The SC Ruling on Right to Shelter (2025) drew a sharp line between genuine homebuyers and speculative investors. While reaffirming housing as a fundamental right under Article 21, the Supreme Court also issued systemic reforms to strengthen India’s insolvency and housing sector.
New Delhi (ABC Live): The SC Ruling on Right to Shelter in Mansi Brar Fernandes v. Shubha Sharma & Ors. (2025 INSC 1110) is a landmark in Indian insolvency and housing law. The Court clarified that the IBC is a tool for revival, not recovery, and it reaffirmed that the Right to Shelter is part of Article 21 of the Constitution. Moreover, it set out a clear test to separate genuine homebuyers from speculative investors.
Case Background
The dispute began when homebuyers invested through buy-back MoUs with assured returns and filed petitions under Section 7 of the IBC. Although the NCLT admitted their claims, the NCLAT reversed this decision and called them speculative investors. Consequently, the case reached the Supreme Court, which had to decide whether such buyers could qualify as financial creditors.
Key Issues in the SC Ruling on Right to Shelter
| Issue | Supreme Court’s Decision |
|---|---|
| Were the appellants genuine homebuyers or speculative investors? | Classified as speculative investors due to abnormal returns, buy-back clauses, and refusal to take possession. |
| Did the 2019 IBC Amendment (100/10% threshold) apply to pending cases? | Yes, but litigants should not be penalized where orders were already reserved before the Ordinance. |
| Is housing a fundamental right under Article 21? | Yes, the Court reaffirmed the SC Ruling on Right to Shelter principle. |
Genuine Buyers vs. Speculative Investors
| Indicator | Genuine Homebuyer ? | Speculative Investor ? |
|---|---|---|
| Intent | Seeks possession of a home. | Seeks refund or profit only. |
| Contract Terms | Builder-buyer agreement under RERA. | MoU with buy-back and assured returns. |
| Returns | No guaranteed returns. | 20–25% p.a. or abnormal profits. |
| Conduct | Monitors project progress, demands possession. | Focuses on refund, files cheque bounce cases. |
| Units Purchased | One or few units. | Multiple units for speculation. |
Therefore, the Court concluded that the appellants were speculative investors.
Systemic Directions Issued
The Supreme Court did not stop at deciding the case. Instead, it issued directions that aim to fix broader weaknesses in the system.
| Area of Reform | Supreme Court Directions |
|---|---|
| NCLT/NCLAT | Vacancies must be filled quickly; more benches should be created (NCLT Portal). |
| RERA | Improve staffing, enforcement, and escrow SOPs (RERA). |
| SWAMIH Fund | Expand financing and ensure CAG audit. |
| CIRP Process | Prefer project-wise insolvency to avoid harming buyers. |
| Allottees in CoC | Give stronger representation through authorized representatives. |
| Admission Stage | NCLTs must check whether applicants are genuine or speculative. |
Critical Analysis
| Dimension | Strengths | Weaknesses |
|---|---|---|
| Jurisprudential | Aligns with Pioneer Urban; sets clear tests. | May unfairly exclude buyers trapped in developer-drafted clauses. |
| Constitutional | Embeds SC Ruling on Right to Shelter under Article 21. | Some directions resemble policy-making, raising concerns. |
| Practical | Suggests reforms for NCLT, RERA, and CIRP. | Relief denied to appellants; execution remains uncertain. |
Judgment Rating
Weighted Evaluation
- Doctrinal Soundness (25%) – 9/10
? Consistent with Pioneer Urban and Manish Kumar.
? Clear indicators for distinguishing genuine from speculative buyers.
? Prevents misuse of IBC as a debt-recovery tool.
? Slight rigidity may wrongly classify genuine buyers.
Weighted Score: 2.25/2.5 - Constitutional Strength (20%) – 9/10
? Reaffirms Right to Shelter under Article 21.
? Applies actus curiae neminem gravabit (litigants should not suffer court delays).
? Consistent with Chameli Singh and Samatha.
? Some policy-style orders raise judicial overreach concerns.
Weighted Score: 1.8/2.0 - Systemic Reform Potential (20%) – 8/10
? Directions on NCLT reforms, RERA staffing, escrow SOPs, SWAMIH audits.
? Introduces project-wise CIRP.
? Similar orders in earlier cases were not enforced.
Weighted Score: 1.6/2.0 - Fairness to Litigants (15%) – 6/10
? Protects the collective interests of genuine buyers.
? Appellants denied remedy despite developer-driven contracts.
? Creates a two-tier system of protection.
Weighted Score: 0.9/1.5 - Practical Enforceability (20%) – 7/10
? Clear test helps NCLT/NCLAT consistency.
? Recognition of Article 21 ensures stronger scrutiny.
? Execution of reforms depends on the government’s follow-up.
Weighted Score: 1.4/2.0
Final Composite Score: 7.95 / 10 ? Rounded: ? 8/10
Conclusion
The SC Ruling on Right to Shelter is a milestone in Indian housing and insolvency law. It draws a clear line between speculative investors and genuine homebuyers, while also reaffirming housing as a fundamental right under Article 21.
However, the judgment leaves individual litigants without direct relief. Moreover, its systemic directions will only matter if the executive ensures compliance. Consequently, this ruling is best seen as a system-strengthening precedent: individuals may have lost, but the housing sector as a whole gained.
Editor’s Note (ABC Live)
This ruling is unique because it connects the IBC framework with the constitutional Right to Shelter, ensuring homebuyer protection while addressing systemic weaknesses. It reflects the judiciary’s proactive role in safeguarding citizens’ rights and economic stability.
Resources & References
- Supreme Court of India Judgment on Right to Shelter
- Insolvency and Bankruptcy Code, 2016 – India Code
- Insolvency and Bankruptcy Board of India (IBBI)
- Real Estate (Regulation and Development) Act, 2016 – RERA
- Comptroller and Auditor General of India (CAG)
- National Company Law Tribunal (NCLT)
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