The Supreme Court has raised serious concerns over possible collusion between banks and real estate developers in housing projects financed through subvention schemes in Noida, Greater Noida, and Gurugram. The court hinted at a Central Bureau of Investigation (CBI) probe into the matter.
A Bench comprising Justices Surya Kant and N Kotiswar Singh remarked that “not a single bank seems to be free from doubt” and criticized the way banks released payments to developers without verifying project progress. The court emphasized that banks disbursed loans before even a single brick was laid in some cases.
Supreme Court’s Observations
The court was hearing petitions filed by homebuyers who alleged financial distress due to project delays and defaults by developers under tripartite agreements involving banks, builders, and buyers. The affected homebuyers complained that banks continued demanding loan repayments from them despite builders failing to complete projects.
The issue involves housing projects funded through subvention schemes, where buyers initially pay only a small percentage (5-10%) while banks directly finance developers. However, when projects stalled or remained incomplete, banks began asking buyers for payments even though they had not received possession of their homes.
The Supreme Court took a strong stance, pointing at possible collusion between banks and builders, stating that banks released funds without verifying project progress. The court noted that in several cases, the construction had not even begun, yet buyers were being asked to repay loans.
Court Directs CBI Investigation
Taking note of the homebuyers’ plight, the Bench directed the CBI to submit a detailed investigation proposal within two weeks. The court also appointed former Intelligence Bureau Director Rajiv Jain, who previously served with the National Human Rights Commission (NHRC), as Amicus Curiae to assist in the probe.
Senior Advocate Abhishek Manu Singhvi, appearing for one of the banks, argued that not all financial institutions should be judged alike. However, the court remained firm on its decision, stressing the need for a thorough and impartial investigation.
Recognizing the gravity of the issue, Justice Kant remarked, “So many helpless people are there. Something has to be done in a timely manner. A huge section of society is involved.”
Next Steps
The Supreme Court has scheduled the next hearing on April 29, by which time the CBI must present its investigation plan. The Amicus Curiae has also been asked to submit recommendations for an effective probe into the matter.
This case highlights the ongoing struggles of homebuyers trapped in delayed real estate projects and raises serious questions about the role of banks in housing finance. The Supreme Court’s intervention may pave the way for stricter regulations and accountability in the real estate sector.
