would cause serious detriment to the
             ability of a corporate debtor to recover its dues from its debtors.”
             ANALYSIS
 F
               232. Before we address the argument with regard to the provisions
       of the Code, it is necessary to cull-out the principles applicable in regard
       to the function of an Explanation. A bench of three learned Judges, in an
       off-quoted judgment in S. Sundaram Pillai (supra) came to elaborately
       examine the scope of an Explanation. Incidentally, the Court had to deal
 G     with an Explanation which was appended to a proviso and, therefore,
       its judgment also deals with the principles applicable in regard to a
       proviso. On a conspectus of various decisions, this Court made a survey
       of the earlier case law. We may refer to paragraphs-49, 50, 52 and,
       finally, its conclusions in paragraph-53 as follows:
 H
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                1077
             [K. M. JOSEPH, J.]

        “49. The principles laid down by the aforesaid authors are        A
 fully supported by various authorities of this Court. To quote only
 a few, in Burmah Shell Oil Storage and Distributing Co. of
 India Ltd. v. CTO [(1961) 1 SCR 902 : AIR 1961 SC 315 : (1960)
 11 STC 764] a Constitution Bench decision, Hidayatullah, J.
 speaking for the Court, observed thus:
                                                                          B
           “Now, the Explanation must be 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.”
                                                                          C
        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      D
    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   E
    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.”               F
        53. Thus, from a conspectus of the authorities referred to
 above, it is manifest that the object of an Explanation to a statutory
 provision is—
              “(a) to explain the meaning and intendment of the Act
    itself,                                                               G
           (b) where there is any obscurity or vagueness in the
    main enactment, to clarify the same so as to make it consistent
    with the dominant object which it seems to subserve,
           (c) to provide an additional support to the dominant object
    of the Act in order to make it meaningful and purposeful,             H
1078                SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A                          (d) an Explanation cannot in any way interfere with or
                    change the enactment or any part thereof but where some gap
                    is left which is relevant for the purpose of the Explanation, in
                    order to suppress the mischief and advance the object of the
                    Act it can help or assist the Court in interpreting the true purport
                    and intendment of the enactment, and
 B
                           (e) it cannot, however, take away a statutory right with
                    which any person under a statute has been clothed or set at
                    naught the working of an Act by becoming an hindrance in the
                    interpretation of the same.”
 C            233. It is important to actually understand the scope of an
       Explanation. We have already noticed the summary of the conclusions
       of this Court in S. Sundaram Pillai (supra) at paragraph-53. It may give
       the impression that an Explanation, in those circumstances, does not
       widen the boundaries of the main provision to which it is an Explanation.
       However, it is apposite that we hearken back to what this Court said on
 D     an earlier occasion. In a judgment rendered by four learned Judges in
       Hiralal Rattanlal and Ors. v. State of U.P. and another70 this Court had,
       while considering the scope of an Explanation in a Taxing Statute, viz.,
       the United Provinces Sales Tax Act, 1948, had this to say:
                        “22. It was next urged that on a true construction of
 E              Explanation II to Section 3-D, no charge can be said to have been
                created on the purchases of split or processed pulses. It was firstly
                contended that an Explanation cannot extend the scope of the
                main section, it can only explain that section. In construing a
                statutory provision, the first and the foremost rule of construction
 F              is the literary construction. All that we have to see at the very
                outset is what does that provision say? If the provision is
                unambiguous and if from that provision, the legislative intent is
                clear, we need not call into aid the other rules of construction of
                statutes. The other rules of construction of statutes are called into
                aid only when the legislative intention is not clear. Ordinarily a
 G              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
       70
 H          (1973) 1 SCC 216
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1079
                 [K. M. JOSEPH, J.]

      substantially altered the main section. In CIT v. Bipinchandra           A
      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
                                                                               B
      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      C
      the fact that the Legislature named that provision as an Explanation.
      In all these matters the courts have to find out the true intention of
      the Legislature.”
                                                      (Emphasis supplied)
                                                                               D
       234. Even though, in a later decision in S. Sundaram Pillai (supra),
this Court had adverted to this Judgment when it came to culling out the
propositions, the aspect about an Explanation, widening the scope of a
provision, has not been expressly spelt out. It must be remembered that
the Legislature speaks through the medium of the words it uses. The
nomenclature, it gives to the device, cannot control the express language,     E
which it employs. If, in effect, in a particular case, an Explanation does
widen the terms of the main provision, it would become the duty of the
Court to give effect to the will of the Legislature.
       235. In fact, with respect to the decision in S. Sundaram Pillai
(supra), it may be necessary to dissect the provisions which fell for          F
consideration. The Court, in the said case, was dealing with the law
relating to restrictions on eviction of the tenant prevailing in Tamil Nadu.
The substantive provision conferred a right on the landlord to evict a
tenant, should he wilfully fail to pay the rent. There was a proviso,
however, which empowered the Court to grant time to the tenant subject         G
to the limit of 30 days, should it be found that the non-payment of the
rent was not wilful. It was to this proviso that an Explanation was added.
The Explanation, in turn, provided that if the landlord gave a notice to the
tenant to pay the rent and rent remained unpaid for a period of two
months, it would be construed as a case of wilful default. The arguments,
                                                                               H
1080            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     which were addressed before this Court, included the contention that
       even if a notice was given within the meaning of the Explanation, it
       would not control the duty of the Court to find out whether there was
       wilful default. It was, while the Court dealt with these arguments, inter
       alia, that the Court proceeded to lay down two propositions. Firstly, in a
       case where no notice was given by the landlord, within the meaning of
 B
       the Explanation, it was for the Court to find out, on the facts and
       circumstances, as to whether there was wilful default. The second
       proposition, which was laid down was, even if a notice was given under
       the Explanation and there was default in payment, it would be treated as
       a case of wilful default unless the tenant was able to establish that he
 C     was prevented 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,
 D
       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:
 E                 “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 co-tenure-holder made after
             the twenty-fourth day of January, 1971 in a suit or proceeding
 F           irrespective of whether such suit or proceeding was pending on
             or was instituted after the twenty-fourth day of January, 1971;
             (b) any admission, acknowledgement, relinquishment or declaration
             in favour of a person to the like effect, made in any other deed or
             instrument or in any other manner.
 G
             Explanation II: The burden of proving that a case falls within clause
             (b) of the proviso shall rest with the party claiming its benefits.”
             236. The transfer in the said case was a gift which attracted the
       wrath of the main provision which meant that the transfer had to be
       ignored, and the land, which was the subject matter of the gift, had to be
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1081
                 [K. M. JOSEPH, J.]

included in the ceiling account of the donor. This Court appreciated the        A
scope of the legislation to be just that and rejected the argument based
on the terms of the Explanation and held as follows:
      “24. In Bihta Co-operative Development Cane Marketing
      Union Ltd. v. Bank of Bihar [AIR 1967 SC 389 : (1967) 1 SCR
      848 : 37 Com Cas 98] this Court was called upon to consider the           B
      Explanation to Section 48(1) of the Bihar and Orissa Cooperative
      Societies Act, 1935. Therein this Court observed:
      “The question then arises whether the first Explanation to the
      section widens the scope of sub-section (1) of Section 48 so as to
      include claims by registered societies, against non-members even          C
      if the same are not covered by clause (c).”
      237. We have made a brief survey of some of the case law by
way of expounding the true province of an Explanation.
        238. Coming to the facts of the instant case, it is necessary to
analyse the limbs of Section 11. Sections 7, 9 and 10, read with Section        D
5, provide for the procedure to be adopted by the Adjudicating Authority
in dealing with applications for initiating CIRP by the financial creditor,
operational creditor and corporate debtor. It is after that Section 11 makes
its appearance in the Code. It purports to declare that an application for
initiating CIRP cannot be made by categories expressly detailed in Section      E
11. Section 11(a) vetoes an application by a corporate debtor, which is
itself undergoing a CIRP. 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      F
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             G
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
                                                                                H
1082             SUPREME COURT REPORTS                             [2021] 14 S.C.R.


 A     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
 B     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 to be that the corporate debtor cannot initiate
       CIRP against itself under any of the limbs of Section 11, in the
 C     circumstances detailed therein. Section 11(c) again disentitles corporate
       debtor, apart from a financial creditor who has violated any terms of a
       resolution plan, which was approved twelve months before the making
       of the application. In other words, after the Adjudicating Authority
       approves a resolution plan under Section 31 of the Code, should a
 D     corporate debtor, inter alia, transgress upon any of the terms of the
       resolution plan and it still ventures to again approach the Adjudicating
       Authority with an application under Section 10 and attempt to restart the
       process all over again within a period of twelve months from the date of
       approval, this is declared impermissible under Section 11(c).
 E            240. 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 initiated. If it is admitted,
 F     a Committee of Creditors is constituted before the curtains are wrung
       down on the insolvency resolution process by the inexorable passage of
       time, which is fixed under Section 12. If a resolution plan finds approval
       at the hands of the Committee of Creditors and also the Adjudicating
       Authority, liquidation is staved off. Should there be no resolution plan
 G     within the time limit or the resolution plan is not approved, the curtains
       rise for the process of liquidation process to be played out in terms of the
       Code. The first act of the drama consists of the order of liquidation to be
       passed under Section 33 of the Code. It is this order which is referred to
       in Section 11(d). There is also an order of liquidation permissible earlier,
       under Section 33(4). No doubt after the introduction of the explanation
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1083
                 [K. M. JOSEPH, J.]

to Section 33(2), an order of liquidation may be passed in terms thereof.       A
Once, this order is passed, the Legislature intended that a corporate
debtor, in regard to whom the CIRP was initiated and which has
culminated in the order of liquidation being passed after no resolution of
the insolvency took place, cannot again initiate a fresh CIRP, putting
under the carpet, as it were, a whole process in the recent past. In fact,
                                                                                B
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         C
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       D
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 order
to appreciate this argument, it is necessary to set out the definition of the   E
word “corporate applicant” in the Code.
      “6(5) “corporate applicant” means—
          (a) corporate debtor; or
          (b) a member or partner of the corporate debtor who is                F
          authorised to make an application for the corporate insolvency
          resolution process under the constitutional document of the
          corporate debtor; or
          (c) an individual who is in charge of managing the operations
          and resources of the corporate debtor; or                             G
          (d) a person who has the control and supervision over the
          financial affairs of the corporate debtor;”
      242. It is to be noticed that under Section 10 of the Code, a
corporate debtor can file an application for CIRP, when there is a default
                                                                                H
1084             SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A     by itself. The persons, who can make application under section 10, are
       those who are alluded to as in the definition of the word “corporate
       applicant”. In other words, an application by the corporate debtor for
       initiating a CIRP, when there is a default by the corporate debtor, can be
       made not only by the corporate debtor but also any of the other three
       categories falling in clauses (b), (c) and (d) of the provision which defines
 B
       the word “corporate applicant”. It is to ensure that there was clarity
       regarding the question as to whether, while in Section 11, there is a
       prohibition against the corporate debtor in various circumstances and it
       is disabled from moving an application under Section 10 against itself,
       there is no reference to the other persons who are covered by the definition
 C     of the word “corporate applicant”. It is hence that Explanation I was
       inserted. In other words, it was to ensure that in the circumstances
       contemplated in Section 11, an application under Section 10 could not be
       made by any of the categories of persons mentioned in the definition of
       the word “corporate applicant”.
 D             243. Now, let us consider finally the impugned Explanation. The
       impugned Explanation came to be inserted by the impugned amendment.
       Apparently, interpreting Section 11, there appears to have been some
       cleavage of opinion. This is apparent from the case set up on behalf of
       the petitioners and the case set up on behalf of the Union of India. The
       intention of the Legislature was always to target the corporate debtor
 E     only insofar as it purported to prohibit application by the corporate debtor
       against itself, to prevent abuse of 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
 F     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
 G     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,
 H     cannot be accepted. The Explanation, in the facts of these cases, is
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   1085
                 [K. M. JOSEPH, J.]

clearly clarificatory in nature and it will certainly apply to all pending       A
applications also.
       244. We may notice that these are petitions filed under Article 32
of the Constitution of India, essentially, complaining of violation of
Fundamental Right under Article 14 of the Constitution insofar as the
challenge to the Explanation is concerned, a strained effort is made to          B
describe this amendment as manifestly arbitrary. To build up this argument,
an attempt is made to contend that an Explanation cannot widen the
provisions or whittle down its scope. We are afraid, that this venture of
attempting to persuade us to hold that an Explanation would be trespassing
the limits of its province, should it widen the scope of the main provisions,
itself has no legs to stand on, as explained earlier. We are unable to           C
understand how it could be described as being arbitrary for the Legislature
to clarify its intention through the device of an Explanation. The further
attempt to persuade us to overturn the provision on the score that the
Explanation attempts to achieve the result of a repeal of Sections 11(a)
and 11(d), is totally meritless. We are clear in our mind that on a proper       D
understanding of Sections 11(a) and 11(d), it does nothing of the kind.
Sections 11(a) and 11(d) remain intact in the manner we have propounded.
       245. 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                E
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 violation of Article
14. This ground does not merit acceptance. The challenge is repelled.
       IS SECTION 32A UNCONSTITUTIONAL?                                          F
      246. Section 32A is challenged by allottees in Writ Petition No.75
of 2020. The petitioners in Writ Petition No.27 of 2020 and Writ Petition
No. 579 of 2020, who are creditors (money lenders) also challenge Section
32A.
       247. The petitioners contend that immunity granted to the corporate       G
debtors and its assets acquired from the proceeds of crimes and any
criminal liability arising from the offences of the erstwhile management
for the offences committed prior to initiation of CIRP and approval of
the resolution plan by the adjudicating authority further jeopardizes the
interest of the allottees/creditors. It will cause huge losses which is sought
                                                                                 H
1086            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     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:
 B
                    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
 C           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
 D           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
 E
             2. A need was felt to give the highest priority in repayment to last
             mile funding to corporate debtors to prevent insolvency, in case
             the company goes into corporate insolvency resolution process or
             liquidation, to prevent potential abuse of the Code by certain classes
             of financial creditors, to provide immunity against prosecution of
 F           the corporate debtor and action against the property of the
             corporate debtor and the successful resolution applicant subject
             to fulfilment of certain conditions, and in order to fill the critical
             gaps in the corporate insolvency 69 framework, it has become
             necessary to amend certain provisions of the Insolvency and
             Bankruptcy Code, 2016.
 G
             3.The Insolvency and Bankruptcy Code (Second Amendment)
             Bill, 2019, inter alia, provides for the following, namely:—
                                          xxx

 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   1087
                 [K. M. JOSEPH, J.]

