Supreme Court Orders CBI Investigation into Home Loan Fraud by Builders and Banks in Delhi NCR

The Supreme Court of India has taken action against a suspected “unholy nexus” between banks and real estate developers that has led to the exploitation of homebuyers. On Tuesday, the Court directed the Central Bureau of Investigation (CBI) to open preliminary investigations against several builders in the National Capital Region (NCR), including Supertech Limited.

The Bench, consisting of Justices Surya Kant and N. Kotiswar Singh, found evidence suggesting that well-known banks and builders in areas like Noida, Gurugram, Greater Noida, Yamuna Expressway, Mohali, Mumbai, Kolkata, and Allahabad were involved in fraudulent activities that affected many homebuyers.

The Court referred to an affidavit filed by the CBI and ordered that the Directors General of Police (DGPs) of Uttar Pradesh and Haryana provide a list of senior officers, including Deputy Superintendents of Police (DSPs), inspectors, and constables, to help set up a Special Investigation Team (SIT) for the case.

In addition, the Court instructed senior officers from various authorities, including the Greater Noida Authority, Noida Authority, the Ministry of Housing and Urban Affairs, the Institute of Chartered Accountants of India, and the Reserve Bank of India, to appoint a senior official as a nodal officer to assist the SIT. This officer will work to ensure that the investigation proceeds smoothly.

The Supreme Court made it clear that it would monitor the progress of the investigation on a monthly basis to ensure transparency and accountability.

Rajiv Jain, an advocate who is assisting the Court as an amicus curiae (friend of the court), highlighted Supertech as the “main culprit” in this case. He pointed out that Corporation Bank had provided over Rs 2,700 crore to builders through subvention schemes, which are at the heart of this fraud.

According to the reports submitted to the Court, Supertech had 21 housing projects in six cities and had agreements with 19 banks. There are around 800 homebuyers who have been affected by these projects. The investigation revealed that Supertech alone had secured loans worth Rs 5,157.86 crore since 1998, raising concerns about the scale of the scam.

The issue centers around the subvention scheme, a loan arrangement where banks pay a large part of the home loan amount (60-70%) directly to the builders. The builders are supposed to pay the monthly installments (EMIs) on the loan until the flats are delivered to homebuyers. However, many builders, including Supertech, started defaulting on their EMI payments. As a result, banks demanded homebuyers to start paying the EMIs, even though they had not received possession of their flats.

This system caused significant hardship to homebuyers, many of whom were forced to pay EMIs without being able to move into their homes. The Supreme Court previously noted that thousands of buyers were affected by this fraudulent scheme, where projects were not completed on time, despite substantial payments being made by the banks.

The Court had previously ordered the CBI to come up with a plan to investigate the deep-rooted connection between builders and banks that led to these fraudulent practices. The focus was to get to the bottom of how this network exploited the homebuyers and left them stranded with unfinished homes.

The case came to the Supreme Court after over 1,200 homebuyers filed petitions, alleging that they were being forced to pay EMIs for flats they had booked under the subvention scheme in NCR projects, particularly in Noida, Greater Noida, and Gurugram. Many of these homebuyers have still not received possession of their homes, despite paying a significant amount of money upfront.

The Court’s intervention is a crucial step toward holding both the builders and the banks accountable for their role in this large-scale scam and ensuring that justice is served for the affected homebuyers.