Shielding homes in financial distress

A decade-long delay in individual insolvency protections leaves families vulnerable

- MS SAHOO AND RAGHAV PANDEY

Consider a citizen who owns a single home and takes a small loan to start a modest business. Through no fault of her own, perhaps due to adverse economic conditions, she fails to repay an instalment of the loan. Should her only home be taken away, rendering her and her family homeless merely because she attempted entrepreneurship? The legislature, through the Insolvency and Bankruptcy Code, 2016 (IBC), has answered this question with compassion and principle. Part III of the IBC, which provides for individual insolvency, incorporates a humane safe guard protecting a debtor’s single dwelling unit. However, this protection has remained dormant for about a decade because Part IIT is still awaiting notification, leaving those it seeks to protect without recourse.

Two recent developments heighten the constitutional and legislative rationale for bringing this protection in to effect. First, in Mansi Brar Fernandes (2025), the Supreme Court has reaffirmed that the right to shelter is an integral part of the right to life guaranteed under Article 21 of the Constitution. The court has emphasised that a home is not merely a roof over one’s head; it embodies hopes and dreams, provides a safe space for a family, and offers refuge from life’s uncertainties. The case highlighted the recurring injustice meted out to homebuyers who invested their life’s savings in housing projects, only to be left stranded due to the developer's default. The court recognised the legislative initiative giving home buyers a voice in insolvency proceedings, enabling them to secure their homes when the developers faced financial distress.