      (vii) to insert a new section 32A so as to provide that the liability      A
      of a corporate debtor for an offence committed prior to the
      commencement of the corporate insolvency resolution process
      shall cease under certain circumstances.”
    250. Reliance is also placed on the report of the Insolvency Law
Committee. Relevant extracts which have been relied on are as follows:           B
                              “PREFACE
      v. Liability of corporate debtor for offences committed prior to
      initiation of CIRP- in order to address the issue of liability that fall
      upon the resolution applicant for offences committed prior to
      commencement of CIRP, it has been recommended that a new                   C
      section should be inserted which provides that when the corporate
      debtor is successfully resolved, it should not be held liable for any
      offence committed prior to the commencement of the CIRP, unless
      the successful resolution applicant was also involved in the
      commission of the offence, or was a related party, promoter or             D
      other person in management and control of the corporate debtor
      at the time of or any time following the commission of the offence.
      Notwithstanding this, those persons who were responsible to the
      corporate debtor for the conduct of its business at the time of the
      commission of such offence, should continue to be liable for such
      an offence, vicariously or 70 otherwise. The newly inserted section        E
      as mentioned above shall also include protection of property from
      enforcement action when taken by successful resolution applicant.
      Also, it was recommended that cooperation and assistance to
      authorities investigating the offences committed prior to
      commencement of CIRP shall be continued by any person who is               F
      required to provide such assistance under the applicable law.
                                    xxx
      Chapter 1: Recommendations regarding the Corporate Insolvency
      Resolution Process
                                                                                 G
                                    xxx
      17. LIABILITY OF CORPORATE DEBTOR FOR
      OFFENCES COMMITTED PRIOR TO INITIATION OF
      CIRP*
                                                                                 H
1088      SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A     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),
 B
       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
 C     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. Additionally, while the
       property of the corporate debtor may also change hands upon
       resolution or liquidation, such property also continues to exist, either
       as property of the corporate debtor, or in the hands of the
 D
       purchaser.
       17.2. However, even after commencement of CIRP or after its
       successful resolution or liquidation, the corporate debtor, along
       with its property, would be susceptible to investigations or
       proceedings related to criminal offences committed by it prior to
 E     the commencement of a CIRP, leading to the imposition of certain
       liabilities and restrictions on the corporate debtor and its 71
       properties even after they were lawfully acquired by a resolution
       applicant or a successful bidder, respectively.
       Liability where a Resolution Plan has been Approved
 F
       17.3. It was brought to the Committee that this had created
       apprehension amongst potential resolution applicants, who did not
       want to take on the liability for any offences committed prior to
       commencement of CIRP. In one case, JSW Steel had specifically
       sought certain reliefs and concessions, within an annexure to the
 G     resolution plan it had submitted for approval of the Adjudicating
       Authority. Without relief from imposition of the such liability, the
       Committee noted that in the long run, potential resolution applicants
       could be disincentivised from proposing a resolution plan. The
       Committee was also concerned that resolution plans could be priced
 H     lower on an average, even where the corporate debtor did not
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                               1089
             [K. M. JOSEPH, J.]

 commit any offence and was not subject to investigation, due to         A
 adverse selection by resolution applicants who might be
 apprehensive that they might be held liable for offences that they
 have not been able to detect due to information asymmetry. Thus,
 the threat of liability falling on bona fide persons who acquire the
 legal entity, could substantially lower the chances of its successful
                                                                         B
 takeover by potential resolution applicants.
 17.4. This could have substantially hampered the Code’s goal of
 value maximisation, and lowered recoveries to creditors, including
 financial institutions who take recourse to the Code for resolution
 of the NPAs on their balance sheet. At the same time, the
 Committee was also conscious that authorities are duty bound to         C
 penalize the commission of any offence, especially in cases
 involving substantial public interest. Thus, two competing concerns
 need to be balanced.
 17.5. The Committee noted that the proceedings under the Code,
 which are designed to ensure maximization of value, generally           D
 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     E
 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.
                                                                         F
 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          G
 investigated and penalised, the liability must be affixed only upon
 those who were responsible for the corporate debtor’s actions in
 this period. However, the new management of the corporate
 debtor, which has nothing to do with such past offences, should
 not be penalised for the actions of the erstwhile management of         H
1090      SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A     the corporate debtor, unless they themselves were involved in the
       commission of the offence, or were related parties, promoters or
       other persons in management and control of the corporate debtor
       at the time of or any time following the commission of the offence,
       and could acquire the corporate debtor, notwithstanding the
       prohibition under Section 29A.
 B
       17.7. Thus, the Committee agreed that a new Section should be
       inserted to provide that where the corporate debtor is successfully
       resolved, it should not be held liable for any offence committed
       prior to the commencement of the CIRP, unless the successful
       resolution applicant was also involved in the commission of the
 C     offence, or was a related party, promoter or other person in
       management and control of the corporate debtor at the time of or
       any time following the commission of the offence. 17.8.
       Notwithstanding this, those persons who were responsible to the
       corporate debtor for the conduct of its business at the time of the
 D     commission of such offence, should continue to be liable for such
       an offence, vicariously or otherwise, regardless of the fact that
       the corporate debtor’s liability has ceased.
       Actions against the Property of the Corporate Debtor
       17.9. The Committee also noted that in furtherance of a criminal
 E     investigation and prosecution, the property of a company, which
       continues to exist after the resolution or liquidation of a corporate
       debtor, may have been liable to be attached, seized or confiscated.
       For instance, the property of a corporate debtor may have been
       at risk of attachment, seizure or confiscation where there was
 F     any suspicion that such property was derived out of proceeds of
       crime in an offence of money laundering. It was felt that taking
       actions against such property, after it is acquired by a resolution
       applicant, or a bidder in liquidation, could be contrary to the interest
       of value maximisation of the corporate debtor’s assets, by
       substantially reducing the chances of finding a willing resolution
 G     applicant or bidder in liquidation, or lowering the price of bids, as
       discussed above.
       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,
 H     should be protected from such enforcement action, and the new
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1091
                 [K. M. JOSEPH, J.]

      Section discussed in paragraph 17.7 should provide for the same.         A
      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.
                                                                               B
      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           C
      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 offence along with the corporate debtor.
      Cooperation in Investigation
                                                                               D
      17.12. While the Committee felt that the corporate debtor and
      bona fide purchasers of the corporate debtor or its property should
      not be held liable for offences committed prior to the
      commencement of insolvency, the Committee agreed that the
      corporate debtor and any person who may be required to provide
      assistance under the applicable law should continue to provide           E
      assistance and cooperation to the authorities investigating an
      offence committed prior to the commencement of the CIRP.
      Consequently, the Committee recommended the new Section
      should provide for such continued cooperation and assistance.”
      The Additional Solicitor General also places reliance on the Sixth       F
Report of the Standing Committee of Lok Sabha made in March, 2020.
The relevant portion according to the learned ASG are as follows:
      “
      3.8    “The stakeholders on the above clause furnished the
                                                                               G
             following suggestion:-
             “Though the Bill gives immunity to the corporate debtor
             (company as a legal entity) from prior offences, the
             individuals responsible for committing such offences on
             behalf of the debtor will still be held liable. The question is
                                                                               H
1092      SUPREME COURT REPORTS                         [2021] 14 S.C.R.


 A           whether the debtor should be absolved of all kinds of prior
             offences with such a blanket immunity.”
       3.9   The Secretary, Ministry of Corporate Affairs during the
             sitting held on 15th January, 2020 remarked:-
             “If the bidder, who is coming and participating under the
 B           court supervised competitive process, does not get security
             and is not indemnified, there may be a problem.”
       3.10 Further, the Ministry furnished the following comment on
            the above suggestion:

 C           “…this provision would only apply where the CIRP
             culminates in a change in control to a 75 completely
             unconnected resolution applicant. As such, a resolution
             applicant has nothing to do with the commission of any pre-
             CIRP offence whatsoever, and the corporate debtor is now
             fundamentally not the same entity as the one that committed
 D           the crime.”
       3.11 The Committee are in agreement with the intent of this
            amendment to safeguard the position of the Resolution
            Applicant(s) by ring-fencing them from prosecution and
            liabilities under offences committed by erstwhile promoters
 E          etc. The Committee understand the need for treating the
            company or the Corporate Debtor as a cleansed entity for
            cases which result in 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
 F          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,
 G          which may not be as beneficial to the economy. The
            Committee believe that this ring-fencing 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.”
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                1093
                 [K. M. JOSEPH, J.]

      251. Apart from the fact that it is intended to give a clean break to   A
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 and liabilities for offences that        B
may have been committed prior to the commencement of the CIRP.
Further, ample safeguards have been incorporated in the said provision
to prevent any exploitation, namely:
      i. The immunity is attracted only when a resolution plan is approved
      by the Adjudicating Authority under section 31 and the resolution       C
      plan results in the change in management or control of the corporate
      debtor.
      ii. The immunity is granted only to the corporate debtor and its
      property, where such property is covered under the resolution
      plan approved by the Adjudicating Authority under section 31,           D
      from any liability or prosecution with regard to offences committed
      prior to the commencement of the corporate insolvency resolution
      process.
      iii. Any person who was a promoter or in the management or
      control of the corporate debtor or a related party or was in any        E
      manner incharge of, or responsible to the corporate debtor for the
      conduct of its business and who was directly or indirectly involved
      in the commission of such offence 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.                                                   F
      iv. Section 32A does not bar an action against the property of any
      person other than the corporate debtor against whom such an
      action may be taken under such law as may be applicable.
      v. Notwithstanding the immunity given under Section 32A, the
                                                                              G
      corporate debtor and any person, who may be required to provide
      assistance under such law as may be applicable to such corporate
      debtor or person, shall extend all assistance and co-operation to
      any authority investigating an offence committed prior to the
      commencement of the corporate insolvency resolution process.”
                                                                              H
1094               SUPREME COURT REPORTS                         [2021] 14 S.C.R.


 A             252. Section 32A has been divided into three parts consisting of
       sub-Sections (1) to (3). Under sub-Section (1), notwithstanding anything
       contained, either in the Code or in any other law, liability of a corporate
       debtor, for an offence committed prior to the commencement of the
       CIRP, shall cease. Further, the corporate debtor shall not be liable to be
       prosecuted for such an offence. Both, these immunities are subject to
 B
       the following conditions:
             i.    A Resolution Plan, in regard to the corporate debtor, must be
                   approved by the Adjudicating Authority under Section 31 of
                   the Code;
 C           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
 D                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
 E               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
 F               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 approved under Section 31 of the
                 Code and the filing of the report, would remove the protective
 G               umbrella or immunity erected by Section 32A in regard to an
                 offence committed by the corporate debtor before the
                 commencement of the CIRP. To make it even more clear, if
                 either of the conditions, namely abetting or conspiring followed
                 by the report, which have been mentioned as aforesaid, are
                 present, then, the liability of the corporate debtor, for an offence
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                    1095
                 [K. M. JOSEPH, J.]

            committed prior to the commencement of the CIRP, will remain          A
            unaffected.;
        253. The first proviso in sub-Section (1) declares that if there is
approval of a Resolution Plan under Section 31 and a prosecution has
been instituted during the CIRP against the corporate debtor, the corporate
debtor will stand discharged. This is, however, subject to the condition          B
that the requirements in sub-Section (1), which have been elaborated by
us, have been fulfilled. In other words, if under the approved Resolution
plan, there is a change in the management and control of the corporate
debtor, to a person, who is not a promoter, or in the management and
control of the corporate debtor, or a related party of the corporate debtor,
or the person who acquires control or management of the corporate                 C
debtor, has neither abetted nor conspired in the commission of the offence,
then, the prosecution, if it is instituted after the commencement of the
CIRP and during its pendency, will stand discharged against the corporate
debtor. Under the second proviso to sub-Section (1), however, the
designated partner in respect of the liability partnership or the Officer in      D
default, as defined under Section 2(60) of the Companies Act, 2013, or
every person, who was, in any manner, in-charge or responsible to the
corporate debtor for the conduct of its business, will continue to be liable
to be prosecuted and punished for the offence committed by the corporate
debtor. This is despite the extinguishment of the criminal liability of the
corporate debtor under sub-Section (1). Still further, every person, who          E
was associated with the corporate debtor in any manner, and, who was
directly or indirectly involved in the commission of such offence, in terms
of the Report submitted and Report filed by the Investigating Authority,
will continue to be liable to be prosecuted and punished for the offence
committed by the corporate debtor. Thus, the combined reading of the              F
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               G
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.
                                                                                  H
1096            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A            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
 B
       that a Resolution Plan must be approved by the Adjudicating Authority
       and, finally, the approved plan, must result in a change in control of the
       corporate debtor not to a person, who is already identified and described
       in sub-Section (1). In other words, the requirements for invoking the bar
       against proceeding against the property of the corporate debtor in relation
 C     to an offence committed before the commencement of the CIRP, are as
       follows:
             (i) There must be Resolution Plan, which is approved by the
                 Adjudication Authority under Section 31 of the Code;
             (ii) The approved Resolution Plan must result in the change in
 D                control of the corporate debtor to a person, who was not –
                  (a) a promoter; (b) in the management or control of the
                  corporate debtor or (c) a related party of the corporate debtor;
                  (d) a person with regard to whom the investigating authority,
                  had, on the basis of the material, reason to believe that he has
 E                abetted or conspired for the commission of the offence and
                  has submitted a Report or a complaint. If all these aforesaid
                  conditions are fulfilled then the Law Giver has provided that
                  no action can be taken against the property of the corporate
                  debtor in connection with the offence;

 F               The Explanation to sub-Section (2) has clarified that the words
                 “an action against the property of the corporate debtor in
                 relation to an offence”, would include the attachment, seizure,
                 retention or confiscation of such property under the law
                 applicable to the corporate debtor. Since the word “include” is
                 used under sub-clause (i) of the Explanation, the word “action”
 G               against the property of the corporate debtor is intended to have
                 the widest possible amplitude. There is a clear nexus with the
                 object of the Code. The other part of the clarification, under
                 the Explanation, is found in the second sub-clause of the
                 Explanation (ii). Under the second limb of the Explanation, the
 H               Law Giver has clearly articulated the point that as far as the
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   1097
                 [K. M. JOSEPH, J.]

          property of any person, other than the corporate debtor or any         A
          person who had acquired the property of the corporate debtor
          through the CIRP or liquidation process under the Code and
          who otherwise fulfil the requirement under Section 32A, action
          can be taken against the property of such other person. Thus,
          reading sub-Section (1) and sub-Section(2) together, two results
                                                                                 B
          emerge – (i) subject to the requirements embedded in sub-
          Section (1), the liability of the corporate, debtor for the offence
          committed 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   C
          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
                                                                                 D
          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        E
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 provisions of the Prevention of Money-Laundering Act,               F
2002 (for short, the PMLA) are pressed before us. It is contended that
the prohibition against proceeding against the property, affects the interest
of stakeholders like the petitioners who may be allottees or other
creditors. In short, it appears to be their contention that the provisions
cannot stand the scrutiny of the Court when tested on the anvil of Article       G
14 of the Constitution of India. The provision is projected as being
manifestly arbitrary. To screen valuable properties from being proceeded
against, result in the gravest prejudice to the home buyers and other
creditors. The stand of the Union of India is clear. The provision is born
out of experience. The Code was enacted in the year 2016. In the course
                                                                                 H
1098             SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A     of its working, the experience it has produced, is that, resolution applicants
       are reticent in putting up a Resolution Plan, and even if it is forthcoming,
       it is not fair to the interest of the corporate debtor and the other stake
       holders.
               257. We are of the clear view that no case whatsoever is made
 B     out to seek invalidation of Section 32A. The boundaries of this Court’s
       jurisdiction are clear. The wisdom of the legislation is not open to judicial
       review. Having regard to the object of the Code, the experience of the
       working of the code, the interests of all stakeholders including most
       importantly the imperative need to attract resolution applicants who would
       not shy away from offering reasonable and fair value as part of the
 C     resolution plan if the legislature thought that immunity be granted to the
       corporate debtor as also its property, it hardly furnishes a ground for this
       this Court to interfere. The provision is carefully thought out. It is not as
       if the wrongdoers are allowed to get away. They remain liable. The
       extinguishment of the criminal liability of the corporate debtor is
 D     apparently important to the new management to make a clean break
       with the past and start on a clean slate. We must also not overlook the
       principle that the impugned provision is part of an economic measure.
       The reverence courts justifiably hold such laws in cannot but be applicable
       in the instant case as well. The provision deals with reference to offences
       committed prior to the commencement of the CIRP. With the admission
 E     of the application the management of the corporate debtor passes into
       the hands of the Interim 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
 F     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
 G     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
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                   1099
                 [K. M. JOSEPH, J.]

