20 hours Ago By Amit Anand Choudhary
NEW DELHI: Taking strong exception to real estate firms and banks making “homebuyers cry” by not completing projects on time and forcing them to pay EMIs, SC on Tuesday said a CBI probe was needed to unearth the nexus between them and sought a proposal from the agency on how it intends to conduct the investigation, which could bring many realtors under the scanner. Submit builder-bank nexus probe blueprint in 2 weeks: SC to CBI A bench of Justices Surya Kant and N Kotiswar Singh said the builderbank nexus had created havoc, leaving lakhs of homebuyers suffering and it was ultimately Supreme Court which was coming to their rescue. It said SC was dealing with multiple cases of homebuyers of different projects on a daily basis, and it was not the court’s job.
“We will definitely have a CBI probe. That is clear. 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,” the bench said. It asked CBI to come up with a proposal in two weeks on how to conduct the probe — whether project-wise or area-wise.
Considering that the proposed probe against builders and banks would be a huge exercise, bringing virtually the entire real estate sector under the lens, the bench sought the assistance of former Intelligence Bureau chief Rajiv Jain. Court appointed the 1980-batch IPS officer, who is now practising law, as amicus curiae and asked him to file a note on how to proceed in the case. The court was hearing petitions filed by thousands of homebuyers who had booked flats under subvention plans in various housing projects in NCR and alleged that they were being forced by banks to pay EMIs despite not getting possession of their flats because of inordinate delay by developers.
Under the subvention scheme, banks disburse the sanctioned amount directly to the accounts of builders, who pay EMIs on the amount till flats are handed over to homebuyers. As builders started defaulting in paying EMIs as per the tripartite agreement, banks initiated action against homebuyers to recover the payments. Realising the fallout of a CBI probe, some financial institutions urged the court not to bring the agency into the picture as it would create instability and requested that RBI be asked to look into the matter.
Senior advocates Abhishek Manu Singhvi and Ranjit Kumar, appearing for financial institutions, urged the court not to paint all banks with the same brush and said their clients had already placed all information before the bench as sought by it. Singhvi said if a particular builder became insolvent, then the fault did not lie with banks. But the bench questioned how a bank could release money to a builder despite knowing that not a brick was laid at the site.
The court made it clear that “no one will be spared” but those who acted fairly should not be afraid of the impending investigation. Additional solicitor general Aishwarya Bhati, appear ing for CBI, said at the outset that the agency would take the case if the court directed and suggested that the probe could start with investigation into any project in Greater Noida. The court, however, asked the agency to come back with a detailed proposal.
SC decided to take stern action after very few builders and banks complied with its order to give details of their projects and loans sanctioned. Out of roughly 40 builders and 30 banks/financial institutions which are party in the proceedings, only nine banks and five builders filed their compliance affidavits. “This blatant disregard and ignorance of the court’s directions, coupled with their reluctance in appropriately assisting the court, hints to wards a possible collusion between builders-cum-developers and banks/financial institutions,” the bench said.
The bench had directed the petitioners, builders and banks to furnish the following information regarding different projects — (i) The status and details of payments made by builders to banks or payments by homebuyers to banks/ builders, (ii) The date of offering possession where the project is stated to have been completed, (iii) The current status of completion of the project, (iv) The status of recovery from homebuyers, (v) The amenities advertised by builders at the time of launching projects and the status regarding completion thereof, (vi) The status as to whether the builder-cum-developers had undergone CIRP (under IBC) or any other coercive or non-coercive recovery procedure, and the stage of such proceedings, (vii) Whether homebuyers received any relief from statutory authorities like RERA. If so, the details of such orders were to be furnished. SC had in July last year protected homebuyers and directed that no coercive action be taken against them by banks or builders regarding payment of EMIs and no complaint shall be entertained against them for cheque bounce cases.
The aggrieved homebuyers said they were victims of illegal disbursal of loans by banks directly into the account of builders in violation of RBI guidelines, which are statutory in nature. “This is a classic case where one rich man (bank/financial institution) gave money to another rich man (builder). The rich man who received the money (builder) ran away with it without fulfilling his obligations.
The rich man who gave the money (bank/financial institution) disbursed it in violation of the law of the land. The poor man (homebuyer) is now made a victim and is pushed into litigation by the bank when he has not received a single rupee. And is deprived of his dream home,” one of the petitions said.
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