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Informist, Tuesday, Mar. 18, 2025

 

NEW DELHI – The Supreme Court on Tuesday said it will definitely order a Central Bureau of Investigation probe to uncover nexus between banks or financial institutions and builders-cum-developers with respect to projects where homebuyers have paid substantial amounts and projects have not even been launched or construction has not begun. "Thousands of people are crying. We can't wipe their tears, but we can address their issues. Something very effective has to be done in a time bound manner," said the court.

 

Additional Solicitor General of India Aishwarya Bhati said the Central Bureau of Investigation can investigate the nexus but the volume of cases was huge. "You (CBI) are the premier agency. We don't want any affidavit from you. You put a proposal before us how this mess can really be gone into. You can do it on a pilot basis. Tell us what assistance you require, we can provide that also," said the top court. The bench of Justices Surya Kant and N.K. Singh asked the agency to give a proposal as to how they would like to proceed with the issue. In addition, the court appointed Rajeev Jain as amicus curiae, a friend of the court, to assist them in the case.

 

During the hearing, Advocate Abhishek Manu Singhvi, appearing for financiers, said if a particular builder went into insolvency then it was not its client's fault. To this, the top court said, "Your fault is that knowing not a brick has been laid at the site, you released 60%! How can this be without quid pro quo?"

 

The apex court was hearing a batch of petitions by homebuyers about disbursement of funds by banks to builders-cum-developers through subvention schemes for various housing development projects in Noida, Greater Noida, Gurugram, and other nearby areas.

 

All the aggrieved homebuyers had purchased units in some or the other development projects launched by the builders-cum-developers. Through the subvention scheme, the builders-cum-developers advertised that they would pay the equated monthly installment or pre-EMI of the loans taken by the homebuyers to purchase the units in their development projects, till the specified cut-off taken or till the date of possession, depending on the terms of each tripartite agreement. In furtherance of these tripartite agreements, banks had disbursed majority of the loan amounts to the builders-cum-developers upfront.

 

In 2018 and 2019, when the builders-cum-developers defaulted on the required EMI or pre-EMI payments, banks began to demand payments from the homebuyers. It is pertinent to note that at the time of demanding payment from them, the homebuyers had not still received possession of their purchased units. In fact, the development projects were still under construction, incomplete, or had not even begun construction till then.

 

The petitioners have said almost 70-80% of the loan amounts were disbursed by the banks to the builders-cum-developers as 'first tranche', despite project milestones not being achieved. The banks and financial institutions had violated several provisions of the 2013 Reserve Bank of India guidelines when disbursing the amounts as the disbursal was done without any form of due diligence on behalf of the banks, said the petitioners.  End

 

Reported by Surya Tripathi

Edited by Ashish Shirke

 

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