bar from actions against the property. Significantly every person who            A
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 report submitted continues to be liable to be prosecuted and punished
for the offence committed by the corporate debtor. The corporate debtor
and its property in the context of the scheme of the code constitute a
                                                                                 B
distinct subject matter justifying the special treatment accorded to them.
Creation of a criminal offence as also abolishing criminal liability must
ordinarily be left to the judgement of the legislature. Erecting a bar against
action against the property of the corporate debtor when viewed in the
larger context of the objectives sought to be achieved at the forefront of
which is maximisation of the value of the assets which again is to be            C
achieved at the earliest point of time cannot become the subject of judicial
veto on the ground of violation of Article 14. We would be remiss if we
did not remind ourselves that attaining public welfare very often needs
delicate balancing of conflicting interests. As to what priority must be
accorded to which interest must remain a legislative value judgement
                                                                                 D
and if seemingly the legislature in its pursuit of the greater good appears
to jettison the interests of some it cannot unless it strikingly ill squares
with some constitutional mandate suffer invalidation.
        259. There is no basis at all to impugn the Section on the ground
that it violates Articles 19, 21 or 300A.
                                                                                 E
    VESTED RIGHT; RETROSPECTIVITY; THE 3 rd
PROVISO IN SECTION 7
       260. We will recapitulate the third proviso, at this juncture.
       “7(1)     xxx                xxx               xxx
                                                                                 F
       Explanation                  xxx               xxx
       xxx                 xxx               xxx                        xxx
             Provided also that where an application for initiating the
       corporate insolvency resolution process against a corporate debtor
       has been filed by a financial creditor referred to in the first and       G
       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,
                                                                                 H
1100             SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A            failing which the application shall be deemed to be withdrawn
              before its admission.”
                261. A perusal of the same, makes it clear that the third proviso is
       a one-time affair. It is intended only to deal with those applications, under
       Section 7, which were filed prior to 28.12.2019, when, by way of the
 B     impugned Ordinance, initially, the threshold 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,
 C     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,
 D     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
 E     that they would stand withdrawn.
               262. In this regard, several contentions are raised. It is pointed
       out by the learned Counsel for the petitioners, apart from the plea of
       discrimination, which is alleged against the first and second provisos,
       that the third proviso, makes a clear incursion into a vested right. The
 F     impugned third proviso is afflicted with the vice of manifest arbitrariness.
       It is contended that the petitioners, who had moved an application under
       the erstwhile regime, were legally entitled to make such an application,
       whether it is by a single allottee or jointly. This was a substantive right.
       Availing such substantive right, under a Statute, when the application
 G     stood instituted, they had the right to continue with the proceeding
       unimpaired and unhindered by the new threshold requirement, which
       cannot be made applicable in their cases. It is contended that when
       there is a repeal of a Statute, the existing rights are saved. In this case,
       there was an existing right with the petitioners to institute the application
       under Section 7 and, therefore, this right cannot be imperilled by enacting
 H
     MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1101
                  [K. M. JOSEPH, J.]

the amendment. It is pointed out that the statutory time limit to decide an     A
application, was fourteen days. This Court, in Pioneer (supra), also
stressed the importance of disposing matters, within the period, even
though, it may have laid down that the period is not inflexibly mandatory
and that it is directory. In the case of the petitioners, the applications
were pending for more than a year. Classifying the applications under
                                                                                B
the same head, is arbitrary and irrational. The petitioners have spent
substantial sums towards court fee, legal and other expenses, in addition
to considerable time. There is no provision to ameliorate their losses.
Withdrawals and fresh filing would derail the insolvency process. Our
attention is draw to the judgment of this Court in Hitendra Vishnu Thakur
and others v. State of Maharashtra and others71, wherein this Court laid        C
down that Statute, which affects substantive right, is presumed to be
prospective, unless made retrospective expressly or by necessary
intendment. Every litigant has a vested right in substantive matters but
no such right exists in procedural law. The law relating to right of action
and right of appeal, even though remedial, is substantive in nature. A
                                                                                D
procedural Statute should not, generally 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 another72.
The period of 30 days is far too short and that too, under an amendment,        E
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 73 , 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.
                                                                                F
Nutt74.
      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          G
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
71
   (1994) 4 SCC 602
72
   (2001) 8 SCC 397
73
   (2019) 11 SCC 633/ 2018 1 IBJ (JP) 649 SC
74
   (1894) 1 QB 725                                                              H
1102             SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A     SCC 206, (2019) SCCONLINE SC 1478. It is further contended that
       the mere right to take advantage of a statue is not a vested right. And in
       this regard out attention is drawn to following Judgments – (1961) Vol. 2
       All Eng. 721, (1980) 1 SCC 149; Lalji Raja and Sons (supra), (1985) 1
       SCC 436. The impugned third proviso is intended to protect the collective
       interest of others in a class of creditors. Before admission of an application,
 B
       there is no vested right. Therefore, it does not have retrospective
       application, in a manner that impairs vested right. This requirement would
       ensure that there is no needless multiplicity and no single allottee would
       be able to achieve admission and its consequences without having a
       certain minimum number of compatriots on board. Even vested right
 C     can be taken away by the Legislature [(1957 SCR 488].
               264. The first question, which we would have to answer, is whether
       the right under the unamended Section 7 was a vested right of the financial
       creditors or allottees covered by the provisos 1 and 2, respectively. This
       brings us squarely to the question as to what constitutes a vested right.
 D     Learned ASG contends that there is no vested right till the application is
       admitted. It is also contended that the right was only one to take advantage
       of a Statute. In Salmond on Jurisprudence, the following characteristics
       have been found indispensable to constitute a right:
              “41. The characteristics of a legal right
 E                   Every legal right has the five following characteristics: -
              (1) It is vested in a person who may be distinguished as the owner
              of the right, the subject of it, the person entitled, or the person of
              inherence.

 F            (2) It avails against a person, upon whom lies the correlative duty.
              He may be distinguished as the person bound, or as the subject of
              the duty, or as the person of incidence.
              (3) It obliges the person bound to an act or omission in favour of
              the person entitled. This may be termed the content of the right.
 G            (4) The act or omission relates to some thing (in the widest sense
              of that word), which may be termed the object or subject-matter
              of the right.
              (5) Every legal right has a title, that is to say, certain facts or
              event by reason of which the right has become vested in its owner.”
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                    1103
                 [K. M. JOSEPH, J.]

        265. Legal rights are, in a wider sense, of four distinct kinds.          A
They are rights, liberties, powers and immunities. 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.
                                                                                  B
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:
                                                                                  C
              “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 re-
       entry; 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;        D
       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 legally recognized interests-
       they are advantages conferred by the law-but they are rights of a          E
       different species from the two classes which we have already
       considered. …… My right to make a will corresponds to no duty
       in any one else. A mortgagee’s power of sale is not the correlative
       of any duty imposed upon the mortgagor;
                  xxx        xxx             xxx               xxx                F
              A power may be defined as ability conferred upon a person
       by law to alter, by his own will directed to that end, the rights,
       duties, liabilities or other legal relations, either of himself or of
       other persons. …”
                                                        (Emphasis supplied)       G
       267. It may be asked whether a right of action is a right or a
power. Is there a duty with anyone in the case of a right to an action?
We need not probe this further as a power is also a right in the wider
sense. The right to sue and right to appeal has been so recognized as we
will notice.                                                                      H
1104                 SUPREME COURT REPORTS                                  [2021] 14 S.C.R.


 A            268. As far as the distinct kind of legal rights are concerned, in
       the classification made by Salmond75 which counts nine distinct legal
       classifications of legal rights, we notice the following discussion of
       classification between vested and contingent rights. To quote:
                         “Vested and contingent rights. A right vests when all the
 B               facts have occurred which must by law occur in order for the
                 person in question to have the right. A right is contingent when
                 some but not all of the vestive facts, as they are termed, have
                 occurred. A grant of land to A in fee simple will give A a vested
                 right of ownership. A grant to A for life and then to B in fee simple
                 if he survives A, gives B a contingent right. It is contingent because
 C               some of the vestive facts have not yet taken place, and indeed
                 may neve do so: B may not survive A. if he does, his formerly
                 contingent right now becomes vested. A contingent right then is a
                 right that is incomplete.
                        A contingent right is different, however from a mere hope
 D               of spes. If A leaves B a legacy in his will, B has no right to this
                 during A’s lifetime. He has no more than a hope that he will obtain
                 a legacy; he certainly does not have an incomplete right, since it is
                 open to A at any time to alter his will.”
              269. In Garikapati Veeraya (supra), the suit was filed on
 E     22.04.1949. The High Court decreed the suit in an appeal by the plaintiff
       on 04.03.1955. The petitioner before this Court contended that since the
       valuation of the suit was more than Rs. 10,000, 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
 F     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.
 G               “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.
 H     75
            See “Salmond on Jurisprudence, 12 th Edition, P J Fitzgerald”
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                      1105
                    [K. M. JOSEPH, J.]

          (iii) The institution of the suit carries with it the implication that all   A
          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 actually                   B
          exercised when the adverse judgment is pronounced such right is
          to be governed by the law prevailing at the date of the institution
          of the suit or proceeding and not by the law that prevails at the
          date of its decision or at the date of the filing of the appeal.
          (v) This vested right of appeal can be taken away only by a                  C
          subsequent enactment, if it so provides expressly or by necessary
          intendment and not otherwise.
                                                            (Emphasis supplied)
       271. It is clear that the institution of a suit leads to the inference
that the right of appeal is preserved. There is a vested right of appeal.              D
The vested right of appeal accrues to the litigant and exists from the day
of the institution of the lis (suit). Therefore, while the remedy of an
appeal may be provided under the statute that right becomes a vested
right only from the point of time that the suit is filed either by the appellant
or the opposite party. All of this undoubtedly is subject to a subsequent              E
enactment not interfering with the right of an appeal.
       272. In Lalji Raja and Sons v. Hansraj Nathuram76, this court
inter alia held as follows:
                 “16. That a provision to preserve the right accrued under a
          repealed Act “was not intended to preserve the abstract rights               F
          conferred by the repealed Act.... It only applies to specific rights
          given to an individual upon happening of one or the other of the
          events specified in statute see” — Lord Atkin’s observations
          in Hamilton Cell v. White. [(1922) 2 KB 422] The mere right,
          existing at the date of spealing statute, to take advantage of
                                                                                       G
          provisions of the statute repealed is not a “right accrued” within
          the meaning of the usual saving clause — see Abbot v. Minister
          for Lands [(1895) AC 425] and G. Ogden Industries Pvt.
          Ltd. v. Lucas. [(1969) 1 All ER 121]”

276
      (1971) 1 SCC 721                                                                 H
1106               SUPREME COURT REPORTS                        [2021] 14 S.C.R.


 A            273. It is apposite to notice the context in which the said
       observations were made. There was an ex parte decree passed by a
       Court in West-Bengal in 1949. It was transferred to a Court (Morena) in
       Old Madhya Bharat State. The Execution Petition was dismissed on the
       ground that it was an ex parte Decree by a foreign court. This Court
       noted that Sections 38 and 39 of the Code of Civil Procedure did not
 B
       apply on the day in question, and therefore, the transfer orders was
       without jurisdiction. On 1st April, 1951 the CPC was extended to former
       state of Madhya Bharat. The decree 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
 C     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
 D
       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
 E     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 the whole of India. It is, therefore,
       in the context of a repeal and as to whether right to take advantage of
       the repealed law constituted a right accrued under the usual saving clause
 F
       that the observations made in paragraph 16 are to be understood.
              274. This Court made reference to a few decisions (paragraph-
       16) including Abbott and Minister of Lands77. We think, it is appropriate
       that we advert to the issues which were involved in the said cases.

 G           275. In Abbott (supra), the Privy Council had to deal with the
       following factual matrix, in short:
              The appellant effected a conditional purchase under Section 22
       of the Crown Lands Alienation Act, 1861, adjoining the land which he
       had acquired in fee simple. He made certain applications, seeking to
       77
 H          (1895) AC 425
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1107
                    [K. M. JOSEPH, J.]

make further additional conditional purchases of certain adjoining lands          A
as also seeking a lease. The questions which arose for the opinion of the
court were three in number. Firstly, the question arose whether the
conditional purchase which the appellant had made, constituted him the
holder of an original conditional purchase, under Section 42 of the Act of
1884. Still further, the question fell for decision as to whether Section 22
                                                                                  B
of the Crown Lands Act of 1884 reserved the right for the appellant the
right to purchase additional conditional purchases of adjoining crown
lands, which were allowed to the full area of 648 acres allowed by the
repealed Act. Thirdly, the question arose, as to whether supposing him
to be entitled to the additional conditional purchase, was he entitled to
the conditional lease which he had applied for? Section 22 of the 1861            C
Act was repealed and in the later Act, there was no corresponding
provision to Section 22 but there was a saving proviso which enabled the
appellant, according to him, to make an additional conditional purchase,
as if Section 22 remained in force. The saving clause saved all the accrued
rights and liabilities. Noticing the change in the condition of residence,
                                                                                  D
which had been earlier imposed, being done away with, the Court went
on to hold as follows:
                “It has been very common in the case of repealing statues
          to save all rights accrued. If it were held that the effect of this
          was to leave it open to any one who could have taken advantage
          of them, the result would be very far-reaching.                         E
                It may be, as Windeyer J. observes, that the power to 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.
                                                                                  F
                 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          G
          availing himself of that right, cannot properly be deemed a “right
          accrued” within the meaning of the enactment.”
      276. In Hamilton Gell v. White78, upon a quit notice given by the
landlord, the tenant sought to avail the benefit of Section 11 of the
78
     (1922) 2 K.B. 422                                                            H
1108            SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A     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 months, as limited
       by the repealed Section. The matter went to an Arbitrator. The Arbitrator
 B
       stated a special case. He raised two questions. Firstly, whether the tenant
       was entitled to claim compensation under the repealing Act of 1920 and,
       secondly, whether he could claim under the repealed Act notwithstanding
       the repeal. The first question was answered against the tenant, with
       which, the Court of Appeal agreed. As regards the second question, the
 C     Court was of the view that the tenant was entitled to succeed. The
       following is the reasoning, in short:
                    “SCRUTTON L.J. … But it is not suggested by the
             appellant that his right to compensation was acquired by his giving
             notice of intention to claim it, what gave him the right was the fact
 D           of the landlord having given a notice to quit in view of a sale. The
             conditions imposed by s. 11 were conditions, not of the acquisition
             of the right, but of its enforcement. Sect. 38 says that repeal of an
             Act shall not (c) “affect any right …. acquired …. under any
             enactment so repealed,” or (e) “affect any investigation, legal
             proceeding, or remedy in respect of any such right.” As soon as
 E           the tenant had given notice of his intention to claim compensation
             under s. 11 he was entitled to have that claim investigated by an
             arbitrator. In the course of that arbitration he would no doubt have
             to prove that that right in fact existed, that is to say that the notice
             to quit was given in view of a sale, and he would also have to
 F           prove the measure of his loss. But he was entitled to have that
             investigation, which had been begun, continue, for s. 38 expressly
             provides that the investigation shall not be affected by the repeal.
             I should like to add that the arbitrator would be well advised to
             make his award complete. If he had continued his investigation
             and said: If it is found that the tenant had a right I assess the
 G           compensation at so much under the Act of 1908 and so much
             under the Act of 1920 we should have been able to give our final
             judgment.”
                                                              (Emphasis supplied)

 H
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                               1109
                    [K. M. JOSEPH, J.]

