On Friday, the Supreme Court of India strongly criticized HDFC Bank for allegedly harassing a homebuyer and suggested that the bank officials involved in the case should be investigated for possible collusion with the builders. The Court’s remarks came after it reviewed a case in which a homebuyer, Santosh Soni, had entered into a loan agreement with HDFC Bank and a builder, International Land Developers Private Ltd. The bank had disbursed the home loan to the builder, but the property was not delivered to the buyer as agreed. Despite this, the bank started proceedings to recover the loan from the homebuyer.
Court Emphasizes the Need for Banks to Protect Consumers’ Interests
Justices Surya Kant and Ujjal Bhuyan, who were hearing the case, said that banks should treat their customers, especially homebuyers, with more consideration. They pointed out that homebuyers are humans, and banks must understand and protect their interests. “What banks have is after all the money of the consumers,” the bench remarked, urging the bank to be more responsible in its dealings with customers.
Homebuyer Soni’s Case: Loan Disbursed but Property Not Delivered
The case involves a home loan disbursed by HDFC Bank to the builder for the purchase of a property. While the loan was given to the builder, the property was not completed and handed over to the homebuyer. However, the bank had already made payments to the builder. Later, the bank initiated recovery proceedings against the homebuyer, Soni, for defaulting on loan repayments, even though the property had not been delivered as promised.
Subvention Scheme and Builder’s Failure to Deliver Property
The homebuyer, Soni, had purchased the property under a scheme called the “subvention scheme.” In this scheme, the bank gives the loan to the builder, and the builder is supposed to bear the interest cost until the buyer takes possession of the property. In this case, the builder failed to hand over the property, but the bank still disbursed the loan to the builder. As a result, Soni, the homebuyer, faced financial and legal troubles.
Punjab and Haryana High Court Raises Concerns About Possible Collusion
The Punjab and Haryana High Court had earlier heard the case and raised concerns that there might have been some wrongdoings by the bank officials, suggesting that they could have been working in collusion with the builder. The High Court had issued an interim order asking the bank and the builder to explain why they should not be investigated. This order also suggested that the builder’s property could be seized to recover the loan amount.
Supreme Court Refuses to Intervene, Supports High Court’s Interim Order
When the case reached the Supreme Court, HDFC Bank appealed against the High Court’s order. However, the Supreme Court refused to intervene and said it would not interfere with the High Court’s interim order. The Court stressed that if it was found that bank officials were indeed working with the builder to cheat the homebuyer, then they should be investigated and punished. “Are bank officers above the law? Banks must sensitise their officers. All bank managers have become property dealers,” the bench remarked, emphasizing that bank officials should be more careful in their professional conduct.
Supreme Court Suggests CBI Investigation if Collusion is Found
The Court also referred to a previous case where a bank auctioned a property in Haryana, which was later bought by a relative of the bank manager. The Supreme Court had ordered an inquiry into that case, and it was later confirmed that there had been wrongdoing. This, the bench pointed out, demonstrated the importance of investigating such cases thoroughly. The Supreme Court also suggested that the matter could be referred to the Central Bureau of Investigation (CBI) if further evidence of corruption and wrongdoing comes to light.
HDFC Bank’s Defense Rejected by the Court
HDFC Bank argued that the case was simply a loan default issue, where the homebuyer had failed to repay the loan installments. The bank’s lawyer stated that the homebuyer had missed 50 installments and, therefore, the bank was within its rights to take action. However, the Supreme Court disagreed with this argument and stated that the case was not one where the Court needed to get involved at this stage.
The Tripartite Agreement and the Homebuyer’s Struggle
The case involves Santosh Soni, the homebuyer, who had signed a tripartite agreement with both HDFC Bank and International Land Developers. The bank disbursed the loan to the builder, but the property was never completed or handed over to Soni. Despite this, the bank moved forward with legal action to recover the loan from Soni under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act.
High Court Orders Inquiry Against Bank Officials
The Punjab and Haryana High Court had raised concerns about possible collusion between bank officials and the builder. It noted that while the bank had paid the builder, the homebuyer never received the property. The High Court had issued an order asking why the builder’s property should not be seized to recover the loan, and why an investigation should not be launched against the bank officials.
Supreme Court’s Criticism of Authorities Indifferent to Homebuyers’ Rights
This ruling follows a similar situation earlier this year, where the Supreme Court had criticized authorities in Noida for their indifference to homebuyers who had been waiting for years to receive their apartments. These buyers had been caught in a situation where developers had delayed construction, and authorities were still trying to recover dues from the developers. The Supreme Court had called for better protection of homebuyers’ rights in such cases.
