The Supreme Court has taken a strong stand against real estate companies and banks for allegedly exploiting homebuyers in the National Capital Region (NCR). On Tuesday, a bench comprising Justices Surya Kant and N Kotiswar Singh called for an investigation into the builder-bank nexus, stating that poor homebuyers had been held to ransom by both parties. The court has sought a response from the Central Bureau of Investigation (CBI) to conduct the probe.
Court Slams Builders and Banks Over Delayed Housing Projects
During the hearing, the bench expressed its frustration over builders, interim resolution professionals (IRPs), and banks failing to provide details of delayed housing projects in NCR and their construction status. The court emphasized the need for a Special Investigation Team (SIT) probe to expose the alleged collusion between builders and banks.
Thousands of homebuyers had filed petitions, claiming that banks were forcing them to pay EMIs despite long delays in project completion. Many buyers had booked flats under subvention schemes, where banks directly disbursed the loan amount to builders, and the builders were responsible for paying the EMIs until possession. However, when builders defaulted, banks started demanding payments from homebuyers, citing the Tripartite Agreement.
Supreme Court to Involve CBI in Investigation
The court strongly criticized the situation, stating,
“People invested their hard-earned money, but poor homebuyers have been taken to ransom. An SIT must be formed to investigate the builder-bank nexus, and we will direct the CBI to register a case,” the bench remarked.
It also made it clear that interim resolution professionals (IRPs) handling insolvent builders will not be spared. However, it assured that those who acted honestly and in accordance with the law had nothing to fear. The court also stated that every bank involved in such transactions must be investigated. The specific questions for the CBI probe will be formulated in the next hearing.
Homebuyers’ Advocates Demand Justice
Advocates Anshul Gupta, Aditya Parolia, and Piyush Singh, representing homebuyers, strongly supported the need for an investigation. The court was also displeased that relevant project details had not been submitted, despite an earlier order.
The Supreme Court had previously instructed all parties—including petitioners, builders, and banks—to provide critical details regarding:
- Payments made by builders to banks or homebuyers to banks/builders.
- Possession status of completed projects.
- Current construction status of delayed projects.
- Recovery actions taken by banks against homebuyers.
- Amenities promised by builders at the time of project launch and their current status.
- Legal proceedings against builders, including insolvency under the Insolvency and Bankruptcy Code (IBC).
- Relief granted by regulatory bodies such as RERA (Real Estate Regulatory Authority).
SC Had Earlier Protected Homebuyers from Coercive Action
In July 2023, the Supreme Court had ruled in favor of homebuyers, directing that banks and builders could not take coercive action against them regarding EMI payments. It also prohibited legal action against them in cases of cheque bounces related to these loans.
Homebuyers argued that they were victims of illegal loan disbursal practices by banks, which violated RBI guidelines. They claimed that banks had sanctioned loans in favor of builders without ensuring proper safeguards, leaving homebuyers burdened with payments for projects that remained unfinished.
One petition summarized the issue, stating:
“This is a classic case where a rich man (bank/financial institution) gave money to another rich man (builder). The builder took the money and ran away without fulfilling his obligations. The bank, which disbursed the money illegally, is now forcing the poor homebuyer—who never received a rupee of that loan—to repay the amount and pushing them into litigation.”
Homebuyers Trapped in Legal and Financial Crisis
The petitioners also alleged that homebuyers were used as a means to secure loans, allowing banks to transfer money directly to builders without proper oversight. As a result, buyers remain stuck in legal disputes, facing ongoing EMI demands from banks even when the liability rests with the builder.
The lack of a proper legal framework to handle such cases has further worsened the situation, as insolvency proceedings against builders do not provide adequate protection to homebuyers. The Supreme Court’s intervention is now expected to bring relief to thousands of affected buyers, as it pushes for accountability from builders, banks, and financial institutions.
The matter will be taken up in the next hearing, where the Supreme Court will finalize the scope of the CBI investigation into this massive housing scandal.
