The Supreme Court on Tuesday mandated the Central Bureau of Investigation (CBI) to devise a comprehensive plan to tackle the alleged collusion between builders and banks, which has resulted in substantial financial losses for thousands of homebuyers in the National Capital Region (NCR). The directive aims to delve into the depths of the “builder-banks nexus” implicated in widespread frauds.
Presided over by Justices Surya Kant and N Kotiswar Singh, the court heard grievances concerning the subvention scheme, where banks reportedly disbursed 60 to 70 percent of home loans directly to builders without ensuring the completion of the projects within agreed timelines. The scheme was intended to ease financial burdens on homebuyers by having builders cover the Equated Monthly Installments (EMIs) until possession. However, following defaults by builders on these EMIs, banks began demanding payments from homebuyers directly.
The bench expressed its intention to thoroughly investigate these malpractices, stating, “We don’t want any reluctance on the part of the CBI. We want to go to the depth of it, to the ultimate extent. They will have a free hand.”
The court appointed advocate Rajiv Jain as amicus curiae to assist in the case. Jain, a former Intelligence Bureau officer with expertise in economic offenses, is expected to provide substantial insights into tackling such complex cases.
CBI counsel, Additional Solicitor General Aishwarya Bhati, proposed initiating the investigation in Greater Noida, a region notorious for burgeoning housing projects and numerous complaints from homebuyers. The bench approved this approach, suggesting that starting with a pilot project in Greater Noida could pave the way for a broader investigation.
Addressing the bench, Senior Advocate Abhishek Singhvi, representing one of the implicated financial institutions, acknowledged the presence of both compliant and non-compliant entities within the industry. “I understand there are good apples as well as bad apples. My problem is that I was in the same basket,” he commented, highlighting the complexity of discerning responsibility in such intertwined financial and construction operations.
Justice Surya Kant pointed out the substantial backlog of real estate-related cases before the Supreme Court, underscoring the systemic nature of the issue. Despite the legal intricacies, the court was firm in its resolve to rectify the ongoing injustices faced by homebuyers, emphasizing that financial institutions should have been more cautious before releasing substantial funds for incomplete projects.