       277. The decision thus turned on the point of time at which the          A
right arose.
      278. Atkin LJ., as he then was, agreed that the Appeal should be
allowed and went on to hold as follows:
                 “ATKIN L.J. …. It is obvious that that provision was not
          intended to preserve the abstract rights conferred by the repealed    B
          Act, such for instance as the right of compensation 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.     C
          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. …”
                                                                                D
          279. In Odgen Industries Pty. Ltd. v. Haider Doreen
       79
Lucas ,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           E
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 the employee’s earnings. The
amount of compensation for the dependents would have been calculated
under the Workers Compensation Act, 1958. The Act, however, was                 F
amended by the Workers Compensation (Amendment) Act, 1965. The
Amendment Act, came into force for 01.07.1965. The Amendment Act
increased the benefits payable to the dependents. The High Court of
Australia dismissed the appeal of the employer and affirmed the award
of the Workman’s compensation board paying the increased
compensation under the Amending Act. The Privy Council was called               G
upon to decide two questions. Firstly, the question was whether, as the
Amendment Act came into operation after the original injury to the
employee, his dependents were entitled to the increased rates prescribed
by the amending Act. Secondly, did the deceased, after the 30.06.1965,
79
     3 WLR 75 / (1969) (1) All England Reports 121
                                                                                H
1110            SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A     suffer a further injury or aggravation, which gave him new title for the
       purpose of the Amendment Act. The Court, went on to hold as inter-alia
       follows:
                      “Under the Act of 1958 the widow did not have to prove
              that she was in fact dependent upon the earnings of her husband
 B            though under the Amendment Act she has to do so. Nevertheless,
              it is quite clear as a matter of law that no single person can say
              under either Act the moment before the death “I shall be a
              dependant at the death if I so long live.” First, it must be
              established that the death was caused or contributed to by the
              accident, secondly that the widow will be the deceased’s widow
 C            at the date of death and not dead or married to some other man,
              and the children must show that they are under sixteen. None of
              these things can be ascertained (let alone proved) until after the
              moment of death of the worker.
                     In their Lordships’ opinion in section 7 (2)(c) the rights,
 D           privileges and obligations acquired or accrued on the one side and
             the liabilities incurred on the other side referred to in that paragraph
             are mutual and correlative.
                     … The object and intent of the Interpretation Act is to
             preserve rights and privileges acquired or accrued on the one side
 E           and the corresponding obligation or liability incurred by the person
             bound to observe or perform those rights or privileges on the other
             side; so that when a subsequent Act repeals or amends those
             rights, privileges and liabilities for the future that would not affect
             the pre-existing mutual rights and liabilities of the parties. …. But
             in the view that their Lordships take there is for the purposes of
 F           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
 G           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

 H
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                1111
                    [K. M. JOSEPH, J.]

         in their very careful judgments with which their Lordships agree.       A
         …”
                                                      (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            B
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 Trust80. The
facts in the said case are to be noticed in some detail for it may have
bearing on the questions to be answered by us. The Respondent landlord           C
purported to terminate the tenancy in relation to a building by a notice
dated 12.02.1964 on the ground inter alia of subletting. It must be noticed
that at the time the subletting took place the building was covered by
Saurashtra Rent Control Act, 1951. The said Act provided that the landlord
shall be entitled to recover possession in the case of subletting by the
                                                                                 D
tenant. It is while this Act was in force that the tenant sublet the premises.
However, the Saurashtra Act came to be repealed by the Bombay Rents,
Hotels and Lodging Houses Rates Control Act, 1947 on 31.12.1963.
Section 51 of the Bombay Act, inter alia, contained the saving clause
that the repeal would not affect any right, privilege, obligation, liability
accrued or incurred under any law so repealed. The notice, terminating           E
tenancy was issued on 12.02.1964 after the repeal of the ‘Saurashtra
Act’. The High court took the view that the landlord had an accrued
right under saving clause of the Bombay Act. The suit was brought after
the repeal.
         282. This Court adopted the following reasoning:                        F
               If the notice under the Transfer of Property was necessary
         to determine the tenancy on the ground of subletting, then the
         High Court would not be correct that the respondent landlord had
         an accrued right before issue of notice. Thereafter, the Court
         went on to consider ‘Hamilton’ (supra) and ‘Abbott’ (supra) inter       G
         alia.
               Thereafter, the Court went on to consider the argument as
         to whether the landlord had a privilege under the saving clause.

80
     (1974) 2 SCC 484                                                            H
1112      SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A            Thereafter, what is relevant is that this Court went on to
       find that the High Court was not right in proceeding on the basis
       of that notice was necessary under Transfer of Property Act to
       terminate on the ground that the appellant had sublet the premises.
       283. It is apposite to notice the reasoning in paragraph-16:
 B     “16. Under the Transfer of Property Act, mere sub-letting, by a
       tenant, unless the contract of tenancy so provides, is no ground
       for terminating the tenancy. Under that Act a landlord cannot
       terminate a tenancy on the ground that the tenant had sub-let the
       premises unless the contract of tenancy prohibits him from doing
 C     so. The respondent-landlord therefore could not have issued a
       notice 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
 D     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.
 E     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 landlord 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-
 F     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 on the basis that the tenant had sub-let the premises;
       and, that is because, Section 15 of that Act unconditionally
       prohibited a tenant from sub-letting. The Saurashtra Act nowhere
 G     insists that the landlord should issue a notice and terminate the
       tenancy before instituting a suit for recovery of possession under
       Section 13(1)(e) on the ground that the tenant had sub-let the
       premises. The position, therefore, was that the landlord was entitled
       to recover possession of the premises under Section 13(1) of the
       Saurashtra Act on the ground that the tenant sublet the premises.
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1113
                 [K. M. JOSEPH, J.]

       It would follow that a right accrued to the landlord to recover          A
       possession under Section 13(1) of the Saurashtra Act when the
       tenant sub-let the premises during the currency of that Act and
       the right survived the repeal of that Act under proviso (2) to Section
       51 of the Bombay Act and, therefore, the suit for recovery of
       possession of the premises under Section 13(1) read with clause
                                                                                B
       (e) of the Saurashtra Act after the repeal of that Act on the basis
       of the sub-letting during the currency of the Saurashtra Act was
       maintainable. In this view, we think that the judgment of the High
       Court must be upheld and we do so.”
       284. Thus, what is relevant, this Court went on to find under the
Saurashtra Act, there was no requirement of any notice to terminate the         C
tenancy. It was found that the landlord was entitled to recover the
possession under the said Act, if there was subletting. In other words,
the Court went on to hold that a right accrued to the landlord under the
Saurashtra Act upon the appellant subletting the premises. It was during
the pendency of the Saurashtra Act. This right survived the repeal of the       D
Saurashtra Act and thus the suit under the Saurashtra Act was
maintainable.
       285. Apparently, the Court drew support from the principle in
Hamilton (supra). We have already noticed the facts of Hamilton (supra).
The question in short would appear to be as to when the right comes into
existence? If, the right comes into existence then the remedy can be            E
pursued by the party entitled.
       286. This again would necessarily depend upon the terms of the
repealing enactments as also the terms of the saving clause. In the
absence of a saving clause, no doubt a party can also fall back on the
Section 6 of the General Clauses Act, 1897. This is again subject to            F
what is held about the scope of a saving 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           G
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

                                                                                H
1114                SUPREME COURT REPORTS                         [2021] 14 S.C.R.


 A     decision has been relied upon recently in a judgement by one of us (Justice
       R.F. Nariman) in Bombay Stock Exchange v. V.S. Kandalgaonkar81.
              288. In New India Assurance Co. Ltd. v. Shanti Misra82, 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
 B     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 insurer. While deciding in favour of the
       respondents and holding that the application was maintainable before
       the Tribunal, this court, inter-alia, held as follows:
 C
                 “… If action, before Civil Court was alive where no suit had been
                 filed “In such cases the vested right of action was not meant to be
                 extinguished. The remedy of either application under Section 110A
                 or a civil suit must be available; surely not both.”
                 289. Thereafter, it was held, inter-alia, as follows:
 D
                 “5. On the plain language of Sections 110-A and 110-F there should
                 be no difficulty in taking the view that the change in law was
                 merely a change of forum i.e. a change of adjectival or procedural
                 law and not of substantive law. It is a well-established proposition
                 that such a change of law operates retrospectively and the person
 E               has to go to the new forum even if his cause of action or right of
                 action accrued prior to the change of forum. He will have a vested
                 right of action but not a vested right of forum. If by express words
                 the new forum is made available only to causes of action arising
                 after the creation of the forum, then the retrospective operation
 F               of the law is taken away. Otherwise the general rule is to make it
                 retrospective. The expressions “arising out of an accident”
                 occurring in sub-section (1) and “over the area in which the
                 accident occurred”, mentioned in sub-section (2) clearly show
                 that the change of forum was meant to be operative retrospectively
                 irrespective of the fact as to when the accident occurred. To that
 G               extent there was no difficulty in giving the answer in a simple
                 way.”
                                                               (Emphasis supplied)
       81
            (2015) 2 SCC 1
       82
 H          (1975) 2 SCC 840
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1115
                 [K. M. JOSEPH, J.]

       290. We may also notice that in regard to the question as to whether     A
a new law of Limitation could extinguish vested right of action, it was
held, inter-alia, as follows:
      “7. (2) Even though by and large the law of limitation has been
      held to be a procedural law, there are exceptions to this principle.
      Generally the law of limitation which is in vogue on the date of the      B
      commencement of the action governs it. But there are certain
      exceptions to this principle. The new law of limitation providing a
      longer period cannot revive a dead remedy. Nor can it suddenly
      extinguish a vested right of action by providing for a shorter period
      of limitation.”
                                                                                C
      It is important to notice paragraph-9:
      “9. In Gopeshwar Pal v. Jiban Chandra Chandra [ILR 51 Cal
      1125] Jenkins, 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          D
      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,          E
      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          F
      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           G
      came into force. We are conscious of the distinction which was
      sought to be made in the application of these principles. It was
      said that the right could not be destroyed but recourse to suit
      would be available under the old law of limitation. We, however,
      think that giving retrospective effect to the change of law in relation
                                                                                H
1116             SUPREME COURT REPORTS                         [2021] 14 S.C.R.


 A            to the forum, in the context of the object of the change, is
              imperative. That being so the principles aforesaid for overcoming
              the bar of limitation will be applicable.”
             291. This judgment has been followed in Vinod Gurudas Raikar
       v. National Insurance Co. Ltd. & ors83 and also in Union of India v.
 B     Harnam Singh84 and recently also by this Court in B.K. Educational
       Services (supra).
              292. In V. Dhanapal Chettiar v. Yesodai Ammal85, a Bench of
       seven learned Judges while taking the view that a notice to quit under
       section 106 of the TP Act 1882 was not necessary for an Eviction
 C     Petition under any of the State Rent Acts observed in regard to Isha
       Valimohamed (supra) that the view taken in the said case that the landlord
       could not have issued notice to determine the tenancy on the ground of
       subletting under any of the provisions of Transfer of Property Act was
       not correct as a notice issued under Section 111 (h) does not require any
       ground to be made out for termination of the tenancy. It was further
 D     held that the view taken in Isha Valimohamed (supra), in this regard,
       would be taken only under Section 111 (g).
              293. In D. C. Bhatia v. Union of India86, the Delhi Rent Control
       Act came to be amended with effect from 01.12.1988, by which
       amendment, the Act was not to apply to any premises, the monthly rent
 E     of which exceeded Rs.3500/-. Dealing with the tenants’ contention that
       he had a vested right this Court took the view that if the tenant is sought
       to be evicted before the amendment, they could have taken advantage
       of the provisions of the Act to resist such eviction. But this was nothing
       more than the right to take advantage of the law and the tenant had
 F     statutory protection only as long as the law remains in force. We may
       only notice paragraph-53. It read as under:
              “53. The provisions of a repealed statute cannot be relied upon
              after it has been repealed. But, what has been acquired under the
              Repealed Act cannot be disturbed. But, if any new or further step
 G            is needed to be taken under the Act, that cannot be taken even
              after the Act is repealed.”
                                                            (Emphasis supplied)
       83
          (1991) 4 SCC 333
       84
          (1993) 2 SCC 162
       85
          (1979) 4 SCC 214
 H     86
          (1995) 1 SCC 104
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                1117
                    [K. M. JOSEPH, J.]

       294. In Mst. Bibi Sayeeda & Ors. v. State of Bihar and Others87,          A
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
                                                                                 B
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        C
             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             D
             anticipated continuance of existing laws, does not constitute
             vested rights.
         In Webster’s Comprehensive Dictionary, (International Edn.) at
         p. 1397 ‘vested’ is defined as:
             “[L]aw held by a tenure subject to no contingency; complete;        E
             established by law as a permanent right; vested interests.”
       295. Though this is a case which dealt with vested right qua
property there is indeed authority for the proposition that the concept of
vested right is not confined to a property right. In this regard we may
profitably refer to the special bench of judgement of High Court of              F
Calcutta reported in Gopeshur Pal v. Jiban Chandra Chandra and others88,
referred to by this Court in AIR 1976 SC 237 (supra) when it was, inter
alia, held:
         3.‘‘On the contrary, the essential conditions of the two cases are
         so distinct that in our opinion it cannot be said that the earlier      G
         decision is, in relation to the circumstances of this case, affected
         by the judgment of the Privy Council. It is an established axiom of
         construction that though procedure may be regulated by the Act
87
     (1996) 9 SCC 516/AIR 1996 SC 1936
88
     AIR 1914 Calcutta 806                                                       H
1118                SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A              for the time being in force, still, the intention to take away a vested
                right without compensation or any saving, is not to be imputed to
                the Legislature, unless it be expressed in unequivocal terms [cf. The
                Commissioner of Public Works v. Logan [L.R. 1903 A.C. 355.]].
                That this view is not limited to those cases where rights of property
                in the limited sense are involved, is shown by the Colonial Sugar
 B
                Refining Co. v. Irving [L.R. 1905 A.C. 369.], where it was held
                that an Act ought not to be so construed as to deprive a suitor of
                an appeal in a pending action, which belonged to him as of right at
                the date of the passing of the Act. Equally is a right of suit a
                vested right, and in Jackson v. Woolley [8 Ell. and Bl. 784 (1859).],
 C              the Court of Exchequer Chamber declined, in the absence of
                something putting the matter beyond doubt, to put on an Act a
                construction that would deprive any person of a right of action
                vested in him at the time of the passing of the Act.
                4. William, J. said: “It would require words of no ordinary strength
 D              in the statute to induce us to say that it takes away such a vested
                right.”
              296. In M.S. Shivananda v. Karnataka SRTC89, under an ordinance,
       employees of the erstwhile State Carriage Operators were to be absorbed
       by State Road Transport corporation subject to certain conditions. The
 E     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:

 F              “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
 G              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
       89
 H          (1980) 1 SCC 149
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1119
                 [K. M. JOSEPH, J.]

      legal proceeding is necessary. The right is then unaffected and           A
      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 which is to
      decide whether some right should be or should not be given. On a
      repeal, the former is preserved by the Interpretation Act. The
                                                                                B
      latter is not.”(emphasis supplied)
      It must be mentioned that the object of Section 31(2)(i) is to
      preserve only the things done and action taken under the repealed
      Ordinance, and not the rights and privileges acquired and accrued
      on the one side, and the corresponding obligation or liability incurred
      on the other side, so that if no right acquired under the repealed        C
      Ordinance was preserved, there is no question of any liability being
      enforced.
      16. Further, it is significant to notice that the saving clause that
      we are considering in Section 31(2)(i) of the Act, saved things
      done while the Ordinance was in force; it does not purport to             D
      preserve a right acquired under the repealed Ordinance. It is unlike
      the usual saving clauses which preserve unaffected by the repeal,
      not only things done under the repealed enactment but also the
      rights acquired thereunder. It is also clear that even Section 6 of
      the General clauses Act, the applicability of which is excluded, is       E
      not intended to preserve the abstract rights conferred by the
      repealed Ordinance. It only applies to specific rights given to an
      individual upon the happening of one or other of the events specified
      in the statute.”
        297. In Kanaya Ram (supra) the predecessor in interest of the           F
appellants had applied for purchase of the tenancy right under the Punjab
Security of Land Tenures Act 1953. During the pendency of the
proceedings before the Assistant Collector, certain persons were
impleaded as respondents on the basis that they were the legal heirs of
the landlord. Thereafter, their names were struck off as unnecessary.
On the same day, the application of the predecessor in interest of the          G
appellants was allowed. Thereafter, there was certain oral sales by the
original land owner. The contention which apparently was taken by the
legal heirs of landlord upon his death was that the original landlord died
during the pendency of the proceedings, and there was change in the
status of the land owners against whom the application under Section            H
1120                SUPREME COURT REPORTS                      [2021] 14 S.C.R.


