In a major development concerning the plight of homebuyers in the National Capital Region (NCR), the Supreme Court has indicated the need for a Central Bureau of Investigation (CBI) probe into the nexus between certain real estate developers and banks. The Court observed that these entities had allegedly taken poor homebuyers “to ransom,” forcing them to pay EMIs despite not receiving possession of their flats due to project delays.
A bench comprising Justices Surya Kant and N Kotiswar Singh was hearing the grievances of homebuyers who were caught in a financial quagmire. They claimed that banks were coercing them to pay EMIs even though their flats remained incomplete. The issue stemmed from a subvention scheme under which developers defaulted on EMIs of sanctioned loans, shifting the burden onto the unsuspecting homebuyers.
“The homebuyer herein is pushed into litigation for the amount which he himself has never seen or actually received. The acts of both builder and banks are in violation of the tripartite agreement and also in violation of RBI/NHB statutory guidelines,” the homebuyers contended.
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As per the homebuyers, loans were unlawfully disbursed directly into the accounts of builders and developers, flouting the Reserve Bank of India (RBI) guidelines. It was alleged that homebuyers were merely used as intermediaries to secure loans, with the actual funds never reaching them but instead landing directly with the builders.
The Court noted that despite multiple complaints, builders and banks had failed to provide transparency regarding project delays and their current construction status. This lack of accountability led the bench to call for a deeper probe to uncover the truth.
Supreme Court Calls for SIT Investigation
Observing the gravity of the situation, the Supreme Court strongly suggested forming a Special Investigation Team (SIT) to probe the matter.
“People invested their hard-earned money, but poor homebuyers have been taken to ransom. SIT should be constituted to probe the nexus between builders and banks, and it will give a report to us. We will ask CBI to register a case... every bank must be brought into the investigation,” the Court stated.
The Court is expected to frame specific questions for the CBI to investigate in the upcoming hearings.
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The Court further indicated that interim resolution professionals (IRPs) managing real estate firms undergoing insolvency proceedings would also be investigated. However, those who acted in good faith would not face legal consequences.
“We would like the conduct of resolution professionals to be also examined. Those who acted in a bonafide manner need not worry,” the Court remarked.
In a previous ruling in July last year, a Supreme Court bench led by Justices Surya Kant and Ujjal Bhuyan had granted interim relief to homebuyers. The Court had explicitly barred any coercive action, including complaints under Section 138 of the Negotiable Instruments Act (pertaining to bounced cheques), against homebuyers on behalf of banks, financial institutions, or developers.
The homebuyers were represented by Advocates Anshul Gupta, Aditya Parolia, and Piyush Singh. The case, titled Himanshu Singh and Ors. vs. Union of India and Ors., is being heard under SLP(C) No. 7649/2023.
Case Title: HIMANSHU SINGH AND ORS. Versus UNION OF INDIA AND ORS., SLP(C) No. 7649/2023
