‘Thousands suffering’: SC seeks CBI roadmap on builder-bank nexus duping homebuyers
New Delhi: The Supreme Court has raised serious concerns over the alleged collusion between banks and real estate developers, assuring aggrieved homeowners that the Central Bureau of Investigation (CBI) will conduct a thorough probe into their grievances. The court ordered the CBI to submit a roadmap on how it plans to unravel the “builder-banks nexus”, which has duped thousands of homebuyers in the NCR, as it proposed to get into the root of the matter.
A group of homebuyers moved the apex court, alleging that despite significant delays in possession due to the inaction of builders, they are being compelled by banks to continue paying EMIs. The petitioners claim that financial institutions released 60 to 70 per cent of loan amounts directly to developers, in violation of Reserve Bank of India (RBI) guidelines, leaving homebuyers trapped in a financial crisis.
Justice Surya Kant, leading the two-judge bench hearing the matter, remarked, “We are not here to certify any institution as good or bad. But we will definitely ensure a CBI investigation takes place. That is clear. Thousands of people are suffering. We may not be able to wipe their tears, but we can certainly address their issues.” The court has directed the investigating agency to present a detailed plan outlining its course of action.
In a significant ruling in July 2024, the Supreme Court had barred banks from taking coercive measures, including EMI recovery, against homebuyers in the National Capital Region (NCR) who have yet to receive possession of their flats. However, the petitioners argue that the order has not been effectively enforced. Justice Kant did not mince words in criticising financial institutions. “We may not be able to certify even a single bank as free from doubt. We have seen their functioning,” he observed.
Senior advocate Abhishek Manu Singhvi, representing financial institutions, contended that lenders could not be held responsible if builders defaulted. “If a particular builder goes insolvent, it is not our fault,” he argued. However, Justice Kant questioned the role of banks in disbursing substantial amounts without verifying project progress. “Your fault is that despite knowing there was no construction, you released 60 per cent of the funds without projects being completed within the stipulated time! How can this happen without quid pro quo?” he asked.
Singhvi proposed that banks could suspend interest charges until possession is granted. The court, however, dismissed this suggestion. “This will not resolve the larger issue. The entire system is affected, and lakhs of people are suffering. We must get to the root of the problem,” Justice Kant asserted.
The court has decided to appoint an amicus curiae, acknowledging the sheer volume of such cases. The matter has been listed for further hearing in two weeks, with the Supreme Court reaffirming its commitment to a zero-tolerance approach in addressing homeowners’ grievances.