 A     18(1) of the Act was made as on that date as his legal heirs became
       small land owners. The Financial Commissioner before whom the matter
       reached, however, was of the view that the application made by the
       appellants predecessor 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
 B
       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
 C     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
 D
       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 did not pass any title. This Court, apart from noticing
       the fact that as the special leave had been refused against the main
 E     judgment the appeal was no longer tenable it, held that the original land
       owner was not impleaded by the predecessor in interest of the appellants
       in his application even though respondents 3 to 14 were impleaded and
       they were subsequently deleted on appellant’s objection that they were
       not necessary parties. This Court went on to distinguish the judgment in
       Rameshwar and Others v. Jot Ram and Another90 as it was a case
 F
       where the tenants after making the requisite application had made the
       necessary deposit of the first instalment of the purchase price. It was in
       such circumstances noted that the tenants had acquired a vested right to
       purchase the land and the case had gone beyond the stage of mere
       application under section 18(1). This Court noted that the observation of
 G     the Court that the rights of the parties are determined “by the facts as
       they exist on the date of the action” must be held in the context in which
       they were made. What is relevant is the following statement is the
       judgment in Kanaya Ram (supra):

       90
 H          (1976) 1 SCC 194
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                    1121
                    [K. M. JOSEPH, J.]

         “10. ……In the present case, Harditta Ram, the predecessor-in-               A
         title of the appellants, when he made the application for purchase
         under Section 18(1) of the Act, had a mere “hope or expectation
         of, or liberty to apply for, acquiring a right” and not a “right acquired
         or accrued” under Section 18(1). It has been held ever since the
         leading case of Abbott v. Minister for Lands [1895 AC 425 : 64
                                                                                     B
         LJPC 167 : 72 LT 402 (PC)] [1895 AC 425 : 64 LJPC 167 : 72 LT
         402 (PC)] that a mere right to take advantage of the provisions of
         an Act is not an accrued right. Abbott case [1895 AC 425: 64
         LJPC 167 : 72 LT 402 (PC)] has been followed by this Court in
         a number of decisions. In such a situation, the Court is bound to
         take into consideration the subsequent events and mould the relief          C
         accordingly. The decision in Rameshwar case [(1976) 1 SCC 194
         : AIR 1976 SC 49 : (1976) 1 SCR 847] clearly turned on the legal
         fiction contained in Section 18 (4) (b) of the Act and the death of
         the large landholder Teja during the pendency of the appeal before
         the Financial Commissioner on which inheritance opened and his
                                                                                     D
         legal heirs became small landholders, could not impair the vested
         rights acquired by the tenants by virtue of the 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)
                                                                                     E
      298. While on the ambit of the saving clause we may notice
Bansidhar v. State of Rajasthan91 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          F
         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
                                                                                     G
         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


91
     (1989) 2 SCC 557
                                                                                     H
1122             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A            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 scheme of the 1973 Act
              does not manifest an intention contrary to, and inconsistent with,
              the saving of the repealed provisions of Section 5(6-A) and Chapter
              III-B of “1955 Act” so far as pending cases are concerned and
 B
              that the rights accrued and liabilities incurred under the old law
              are not effaced. Appellant’s contention (a) is, in our opinion,
              insubstantial.
              Re Contention (b)”
               299. Petitioners also rely on the judgment of this Court Hitendra
 C     Vishnu Thakur (supra) and Ambalal Sarabhai Enterprises Ltd. (supra).
              300. In Hitendra Vishnu Thakur (supra), the case arose under
       the Terrorist and Disruptive Activities (Prevention) Act, 1987 (TADA
       Act). Section 20(4) of TADA Act, made Section 167 of the CrPC
       applicable with certain modifications. Clause (b) provided for a longer
 D     period, as the period for which remand could be ordered. By an
       amendment, w.e.f. 22.05.1993, the period was reduced. Thereafter,
       however, another clause, viz., clause (bb) was added, which contained a
       proviso. The proviso mandated that if it was not possible to complete
       the investigation within a period of 180 days on the Report of the Public
       Prosecutor, indicating the progress of the investigation and the specific
 E     reasons for detention beyond 180 days, the designated court should extend
       the period upto one year. It was in the context of this provision that this
       Court, after noting that the amendment was retrospective and apply to
       pending cases, in which, the investigation was not complete on the date
       of the Amending Act and the challan had not been filed in the Court, the
 F     Court culled-out the following principles:
              “26.        xxx              xxx              xxx                xxx
                      (i) A statute which affects substantive rights is presumed
              to be prospective in operation unless made retrospective, either
              expressly or by necessary intendment, whereas a statute which
              merely affects procedure, unless such a construction is textually
 G
              impossible, is presumed to be retrospective in its application, should
              not be given an extended meaning and should be strictly confined
              to its clearly defined limits.
                      (ii) Law relating to forum and limitation is procedural in
              nature, whereas law relating to right of action and right of appeal
 H            even though remedial is substantive in nature.
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                              1123
                    [K. M. JOSEPH, J.]

              (iii) Every litigant has a vested right in substantive law but   A
       no such right exists in procedural law.
              (iv) A procedural statute should not 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.                                      B
              (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          C
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                D
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 Rs.3,500/- was brought into
force. The question arose, inter alia, as to whether the ground of illegal     E
subletting was a vested right. It also fell for decision as to whether there
was merit in the contention of the appellant tenant that after the
amendment, the civil court alone had jurisdiction. It was the contention
of the tenant that he had no vested right and the amendment was not
retrospective in operation, and therefore, the civil court alone would have
jurisdiction. The landlord contended that in view of Section 6 of the          F
General Clauses Act, 1897, the pending proceedings before the Rent
Controller should at any rate continue even if his contention based on
vested right was repelled. This Court went on to hold that the tenant had
no vested right by relying on the judgment of this court in Mohinder
Kumar and others v. State of Haryana and another 92 and also in                G
D. C. Bhatia and others v. Union of India and another 93 (the latter
of which decisions is relied upon by the respondent-Union for the
proposition that a right to take advantage of an enactment, would not
92
     (1985) 4 SCC 221
93
     (1995) 1 SCC 104                                                          H
1124             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     create a vested right). Thereafter, this Court went on to hold that the
       landlord also did not have a vested right for seeking on the ground of
       eviction under Section 14 of the Delhi Rent Control Act. It was found
       that Section 14 was only a protective right for a tenant and the various
       clauses which constituted a proviso to the protection from eviction by a
       landlord could not be construed as a vested right in favour of the landlord.
 B
       Having so held, this Court went on to consider the effect of a repeal of
       Section 6 of the General Clauses Act. Therein, this Court went on to
       hold that the respondent-landlord had a right to continue the proceedings
       before the Rent Control Board under Section 6 of the General Clauses
       Act. It would be an accrued right in terms of Section 6. We need only
 C     notice paragraphs-26, 35 and 36 of Ambalal Sarabhai Enterprises Ltd.
       (supra):
             “26. As a general rule, in view of Section 6, the repeal of a statute,
             which is not retrospective in operation, does not prima facie affect
             the pending proceedings which may be continued as if the repealed
 D           enactment were still in force. In other words, such repeal does
             not affect the pending cases which would continue to be concluded
             as if the enactment has not been repealed. In fact when a lis
             commences, all rights and obligations of the parties get crystallised
             on that date. The mandate of Section 6 of the General Clauses
             Act is simply to leave the pending proceedings unaffected which
 E           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
 F           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
 G           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
 H
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1125
                    [K. M. JOSEPH, J.]

         “acquired” and “accrued”. In such cases pending proceedings is           A
         to be continued as if the statute has not been repealed.
                36. In view of the aforesaid legal principle emerging, we
         come to the conclusion that since proceeding for the eviction of
         the tenant was pending when the repealing Act came into
         operation, Section 6 of the General Clauses Act would be applicable      B
         in the present case, as it is the landlord’s accrued right in terms of
         Section 6. Clause (c) of Section 6 refers to “any right” which
         may not be limited as a vested right but is limited to be an accrued
         right. The words “any right accrued” in Section 6(c) are wide
         enough to include the landlord’s right to evict a tenant in case
         proceeding was pending when repeal came in. Thus a pending               C
         proceeding before the Rent Controller for the eviction of a tenant
         on the date when the repealing Act came into force would not be
         affected by the repealing statute and will be continued and
         concluded in accordance with the law as existed under the repealed
         statute.”                                                                D
        303. In Howrah Municipal Corporation and Others v. Ganges
Rope Co. Ltd. and Others94 the first respondent company had applied
for sanction for construction of its complex of seven floors. By order
dated 23.12.1993 the High Court directed sanction to be accorded for
the plan up to the 4th floor provided other requirements are complied             E
with. It was also observed that the company would be at liberty to seek
further sanction if it was permissible. Sanction was given and construction
completed as regards the four floors. Relying on the High Court order,
sanction was sought for the remaining floors. The High Court passed an
order expressing the expectation that the order would be passed within
a period of four weeks relying upon the earlier order. There was                  F
correspondence between the parties. While the matter was so pending,
the building rules were amended restricting the height of buildings, inter
alia. The height being restricted, the application for sanction of additional
three floors was rejected. The High Court took the view that the
unamended rules and regulations on the date of submission of the                  G
application seeking sanction for further construction would govern the
matter. This Court on a conspectus of the rules found that the rules did
not contemplate ‘deemed sanction’ or ‘deemed refusal’, and therefore,
without express sanction there could not be construction. The contention
94
     (2004) 1 SCC 663                                                             H
1126            SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A     however, was that the order of the High court fixing a period to decide
       its pending application be treated as creating 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
 B           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
 C           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”
 D           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 allotted by the Court for its
             consideration, it had a “legitimate” or “settled expectation” to obtain
 E           the sanction. In our considered opinion, such “settled expectation”,
             if any, did not create any vested right to obtain sanction. True it is,
             that the respondent Company which can have no control over the
             manner of processing of application for sanction by the Corporation
             cannot be blamed for delay but during pendency of its application
 F           for sanction, if the State Government, in exercise of its rule-making
             power, amended the Building Rules and imposed restrictions on
             the heights of buildings on G.T. Road and other wards, such “settled
             expectation” has been rendered impossible of fulfilment due to
             change in law. The claim based on the alleged “vested right” or
             “settled expectation” cannot be set up against statutory provisions
 G           which were brought into force by the State Government by
             amending the Building Rules and not by the Corporation against
             whom such “vested right” or “settled expectation” is being sought
             to be enforced. The “vested right” or “settled expectation” has
             been nullified not only by the Corporation but also by the State by
 H           amending the Building Rules. Besides this, such a “settled
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1127
                    [K. M. JOSEPH, J.]

          expectation” or the so-called “vested right” cannot be                   A
          countenanced against public interest and convenience which are
          sought to be served by amendment of the Building Rules and the
          resolution of the Corporation issued thereupon.”
        304. In Arcelormittal India Private Limited v. Satish Kumar
Gupta & Others95, a judgment rendered by one of us (R.F. Nariman,                  B
J.), this Court dealt with the very Code with which we are concerned. It
concerned the scope of Section 29A of the Code declaring ineligibility of
certain categories of persons to be resolution applicants. In this context,
this Court inter alia, while dealing with the scope of the Code as also
the principle of piercing of corporate veil, and after an exhaustive survey
of the Code and reiterating the principle that it is settled law that a statute    C
is designed to be workable, a question was posed whether a resolution
plan being turned down under Section 30(2) could be challenged.
Answering this question, the Court held as follows:
          “79. Given the timeline referred to above, and given the fact that
          a resolution applicant has no vested right that his resolution plan      D
          be considered, it is clear that no 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      E
          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         F
          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,    G
          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
95
     (2019) 2 SCC 1                                                                H
1128            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A           the adjudicating authority could be entertained as there is no vested
             right or fundamental right in the resolution applicant to have its
             resolution plan approved, and as no adjudication has yet taken
             place.
              305. In Swiss Ribbons (supra), while dealing with constitutional
 B     validity of Section 29A of the Code declaring certain persons not to be
       eligible as resolution applicants, after referring to the decision in
       Arcelormittal India Private Ltd. (supra), this Court held as follows:
             “97. It is settled law that a statute is not retrospective merely
             because it affects existing rights; nor is it retrospective merely
 C           because a part of the requisites for its action is drawn from a time
             antecedent to its passing [see State Bank’s Staff Union (Madras
             Circle) v. Union of India [State Bank’s Staff Union (Madras
             Circle) v. Union of India, (2005) 7 SCC 584 : 2005 SCC (L&S)
             994] (at para 21)]. In ArcelorMittal [ArcelorMittal (India) (P)
             Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1] , this Court has
 D           observed that a resolution applicant has no vested right for
             consideration or approval of its resolution plan as follows: (SCC
             p. 87, para 82)
             “82. Take the next stage under Section 30. A Resolution
             Professional has presented a resolution plan to the Committee of
 E           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,
 F           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 authority could be entertained as there is no vested
             right or fundamental right in the resolution applicant to have its
 G           resolution plan approved, and as no adjudication has yet taken
             place.”
             98. This being the case, it is clear that no vested right is taken
             away by application of Section 29-A. However, Shri Viswanathan
             pointed out the judgments in Ritesh Agarwal v. SEBI [Ritesh
 H
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                1129
                    [K. M. JOSEPH, J.]

