The Supreme Court has expressed concern about the alleged nexus between banks and builders and assured that a probe by the Central Bureau of Investigation will be held into the grievances of homeowners. A group of homeowners have gone to court, claiming that they are being forced by banks to pay EMIs although they have not obtained possession of flats due to delay by builders and developers. 

“We are not going to certify any institution as bad or good,” said Justice Surya Kant, who was heading the two-judge bench hearing the matter. 

“We will definitely have 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 timebound manner,” he added. The Central agency has been asked to file a plan on how it intends to tackle the job.

In a landmark ruling in July 2024, the Supreme Court had directed that no coercive action, including EMI recovery, should be taken against homebuyers in the National Capital Region (NCR) who haven’t received possession of their flats.

But the order is far from being implemented. Moreover, the homeowners have alleged that the loan amounts were illegally disbursed directly into the accounts of the builders/developers in violation of RBI guidelines.

It has also been alleged that the homebuyers were used as a medium to get the loans sanctioned. When the buyers objected, the banks initiated action against them, it has been alleged.

“We may not certify a single bank free from doubt…we have seen their functioning…you see the conduct of public institutions!” Justice Kant said. 

When Abhishek Manu Singhvi, who was representing the financers, said, “If a particular builder goes insolvent, it’s not my fault,” Justice Kant shot back, “Your   fault is that knowing not a brick has been laid at the site, you released 60 per cent! How can this be without quid pro quo!?”

Mr Singhvi suggested that the banks can refrain from charging interest till possession is given. But the court shot it down. 

“It is not going to address the larger issue. It is not going to heal the ailment the entire system is suffering from. Lakhs, lakhs of people… the Supreme Court is handling the poor people’s plight every day,” Justice Kant said.

“We don’t want any reluctance. We want to go into the root… we have zero tolerance. We will request the amicus (curiae) to assist,” the judge said. 

The court decided to appoint an amicus curiae since the volume of such cases is huge. The next hearing will be held after two weeks.