         Agarwal v. SEBI, (2008) 8 SCC 205] (at para 25), K.S.                   A
         Paripoornan v. State of Kerala [K.S. Paripoornan v. State of
         Kerala, (1994) 5 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
                                                                                 B
         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     C
         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
                                                                                 D
         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, however,
         argued that this judgment is distinguishable as no question of          E
         constitutional validity arose in this case, and no issue as to the
         vested right of a promoter fell for consideration. We are of the
         view that the observations made in ArcelorMittal [ArcelorMittal
         (India) (P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1] directly
         arose on the facts of the case in order to oust the Ruias as
                                                                                 F
         promoters from the pale of consideration of their resolution plan,
         in which context, this Court held that they had no vested right to
         be considered as resolution applicants. Accordingly, we follow
         the aforesaid judgment. Since a resolution applicant who applies
         under Section 29-A(c) has no vested right to apply for being
         considered as a resolution applicant, this point is of no avail.”       G
       306. We may observe that the decisions of this Court in
Arcelormittal India Pvt. Ltd. (supra) and Swiss Robbins (supra) are
inappropriate to the context of the cases before us. We may also notice
the decision of the Court of Appeal in West vs. Gwynne96. The plaintiff
96
     (1910) WLR 976                                                              H
1130            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     in the said case who was the landlord of the property wrote to the
       defendant, his tenant for his consent for the proposed underlease. The
       defendant insisted however on receiving for himself one half of the surplus
       rental as a condition for the consent. The suit filed by the plaintiff was
       for a declaration that the defendant could not impose such a condition
       and that he could give the underlease without any further consent of the
 B
       defendant. In the year 1892 (after the lease), section 3 of the
       Conveyancing Act 1892 was enacted. The question which arose was
       whether it would apply to existing leases as well as and was of general
       application or it should be confined to leases after the commencement
       of the Act. The said section provided that in all leases containing a
 C     covenant against assigning or under letting without license or consent
       such covenant should unless the lease contain an express provision to
       the contrary be deemed subject to the proviso that no fine shall be payable
       for or in respect of such license or consent. The court took the view that
       the words of the section was clear. In fact, we may profitably notice the
       words of Joyce, J. whose judgment was the subject matter of the appeal
 D
       “the section with which we have to deal with in this case is quite plain to
       everyone but a lawyer”. The court of appeal 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
 E     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.
 F           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
 G           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
 H
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                               1131
                    [K. M. JOSEPH, J.]

         of the Act, and not as to the date as from which the new law, as       A
         enacted by the Act, is to be taken to have been the law.”
       308. Reliance has been placed on the judgment of this court in
B.K. Educational Services Private Limited v. Parag Gupta and
Associates97 which was rendered by one of us (R.F. Nariman, J.). By
an amendment to the Code with effect from 6.6.2018 Section 238A was             B
inserted by which the Limitation Act, 1963, was made applicable to the
proceedings and appeals before the authorities including the appellate
tribunal. The question which fell for decision was whether the Limitation
Act 1963 would also apply in respect of application under Section 7
inter alia on and from the commencement of the Code on 1.12.2016 till
the date of the amendment that is 6.6.2018. In answering this question,         C
this court went on to hold that the CIRP can only be initiated either by a
financial or operational creditor in relation to debts which have not become
time barred. In the course of its judgment, this Court referred to the
earlier judgment of this Court including the recent judgment of this Court
in M.P. Steel Corporation v. Commissioner of Central Excise98. In               D
the said decision, this Court has relied upon the earlier judgment reported
in Smt. Shanti Misra (supra) wherein it was laid down inter alia as
follows:
         “(2) Even though by and large the law of limitation has been held
         to be a procedural law, there are exceptions to this principle.        E
         Generally, the law of limitation which is in vogue on the date of
         the commencement of the action governs it. But there are certain
         exceptions to this principle. The new law of limitation providing a
         longer period cannot revive a dead remedy. Nor can it suddenly
         extinguish vested right of action by providing for a shorter
         period of limitation.”                                                 F

        309. This Court also held that the application filed in 2016 or
2017 cannot suddenly revive a debt which is no longer due as it is time
barred. Apparently, the petitioners are seeking to lay store by the principle
that a new law cannot extinguish a vested right of action even if it be
pertaining to the period of limitation.                                         G
     310. A right of appeal is a vested right, as noticed. However, it
becomes vested not because the right is created under the Statute alone.
97
     (2019)11 SCC 633
98
     (2015) 7 SCC 58
                                                                                H
1132             SUPREME COURT REPORTS                           [2021] 14 S.C.R.


 A     It becomes vested, as noticed by this Court in Garikapati Veeraya
       (supra), from the date of institution of the suit. What about a right to
       sue? In the case of a right to file 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
 B
       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,
 C     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
 D
       instituting a suit, the right to sue becomes vested from the first day when
       the period of limitation starts to run?
               311. Order VII Rule 11 of the Code of Civil Procedure
       contemplates rejection of a plaint, if it does not disclose a cause of action.
       The cause of action in a suit, will consist of the facts, which, if not
 E     traversed by the defendant, will entitle the plaintiff to a Decree. The
       Schedule to the Limitation Act, 1963, consisting of three columns. The
       third column, provides for the time, from which, the period begins to run
       for different suits. Article 19 provides for money payable for money
       lent. The period of three years, prescribed as period of limitation, begins
 F     to run from the point of time, when the loan is made. This means that, at
       any point of time, after the loan is made, but within three years, ordinarily,
       a civil suit is to be filed. In the example, we have given, if a suit is filed
       towards the end of the three-year period, would it be said that the right
       to sue was not available from the first day, when the period of limitation
       began to run? We will take another example. Article 73 provides for a
 G     period of one year for a suit for compensation for false imprisonment.
       The time, from which the period begins to run, is when the imprisonment
       ends. Can it not be said that the prisoner, upon his incarceration coming
       to an end, is clothed with a vested right to sue? We would think, that he
       is given a right, which is vested in him, when the imprisonment ends. In
 H     fact, it is the illegal imprisonment which is really creates the vested right
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1133
                    [K. M. JOSEPH, J.]

but the period of limitation begins on sound policy only after his release.       A
Article 113 of the Limitation Act, provides for suits for which there is no
period provided in the schedule. The period of 03 years provided begins
to run when the right to sue accrues. If the right to sue ‘accrued’ within
the meaning of Article 113, can it still be said, that for the purpose of
deciding, the effect of a law purporting to impact the right, there is no
                                                                                  B
vested right or accrued right till the suit is filed? We will give another
example and that is Article 30, which gives a right to sue on the bond
subject to a condition. The period of limitation is three years. The time
begins to run when the condition is broken. 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     C
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
                                                                                  D
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.        E
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        F
Court in Mardia Chemicals Ltd. and others v. Union of India and others99.
Therein the validity of certain provisions of the SARFAESI Act 2002,
was questioned. Of relevance to us, in these cases is the discussion of
this Court relating to the vires of Section 17(2). The said provision
contemplated a pre-deposit of 75 per cent of the amount by the applicant
under Section 17 before the Tribunal. This Court found the condition of           G
pre-deposit arbitrary and unreasonable. In this context, this court also
noted the distinction between a civil suit and an appeal and it was found
that an application maintained under section 17 was in the nature of a
suit, it is apposite that we notice the following:
99
     (2004) 4 SCC 311                                                             H
1134      SUPREME COURT REPORTS                              [2021] 14 S.C.R.


 A            “59.We may like to observe that proceedings under Section
       17 of the Act, in fact, are not appellate proceedings. It seems to
       be a misnomer. In fact it is the initial action which is brought
       before a forum as prescribed under the Act, raising grievance
       against the action or measures taken by one of the parties to the
       contract. It is the stage of initial proceeding like filing a suit in civil
 B
       court. As a matter of fact proceedings under Section 17 of the
       Act are in lieu of a civil suit which remedy is ordinarily available
       but for the bar under Section 34 of the Act in the present case.
       We may refer to a decision of this Court in Ganga Bai v. Vijay
       Kumar [(1974) 2 SCC 393] where in respect of original and
 C     appellate proceedings a distinction has been drawn as follows:
       (SCC p. 397, para 15)
                  “There is a basic distinction between the right of suit
          and the right of appeal. There is an inherent right in every
          person to bring a suit of civil nature and unless the suit is barred
 D        by statute one may, at one’s peril, bring a suit of one’s choice.
          It is no answer to a suit, howsoever frivolous to claim, that the
          law confers no such right to sue. A suit for its maintainability
          requires no authority of law and it is enough that no statute
          bars the suit. But the position in regard to appeals is quite the
          opposite. The right of appeal inheres in no one and therefore
 E        an appeal for its maintainability must have the clear authority
          of law. That explains why the right of appeal is described as a
          creature of statute.”
               60. The requirement of pre-deposit of any amount at the
       first instance of proceedings is not to be found in any of the
 F     decisions cited on behalf of the respondent. All these cases relate
       to appeals. The amount of deposit of 75% of the demand, at the
       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
 G     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
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                1135
                 [K. M. JOSEPH, J.]

      of the party, who, so far has alone been the party to decide the        A
      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,
                                                                              B
      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 of proceedings, captioned as appeal, renders the
      remedy illusory and nugatory.
      xxx                xxx              xxx               xxx               C

              64. The condition of pre-deposit in the present case is bad
      rendering the remedy illusory on the grounds that: (i) it is imposed
      while approaching the adjudicating authority of the first instance,
      not in appeal, (ii) there is no determination of the amount due as
      yet, (iii) the secured assets or their management with transferable     D
      interest is already taken over and under control of the secured
      creditor, (iv) no special reason for double security in respect of an
      amount yet to be determined and settled, (v) 75% of the amount
      claimed by no means would be a meagre amount, and (vi) it will
      leave the borrower in a position where it would not be possible for     E
      him to raise any funds to make deposit of 75% of the undetermined
      demand. Such conditions are not alone onerous and oppressive
      but also unreasonable and arbitrary. Therefore, in our view, sub-
      section (2) of Section 17 of the Act is unreasonable, arbitrary and
      violative of Article 14 of the Constitution.”
                                                                              F
                                                     (Emphasis supplied)
       313. Thus, a right to sue is not created by the statute. It is an
inherent right unless is barred by some law. Therefore, the principle that
a right to take advantage of a statute not being an accrued right may not
apply. We may also use this occasion to repel the argument based on           G
Mardia Chemicals (supra) that the application under Section 7 is akin
to a civil suit. The context of the application under Section 17 of
SARFAESI Act is completely different from that of the code. The
application under Section 17 of the SARFAESI was found to be in lieu
of a suit. The allottee has other remedies unlike the applicant under
                                                                              H
1136             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     Section 17. All the assets of the debtor are taken over. The situation
       cannot be compared. No doubt, the argument of the learned ASG is
       based on the right under Section 7 of the Code being a mere right to take
       advantage of a statute. In Abbott (supra), in the context of a saving
       enactment, the Court observed that a mere right assuming it to exist in
       the members of the public or any class, then, to take advantage of an
 B
       enactment, without any act done by the individual, towards availing
       himself of that right, could not be treated as an accrued right under the
       enactment. Therefore, the stand appears to be that the right under Section
       7 is a mere right to take advantage of an enactment. It is the further
       case of the Union, apparently that, only upon an application being filed
 C     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
 D     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
 E     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 would have
 F     arisen earlier. In this regard we may refer to Isha Valimohamed (supra).
               315. In regard to the effect of this finding on the challenge to the
       first and the second provisos in Section 7, we must immediately observe
       that the impugned first and second provisos have only prospective
       operation. We have already found that the provisos first and second are
 G     valid. They can survive, even if the third proviso is struck down. The
       third proviso is on the other hand dependant on the first and second
       provisos and cannot survive their invalidation. The vested right cannot
       exist merely by reason of Section 7. It must depend upon the vestitive
       facts which would create the right in conjunction with Section 7. We
       need not probe the matter further in those cases where only the first and
 H
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                               1137
                    [K. M. JOSEPH, J.]

second provisos can be questioned. This is so in two writ petitions, W.P.       A
No. 228 of 2020 and W.P. No. 850 of 2020, where, though there are no
applications filed under Section 7 before the amendment, the third proviso
is also challenged, which cannot be countenanced.
        316. There is, in our view, a right which is vested in the cases
where, the petitioners have filed application, fulfilling the requirements      B
under unamended Section 7 of the Code. The very act of filing the
application, even satisfies the apparent test propounded by the Additional
Solicitor General, that the right under Section 7 is only one to take
advantage of the statute and unless advantage is actually availed it does
not create an accrued right. When applications were filed under the
unamended provisions of Section 7, at any rate it would transform into a        C
vested right. The vested right is to proceed with the action till its logical
and legal conclusion. We are unable to accept the stand of the learned
ASG, that a vested right to emerge still require an order under Section
7(5) of the Code. It is no doubt a stage, when the authority finds there is
default and takes the matter forward including appointing to begin with         D
the IRP and ordering a moratorium. In this regard, it is to be noted that in
the scheme of the Code, what takes place before admission, is that the
applicant tries to establish the debt and default. This is akin to the stage
of a trial in a suit. No doubt, this happens only if the application is free
from defects. But this is a far cry from saying that a vested right of
action did not inhere even on the version of the ASG upon the act of the        E
creditor invoking the Code.
       317. In P.D. Aggrawal & others v. State of U.P and others.100,
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          F
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          G
          (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
100
      (1987) 3 SCC 622                                                          H
1138                SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A               rule or provision of any Act has violated the principles of equality
                 and non-arbitrariness 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:
                 “..Thus the 1969 and 1971 amendments in effect take away from
 B               the officers appointed to the temporary posts in the cadre through
                 Public Service Commission i.e. after selection by Public Service
                 Commission, the substantive character of their appointment. These
                 amendments are not only disadvantageous to the future recruits
                 against temporary vacancies but they were made applicable
 C               retrospectively from March 1, 1962 even to existing officers
                 recruited against temporary vacancies through Public Service
                 Commission. As has been stated hereinbefore that the Government
                 has power to make retrospective amendments to the Rules but if
                 the Rules purport to take away the vested rights and are arbitrary
                 and not reasonable then such retrospective amendments are subject
 D               to judicial scrutiny if they have infringed Articles 14 and 16 of the
                 Constitution.”
                 318. We may notice two aspects. Firstly, it was a challenge to a
       statutory rule. The Court went on to observe that it could be the overturned
       if it is arbitrary. We have already taken note that in regard to the challenge
 E     to a law made by the legislature under Article 14 that what is required is
       that a law must be manifestly arbitrary. The said concept has been
       explained in Shayara Bano (supra) (paragraph-101).
              319. In Darshan Singh v. Ram Pal Singh and Ors. 101, the
       appellants challenged certain alienations as being contrary to custom
 F     under the State law of the year 1920. The matter was at the appellate
       stage in suits filed by the appellants.
               320. In 1973, the law was amended. On the basis of same, the
       High Court dismissed the suit on the basis of that, after the amending
       Act came into force there could not be a challenge to the transfer. The
 G     contentions of the appellants was that the amending Act could not be
       read as retrospective. The original enactment permitted challenging the
       transfer on the ground that the transfer was contrary to custom. It was
       this right which was sought to be subjected to certain conditions.

       101
 H           1992(Suppl)1 SCC 191
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1139
                    [K. M. JOSEPH, J.]

       321. We may notice that this case did not involve a challenge to            A
the amendment. In the course of the judgement, the Court took the view
what was taken away was the basic right to ‘contest’, the transfer
irrespective of whether it was in a suit or appeal. The Court concluded
that by the amending Act the custom was done away with.
      322. In K.S. Paripoornan v. State of Kerala102, the Constitution             B
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       C
          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         D
          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      E
          laws dealing with substantive rights transactions are neither
          invalidated by reason of their failure to comply with formal
          requirements subsequently imposed, nor open to attack under
          powers of avoidance subsequently conferred. They are also not
          rendered valid by subsequent relaxations of the law, whether
          relating to form or to substance. Similarly, provisions in which a       F
          contrary intention does not appear neither impose new liabilities
          in respect of events taking place before their commencement,
          nor relieve persons from liabilities then existing, and the view that
          existing obligations were not intended to be affected has been
          taken in varying degrees even of provisions expressly prohibiting        G
          proceedings. (See: Halsbury’s Laws of England, 4th Edn. Vol. 44,
          paras 921, 922, 925 and 926).”
                                                          (Emphasis supplied)

102
      (1994) 5 SCC 593                                                             H
1140                SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A            323. In State Bank’s Staff Union (Madras Circle) v. Union of
       India and others103, an award was passed by the Industrial Tribunal,
       which was impugned before the High Court. When the matter was so
       pending, the State Bank of India Act came to be amended. The contention
       of the appellants was that the amendment was intended to nullify the
       decision of the High Court, which was repelled. The Court also
 B
       considered the power of the sovereign Legislature to make retrospective
       legislation. The Court held as follows:
                        “21. Every sovereign legislature possesses the right to make
                 retrospective legislation. The power to make laws includes the
                 power to give it retrospective effect. Craies on Statute Law (7th
 C               Edn.) at p. 387 defines retrospective statutes in the following words:
                           “A statute is to be deemed to be retrospective, which
                    takes away or impairs any vested right acquired under existing
                    laws, or creates a new obligation, or imposes a new duty, or
                    attaches a new disability in respect to transactions or
 D                  considerations already past.”
                        22. Judicial Dictionary (13th Edn.) by K.J. Aiyar,
                 Butterworth, p. 857, states that the word “retrospective” when
                 used with reference to an enactment may mean (i) affecting an
                 existing contract; or (ii) reopening up of past, closed and completed
 E               transaction; or (iii) affecting accrued rights and remedies; or (iv)
                 affecting procedure. Words and Phrases, Permanent Edn., Vol.
                 37-A, pp. 224-25, defines a “retrospective or retroactive law” as
                 one which takes away or impairs vested or accrued rights acquired
                 under existing laws. A retroactive law takes away or impairs vested
                 rights acquired under existing laws, or creates a new obligation,
 F
                 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:
 G
                        “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)
       103
 H           AIR 2005 SC 3446 / (2005) 7 SCC 584
MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                1141
             [K. M. JOSEPH, J.]

        ‘ “Retroactivity” is a term often used by lawyers but rarely      A
 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
                                                                          B
 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.
 Hartley, Foundations of European Community Law, p. 129
 (1981).                                                                  C
         Retrospective. — Looking back; contemplating what is past.
 Having operation from a past time.
        ‘Retrospective’ is somewhat ambiguous and that good deal
 of confusion has been caused by the fact that it is used in more         D
 senses than one. In general, however, the courts regard as
 retrospective any statute which 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. Thus,
 a statute is not retrospective merely because it affects existing        E
 rights; nor is it retrospective merely because a part of the requisite
 for its action is drawn from a time antecedent to its passing.”
 (Vol. 44, Halsbury’s Laws of England, 4th Edn., p. 570, para
 921.)
   xxx              xxx               xxx               xxx               F
         25. In Harvard Law Review, Vol. 73, p. 692 it was observed
 that:
        “It is necessary that the legislature should be able to cure
 inadvertent defects in statutes or their administration by making
                                                                          G
 what has been aptly called ‘small repairs’. Moreover, the individual
 who claims that a vested right has arisen from the defect is seeking
 a windfall since had the legislature’s or administrator’s action had
 the effect it was intended to and could have had, no such right
 would have arisen. Thus the interest in the retroactive curing of
                                                                          H
1142            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A           such a defect in the administration of the Government outweighs
             the individual’s interest in benefiting from the defect.”
             26. The above passage was quoted with approval by the
             Constitution Bench of this Court in the case of Asstt. Commr. of
             Urban Land Tax v. Buckingham and Carnatic Co. Ltd. [(1969)
 B           2 SCC 55] In considering the question as to whether the legislative
             power to amend a provision with retrospective operation has been
             reasonably exercised or not, various factors have to be considered.
             It was observed in the case of Stott v. Stott Realty Co. [284 NW
             635] as noted in Words and Phrases, Permanent Edn., Vol. 37-
             A, p. 2250 that:
 C
                    “The constitutional prohibition of the passage of ‘retroactive
             laws’ refers only to retroactive laws that injuriously affect some
             substantial or vested right, and does not refer to those remedies
             adopted by a legislative body for the purpose of providing a rule to
             secure for its citizens the enjoyment of some natural right, equitable
 D           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:
 E
                    “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.”

 F                                                           (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
 G           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
 H
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1143
                    [K. M. JOSEPH, J.]

          an existing provision with retrospective effect per se does not          A
          amount to violation of Article 14 of the Constitution. The legislature
          can change, as observed by this Court in Cauvery Water Disputes
          Tribunal, Re [1993 Supp (1) SCC 96 (2)] the basis on which a
          decision is given by the Court and thus change the law in general,
          which will affect a class of persons and events at large. It cannot,
                                                                                   B
          however, set aside an individual decision inter partes and affect
          their rights and liabilities alone. Such an act on the part of the
          legislature amounts to exercising the judicial power by the State
          and to function as an appellate court or tribunal, which is against
          the concept of separation of powers.”
                                                          (Emphasis supplied)      C

          SECTION 6 OF GENERAL CLAUSES ACT, 1897
       325. In this regard, no support can be drawn from Section 6 of the
General Clauses Act, 1897. Section 6 makes it clear that the rights or
privileges which may be asserted are subject to the law not being couched          D
contrary to such rights/privileges. In this case it is precisely because the
3rd proviso covers the applications filed prior to the amendment which
had not been admitted, that the petitioners have challenged the provision.
          READING DOWN
       326. Further, the appeal to invoke the principle of reading down            E
the proviso is untenable. In his judgment for the majority Sawant, J. in
Delhi Transport Corpn. v. D.T.C. Mazdoor Congress 104 held as
follows:
          “255. It is thus clear that the doctrine of reading down or of
          recasting the statute can be applied in limited situations. It is        F
          essentially used, firstly, for saving a statute from being struck down
          on account of its unconstitutionality. It is an extension of the
          principle that when two interpretations are possible — one
          rendering it constitutional and the other making it unconstitutional,
          the former should be preferred. The unconstitutionality may spring
                                                                                   G
          from either the incompetence of the legislature to enact the statute
          or from its violation of any of the provisions of the Constitution.
          The second situation which summons its aid is where the provisions
          of the statute are vague and ambiguous and it is possible to gather
104
      (1991) Suppl.(1) SCC 600                                                     H
1144                SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A               the intentions of the legislature from the object of the statute, the
                 context in which the provision occurs and the purpose for which it
                 is made. However, when the provision is cast in a definite and
                 unambiguous 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
 B
                 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
 C               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
 D     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 Maharashtra105. The appellant was elected as a member of
       the Panchayat in 2000 and elected as the Sarpanch. He was further
 E     elected as Councillor of the Zila Parishad. An amendment was made
       with effect from 8.8.2003. Under the marginal note Disqualifications,
       Section 14, inter alia, disentitled a person from continuing as a Panchayat
       Member if he was elected a Councillor of the Zila Parishad. This Court
       found that it was a disqualifying law intended to have retrospective effect.
       We may notice para 12 which reads as follows:
 F
                 “12. The appellant was elected in terms of the provisions of a
                 statute. The right to be elected was created by a statute and, thus,
                 can be taken away by a statute. It is now well settled that when a
                 literal reading of the provision giving retrospective effect does not
                 produce absurdity or anomaly, the same would not be construed
 G               to be only prospective. The negation is not a rigid rule and varies
                 with the intention and purport of the legislature, but to apply it in
                 such a case is a doctrine of fairness. When a law is enacted for
                 the benefit of the community as a whole, even in the absence of a

       105
             (2006) 6 SCC 289
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                  1145
                 [K. M. JOSEPH, J.]

      provision, the statute may be held to be retrospective in nature.         A
      The appellant does not and cannot question the competence of
      the legislature in this behalf.”
       The case did not involve a challenge to the law. What is significant
is the statement that the right created by a Statute, can be taken away
by a statute.                                                                   B
      329. We find that qua the financial creditors covered by the third
proviso, having invoked, at any rate unamended Section 7, they had a
vested right.
       330. They had undoubtedly a vested right to have their actions
carried to its logical and legal end. No doubt, the question of admission       C
of the application arises under Section 7(5) of the Code. It is open to the
Adjudication Authority to reject the application but that does not mean
that the applicants had no vested right of action. The possibility of a
plaint being rejected under Order VII Rule 11 or an appeal being dismissed
under Order XLI Rule 11 without notice being issued to the respondent           D
or the fact that the suit can be dismissed at later stages, cannot detract
from the right of the plaintiff or the appellant, being a substantive right.
The same principle should suffice to reject the contention, based on
admission under Section 7(5) alone, giving rise to the vested right in
regard to an applicant under Section 7 of the Code.
                                                                                E
       331. A vested right is not limited to property rights. A right of
action should conditions otherwise 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)].                                                                       F
      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              G
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         H
1146            SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     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, which affects
 B     substantive rights, are meant to have prospective operation only. In the
       same way, as regards procedural laws or the laws relating to a mere
       matter of procedure or of Forum, they carry retrospective impact.
                335. A Statute is not retrospective merely because it affects
       existing rights. This is, however, in regard to the future operation of law
 C     qua the existing rights. If the existing right is modified or take away and
       it is to have operation only from the date of new law, it would obviously
       have only prospective operation and it would not be a retrospective law.
              336. Declaratory, clarificatory or curative Statutes are allowed to
       hold sway in the past. The very nature of the said laws involve the
 D     aspect of public interest which requires sovereign Legislature to remove
       defects, clarify aspects which create doubt. The declaratory law again
       has the effect of the legislative intention being made clear. It may not be
       apposite in the case of these Statutes to paint them with the taint of
       retrospectivity.

 E            337. What then is retrospectivity? It is ordinarily the new law
       being applied to cases or facts, which came into existence prior to the
       enacting of the law. A retrospective law, in other words, either supplants
       an existing law or creates a new one and the Legislature contemplates
       that the new law would apply in respect of a completed transaction. It
       may amount to reopening, in other words, what is accomplished under
 F     the earlier law, if there was one, or creating a new law, which applies to
       a past transaction.
              338. “A Statute is to be deemed to be retrospective, which takes
       away or impairs any vested right acquired under any existing laws or
       creates a new obligation or imposes a new duty or attaches a new
 G     disability in respect to transactions or considerations already passed”.
       [See Craies on State Law, 7th Edition, Page-387].
              339. In Halsbury’s Laws of England, 4 th Edition, Page-570,
       paragraph-921, it is, inter alia, stated as follows - “In general, however,
       court regarded as retrospective, any Statute, which operates on cases
 H     or facts, coming into existence, before its commencement, in the sense
       MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                1147
                    [K. M. JOSEPH, J.]

that it affects even if for the future only, the character or consequences       A
of transactions, previously entered into or of other past conduct”.
        340. 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,       B
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      C
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          D
(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 Manifest arbitrariness Injustice, undoubtedly, consists
of total absence of public interest, of which the sovereign Legislature as       E
the supreme law giver, is the undoubted custodian. Though made in the
context of the power of the Court in England, in regard to taking into
consideration the concept of fairness, while deciding upon the issue of
retrospectivity, we would think the following passage in the Principles of
Statutory Interpretation by Justice G.P. Singh, made relying upon the            F
Judgment of the House of Lords in L’Office Cherifien Des Phosphates
and another And Yamashita-Shinnihon Steamship Co. Ltd.106, would
furnish a safe and fairly comprehensive guide, even in the matter of
determining the constitutionality of a retrospective law. Hence, we refer
to the same and would approve of the same.
                                                                                 G
          “… It was observed that the question of fairness will have to be
          answered in respect of a particular statute by taking into account
          various factors viz., value of the rights which the statute affects;
          extent to which that value is diminished or extinguished by the
106
      (1994) 1 AllER 20                                                          H
1148             SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A            suggested retrospective effect of the statute; unfairness of
              adversely affecting the rights; clarity of the language used by
              Parliament and the circumstances in which the legislation was
              created. “All these factors must be weighed together to provide a
              direct answer to the question whether the consequences of reading
              the statue with the suggested degree of retrospectivity is so unfair
 B
              that the words used by Parliament cannot have been intended to
              mean what they might appear to say.”
                                                               (Emphasis supplied)
              343. Having laid down the principles, we shall now apply the same
 C     to the facts of the present cases before us. As far as the nature of the
       right in question is concerned, which would include the value of the
       rights, it is a right of action. The right of action is, undoubtedly, a vested
       right. The role of the applicant essentially fades out after the admission
       of the application is made under Section 7(5). The scheme of the Code
       has been unraveled by us. The right, which is given, is a right in rem. It
 D     is not a mere personal right, in the sense that it is right in rem. The
       applicant is not even required to plead the default qua him as the default
       to any financial creditor, in the requisite sum, provided it is not barred
       under Article 137, suffices. The consequences of the application would
       be that it may land the applicant and also all the stakeholders, in liquidation
 E     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
 F     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,
 G     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
 H     between the individual right versus the public interest. Now, public interest
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1149
                 [K. M. JOSEPH, J.]

is a concept, which is capable of embracing, within its scope, the interest    A
of different sections of the public. This would include the sections of the
public to which the applicant himself belongs. Public interest would,
undoubtedly, also encompass, the economy of the country, which can be
understood in terms of all the objects, for which the Code was enacted.
They would include the speed with which the Code is worked. It would
                                                                               B
include, also, safeguarding the interests of all the stakeholders. This may
necessarily include the corporate debtor as a stakeholder, being protected
from applications, which are perceived as frivolous or not representing a
critical mass.
      345. We have noticed the statistics which has been made available
by the Union. On the eve of the ordinance on the 27.12.2019, it would          C
appear that 2201 applications, came to be moved, during a period of
nearly eighteen months as in comparison to 253 applications during the
preceding period representing a nearly 10-fold increase.
       346. Now, the third proviso, thus, indeed, does not say that as on
the date of filing of the applications, the law was what is contained in the   D
first and the second provisos. In that sense, it could be said that it was
not retrospective. We have found that when invoking the unamended
Section 7 applications stood moved, they evinced creation of vested rights
to continue with the proceeding. The applications were, no doubt, at the
stage, prior to the admission under Section 7(5). It is at this stage that     E
through the device of the third proviso, the Parliament has applied the
principle of first and second proviso of threshold requirement, in respect
of pending applications, which is made to appear as it would have operation
in the future. Now here we must address an argument of the 3rd proviso
going to mere procedure. The financial creditors covered by the 3rd proviso
were clothed with a statutory right under Section 7. This right was            F
available to be exercised by an individual creditor, by himself or jointly
with others. The imposition of a threshold requirement being a mandatory
and irreducible minimum even, if it is to be achieved as and after the
date of the amendment, constitutes an intrusion into the substantive right
of action vested in the individual creditor. The action of the creditor was    G
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 3 rd
proviso, is not a mere matter of procedure. It impairs vested rights. It
                                                                               H
1150             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     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.
 B
               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
 C     would appear to have been filed in the year 2019. Enquiring further into
       the different stages in these applications, would go against the principle
       that the Court does not look to mathematical nicety or perfection in the
       law. The Court also bears in mind, the principle that the law is an economic
       measure.
 D         CLARITY REGARDING ‘WITHDRAWAL’ UNDER THE
       THIRD PROVISO
              348. One of the aspects to be considered is the clarity of a
       retrospective law. The requirement of compliance with the threshold
       numerical requirements under the first and second proviso is an integral
 E     and inseparable part of the third proviso. Let us have a look at the
       consequences that follow if the numerical strength cannot be cobbled up
       by the applicant. The proviso declares that in such an eventuality the
       application will be treated as withdrawn before admission. Rule 8, as
       noticed by us, provides for power with the Tribunal to allow withdrawal
 F     before admission. Does it mean that an applicant can file a fresh
       application after gathering together the requisite numbers? What is the
       impact of withdrawal under provisions under the general law? What is
       the impact of the law relating to the Limitation Act in respect of the
       application which has been withdrawn?

 G            349. In the context of a Civil suit, Order XXIII deals with
       withdrawal and adjustment of suit. Order XXIII (1)(4b) prohibits a fresh
       suit in respect of the same subject matter (cause of action), if a suit is
       withdrawn without permission of the Court under Order XXIII(1)(3).
             350. In the facts of the case before us the third proviso does not
       indicate as to whether a fresh application after complying with the
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1151
                 [K. M. JOSEPH, J.]

requirement of the ingredients of the first and second proviso is              A
maintainable. It does not also indicate what would be the position even if
such application is maintainable by the same applicant, with regard to
the periods spent in the context of ruling of this Court that the Limitation
Act applies and the relevant Article is Article 137 and therefore, any
application filed beyond the period of three years from the date of the
                                                                               B
default is barred.
       351. 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   C
and the 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           D
      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          E
      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            F
      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.
                                                                               G
      (3) Notwithstanding anything contained in rule 2 of Order XXIII
      of the Code of Civil Procedure, 1908 (5 of 1908), the provisions
      of sub-section (1) shall apply in relation to a fresh suit instituted
      on permission granted by the court under rule 1 of that Order
      where such permission is granted on the ground that the first suit
                                                                               H
1152             SUPREME COURT REPORTS                            [2021] 14 S.C.R.


 A            must fail by reason of a defect in the jurisdiction of the court or
              other cause of a like nature.
              Explanation.— For the purposes of this section,—
              (a) in excluding the time during which a former civil proceeding
              was pending, the day on which that proceeding was instituted and
 B            the day on which it ended shall both be counted;
              (b) a plaintiff or an applicant resisting an appeal shall be deemed
              to be prosecuting a proceeding;
              (c) misjoinder of parties or of causes of action shall be deemed to
 C            be a cause of a like nature with defect of jurisdiction.”
               353. A perusal of 14(1) shows that it is intended to exclude time in
       regard to a civil suit. Section 14(2) covers cases relating to the applications
       for which period of limitation is fixed. It contemplates that if such applicant
       comes to Court late with a time barred application but is able to show
 D     that he has been prosecuting with due diligence another civil proceeding,
       for the same relief, the period, when he was so prosecuting the other
       proceeding, can be excluded where the proceeding was prosecuted in
       good faith in a Court which from defect of jurisdiction or other cause of
       like nature is unable to entertain it. It will be noticed that sub-Section (3)
       of Section 14 deals only with the case falling under sub section (1). In
 E     other words, it relates to civil suits. It enables a plaintiff in a subsequent
       suit to exclude the period which was consumed in prosecuting an earlier
       civil suit which latter suit stood withdrawn with permission granted by
       the Court. Therefore, in regard to applications, including applications
       under Article 137, it appears, the Law Giver has not contemplated
 F     expressly excluding the time spent in pursuing another proceeding which
       stood withdrawn.
               354. In regard to power of withdrawal as already noticed Rule 8
       of the Insolvency and Bankruptcy (Application of Adjudicating Authority
       Rule), 2016 reads as follows:
 G            “Rule (8) withdrawal of application the adjudicating authority may
              permit withdrawal of the application may not Rule 4,6,7 as the
              case may be on a request made by the applicant before its
              admission.”
             355. The application made under Rule 4 is the application under
 H     Section 7 by the financial creditor. However, rule 8 is silent as to any
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1153
                 [K. M. JOSEPH, J.]

similar prohibition as is contained in Order XXIII(1)4(b). Unless the          A
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
                                                                               B
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      C
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 as the case may be on the same
default.
       357. As far as Limitation is concerned, however, on the terms of        D
Section 14, since 14(1) read with 14(3), contemplates withdrawal of a
suit with permission under Order XXIII Rule 1(4)(b) to enable exclusion
of the period spent in a suit which is withdrawn and Section 14(2) is
what applies to applications including one under, Article 137, the period
spent in the application when it is withdrawn under the 3rd proviso cannot     E
be excluded under Section 14 (3) of the Limitation Act. However, it may
be open to point out that application is not being entertained within the
meaning of Section 14(2) on account of the law that mandates its
withdrawal on account of the non-compliance of conditions for maintaining
the application it would be. However, we need not pronounce on it, as
we feel that having regard to the Explanation in Section 7, it will always     F
be open to the applicant to set up a different default to any financial
creditor and move afresh. This unique feature of the Code is highly
relevant in determining the validity of the Amendment. The application
under Section 7 is not meant to be a recovery mechanism. The Code, as
is clear from its title, deals with insolvency resolution, to begin with. If   G
there is insolvency, the application, with reference to any of the large
number of creditors, suffices.
       358. Thus, withdrawal under the third proviso would not be bar a
fresh application even on the same cause of action. It can, at any rate,
be condoned under Section 5 of the Limitation Act. It is here we would         H
1154             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     also exercise our power under Article 142 to direct that if fresh
       applications are filed by the petitioners after complying with the first and
       second proviso, then on applications being filed under Section 5, of the
       Limitation Act, in regard to the period of pendency of applications, the
       authority shall condone the delay. As far as the period after the withdrawal
       under the proviso, in view of the power again under Section 5 of the
 B
       Limitation Act, certainly we see no reason as to why the periods spent
       cannot be explained in terms of B.K. Educational Services (P) Ltd.
       (supra). In the above manner, we would interpret the implications of
       withdrawal.
              359. We would consider the aspect of public interest, which can
 C     be gathered from the conditions obtaining, when the impugned
       amendment was made. Under the existing law, 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
 D     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
 E     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
 F     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 doubt,
       the Legislature is interfering with the vested right, in the manner done
       under the provisos read together. That a vested right can be the subject
 G     matter of retrospective law, cannot be doubted. Since, the law made,
       under the Constitution, must pass muster, under Articles 14, 19, 21 and
       300A of the Constitution, the issue really boils down to, whether or not,
       it is manifestly arbitrary. The further question would arise, under Article
       19, as to whether, the law would amount to a reasonable restriction of
       the Right under Article 19(1)(g). The Doctrine of Fairness, indeed, has
 H
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                    1155
                 [K. M. JOSEPH, J.]

been present in the mind of the courts, whenever a law, described as              A
retrospective, comes up for interpretation with or without a challenge to
the law. In the context of a challenge, on the ground of manifest
arbitrariness, the test to be applied has been articulated as to whether it
is capricious, irrational, does not disclose any principle, betrays absence
of proportionality or whether it is excessive. We must also not lose sight
                                                                                  B
of the fact that the law in question is an economic measure. This is a
case where the Law Giver has not left anything to speculation or doubt.
We have already indicated about the effect of the proviso mandating
the compulsory withdrawal of the application. We are of the view that
this is a case, where the law, in question, is retrospective, in that, contrary
to the requirement in the law, at the time, when the application was filed,       C
a new requirement is placed, even though, it is sought to be done by
superimposing this condition, not at the time, when the application was
filed, which really is the relevant time to determine the question of
maintainability of the application, with reference to what the law provided
in regard to who can move the application but at the stage of the new
                                                                                  D
law.
       361. However, we cannot also lose sight of the fact that the
Legislature has power to impair and take away vested rights. The
limitation that flows, however, is from both Article 14 and 19 read with
Article 21. It flows from the Doctrine that the action of the State must
be fair and reasonable. The question, as to validity of the retrospective         E
law, is a matter to be judged on a consideration of the facts, the period of
time, over which the retrospective law operates, the impact of the law
on the vested rights, the public interest, the nature of the right, which is
the subject 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    F
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,       G
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
                                                                                  H
1156             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     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
       by another statute. We cannot ignore the fact that there was considerable
 B
       public interest behind such a law. The sheer numbers, in which
       applications proliferated, combined with the results it could produce,
       cannot be brushed aside as an irrational or capricious aspect to have
       been guided by in making the law. Being an economic measure, the
       wider latitude available to the Law Giver, cannot be lost sight of.
 C            363. The issue, which, however remains, is the period of 30 days
       made available. Is it reasonable to expect that a single applicant could,
       under the aegis of the laws’ collect information, and furthermore, gather
       the support of fellow travellers, also inclined to support the applicant, as
       required? The third proviso does not provide for the applicant applying
 D     before the Tribunal and seeking extension of the period. It could be also
       argued that by granting such extensions, no harm is caused to the
       stakeholders, insofar as, all this is done before the admission of the
       application, with which alone, the consequences, including the appointment
       of the Interim Resolution Professional and the passing of an Order of
       Moratorium, would arise. But here again we would be foraying into
 E     areas of legislative value judgement and be proceeding on the basis of
       what would be a fairer law.
              364. We have to take the law, therefore, as it is and deal with it on
       the touchstone of, whether the law is manifestly arbitrary. We have
       already, no doubt, found that by virtue of the statutory mechanism, there
 F     appears to be an information grid available under the law. Undoubtedly,
       we would have felt more reassured, if the period had been longer than it
       is. The law came as a bolt from the blue as it were.
              365. As regards the compelled withdrawal under the third proviso
       of the pending applications is concerned, we hold as follows. Once the
 G     Legislature intended that the pending applications must be made compliant
       with the threshold requirement, consequences for not doing so had to be
       provided. Otherwise, it would have created complete uncertainty and
       the applicant would have been dealt with in a manifestly arbitrary manner.
       Providing for the consequence of withdrawal before admission, which
 H     we have explained, does not have the consequence of preventing the
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                     1157
                 [K. M. JOSEPH, J.]

fresh filing, even in regard to the same default, after complying, no doubt,       A
with the requirement of the first or the second proviso, 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              B
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          C
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?            D
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 information, get into touch with the other creditors and persuade
them to join him/them. As far as court fees is concerned, there is no
extra liability as the amount remains the same, viz., Rs.25,000/-,                 E
irrespective of the number of applicants. If the condition in the third
proviso was impossible to comply with, then, it would also be manifestly
arbitrary. As far as availability of information is concerned, be it the
mechanism of an Association of Allottees contemplated under the RERA
or the requirement under the said Act to post details of the allotment, at
least, in law, the Legislature was not making a capricious command. So             F
also, is the case with the creditors covered by the first proviso, having
regard to the clear requirement of Section 88 of the Companies Act,
2013. There are registers, which can be perused and information
gathered.
       368. Another aspect of the matter is, if there is insolvency and it         G
affects creditors, ordinarily, self-interest would guide them into following
the best course available to them. We have 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
                                                                                   H
1158             SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A     would be necessary, no doubt, only if hundred creditors cannot be found
       to support the application.
              369. We have noted the consequences of the deemed withdrawal,
       the nature of the right, the Explanation to Section 7, the objects of the
       Code, the factual matrix reflecting a ten-fold increase in the applications,
 B     the pressure on the dockets of the bodies, which are charged with the
       imperative duty to deal with matters with the highest speed, the impact
       on similar stakeholders in the category and the sheer largeness of the
       class of creditors. The period could have been more fair to the petitioners
       by being longer but that is where we must bear in mind, the limits of our
       jurisdiction. Where would the Court draw the line? We find it difficult to
 C     hold that within the time limit of 30 days it is impossible to comply with
       the requirements.
              370. We have dealt with the aspect relating to the impact of the
       statutory withdrawal of the application. Secondly, we must also bear in
       mind that the Code was enacted in the year 2016. The period of the
 D     retrospective operation, would appear to be, spread over for a period of
       two years and for the most part, it relates to a period of one 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
 E     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.
 F
              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
 G     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 the applicants, who are petitioner before us,
       in regard to the very same corporate debtor, in the same real estate
       project, as far as allottees are concerned, the applicants shall be exempted
 H     from the requirement of paying court fee. This would obviously be a
    MANISH KUMAR v. UNION OF INDIA AND ANOTHER                                 1159
                 [K. M. JOSEPH, J.]

one-time affair. We, however, further make it clear that exemption from        A
paying court fee, in the case of joint applicants, will be limited only to
once, to a single application in future, in relation to the same subject
matter, as per the application. To make it clear, in a case where there
are more than one applicants in the pending application in respect of real
estate project, if they combine in future application, they would stand
                                                                               B
exempted. Secondly, in case, any of the applicants, if they were to move
jointly with the requisite number under the second proviso, the exemption
will be limited only to once. Meaning thereby, if exemption has been
availed of by any one out of the joint applicants, in conjunction with
others, then, the other joint applicants cannot claim exemption. If there
are any applicants, falling under the first proviso, and who are among         C
the petitioners, in regard to the same corporate debtor, they would also
be entitled to the exemption from payment of the court fee.
      RELIEF
      372. We uphold the impugned amendments. However, this is
subject to the following directions, which we issue under Article 142 of       D
the Constitution of India:
      i.     If any of the petitioners move applications in respect of the
             same default, as alleged in their applications, within a period
             of two months from today, also compliant with either the
             first or the second proviso under Section 7(1), as the case       E
             may be, then, they will be exempted from the requirement
             of payment of court fees, in the manner, which we have
             detailed in the paragraph just herein before.
      ii.    Secondly, we direct that if applications are moved under
             Section 7 by the petitioners, within a period of two months       F
             from today, in compliance with either of the provisos, as
             the case may be, and the application would be barred under
             Article 137 of the Limitation Act, on the default alleged in
             the applications, which were already filed, if the petitioner
             file applications under Section 5 of the Limitation Act, 1963,    G
             the period of time spent before the Adjudicating Authority,
             the Adjudicating Authority shall allow the applications and
             the period 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.                                       H
1160                 SUPREME COURT REPORTS                          [2021] 14 S.C.R.


 A            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
 B
                       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.
 C            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.
 D             374. The intervention application (I.A.No.67473 of 2020 in WP
       (C)No.26 of 2020) is filed by allottees who have filed application under
       Section 7 on 20.9.2019. I.A. No.32863 of 2020 in WP(C) No.53 of 2020
       is filed by the allottee for impleadment. He has filed application under
       Section 7 of the Code on 19.12.2019. I.A. No.32869 of 2020 WP(C)
 E     No.53 of 2020 is filed by the allottees who have filed the same for
       impleadment. They have filed application under Section 7 on 17.9.2019.
       I.A.No. 15425 of 2018 in WP (C)No.26 of 2020 is filed by a corporate
       debtor for impleadment. All the above IAs are disposed of in terms of
       the judgment as aforesaid. We however make it clear that the directions
       we have issued under Article 142 regarding court fees and about
 F     condonation of delay will apply to the applicants who are allottees.


       Bibhuti Bhushan Bose                 Writ Petitions and Transferred Case dismissed.


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