SCI (2025.03.04) in Himanshu Singh & Ors. Vs. Union of India & Ors. [Petition(s) for Special Leave to Appeal (C) No(s).7649/2023] constituted a Special Investigation Team (in short, “SIT”) to uncover the nexus between the banks/financial institutions and the builders-cum-developers;
In such circumstances, it may be necessary to constitute a Special Investigation Team (in short, “SIT”) to uncover the nexus between the banks/financial institutions and the builders-cumdevelopers with respect to the development projects where the homebuyers have paid substantial amounts and where the development projects have not even been launched, have not completed construction, or have not begun construction.
Excerpts of the Order;
# 1. The instant batch of petitions concern the disbursement of funds by banks to builders-cum-developers through subvention schemes for various housing development projects in Noida, GreaterNoida, Gurugram, and other nearby areas.
# 2. There are three parties to the subvention schemes – the aggrieved homebuyers, the builders-cum-developers, and the banks/financial institutions. The aggrieved homebuyers are the Petitioners before this court.
# 3. All the aggrieved homebuyers purchased units in some or the other development projects launched by the builders-cumdevelopers. Through the subvention scheme, the builders-cumdevelopers advertised that they would pay the EMI/pre-EMI of the loans taken by the homebuyers to purchase the said units in their development projects, till the specified cut-off taken or till the date of possession, depending on the terms of each tripartite agreement. The homebuyers obtained loans from the respondent-banks.
# 4. In furtherance of these tripartite agreements, the banks disbursed majority of the loan amounts to the builders-cumdevelopers upfront. In 2018 and 2019, when the builders-cumdevelopers defaulted on the required EMI/pre-EMI payments, the banks began to demand payments from the homebuyers. It is pertinent to note that at the time of demanding payment from them, the homebuyers had not still received possession of their purchased units. In fact, the development projects were still under construction, incomplete, or had not even begun construction till then. Many of these projects incomplete and to this day, most homebuyers have not been granted possession of their units. Owing to this, in 2020, Corporate Insolvency Resolution Process (in short, “CIRP”) proceedings commenced under the Insolvency and Bankruptcy Code, 2016 against the builders-cum-developers, before various National Company Law Tribunals across those regions.
# 5. Aggrieved by the banks claiming monthly instalments from them, the homebuyers approached the High Court of Delhi for a writ of mandamus, inter alia, directing, among others: (i) the banks to charge EMI/pre-EMI payments from the builders-cum-developers, not
the homebuyers; (ii) to refund the already recovered amount to the homebuyers and recover it from the builders-cum-developers; and (iii) the RBI to take strict action against the banks. Parallelly, some homebuyers approached the Real Estate Regulatory Authorities and various consumer fora for relief. The High Court, vide a common judgment dated 14.03.2022, dismissed the writ petitions owing to the alternate remedy available before the Real Estate Regulatory Authority.
# 6. Challenging the same, the homebuyers have approached this Court. The homebuyers allege that: (i) Since the subject matter of the writ petitions concerned public interest and thousands of homebuyers, the writ petitions ought not to have been dismissed by the High Court; (ii) Almost 70-80% of the loan amounts were disbursed by the banks to the builders-cum-developers as ‘first tranche,’ despite project milestones not being achieved; and (iii) The banks and financial institutions violated several provisions of the 2013 RBI Guidelines when disbursing the amounts as the disbursal was done without any form of due diligence on behalf of the banks.
# 7. On 05.11.2024, in order to have a better understanding of the latest stage of construction for the development projects and the large financial sums involved, and to ultimately ensure that reliefs are granted in a timely manner, this Court directed the homebuyers, builders-cum-developers, and banks/financial institutions to furnish the following information by way of compliance affidavits within 4 weeks:
(i) The status and details of the payments made by the buildercum- developers to the financial institutions or such payments made by the home-buyers to the financial institutions/builder-cum-developers.
(ii) The date of offering possession to the home-buyers, where the project is stated to have been completed.
(iii) The current status of completion of the project, including the details of the Completion Certificate and other statutory certificates granted by the prescribed authorities, along with details of the possession given or offered to the home-buyers.
(iv) The status of recovery from the home-buyers, namely, whether they have made EMI payments to the banks or not.
(v) The amenities advertised by the builder-cum developers at the time of launching the project and the status re: completion thereof.
(vi) The status as to whether the builder-cum developers has undergone CIRP (under IBC) or any other coercive or non-coercive recovery procedure, and the stage of such proceedings.
(vii) Whether the home-buyers have received any relief or remedial order from the statutory authorities like Real Estate Regulatory Authority (RERA). If so, the details of such orders be also furnished.
# 8. As a last opportunity, on 07.01.2025, this Court granted the Respondent-banks/financial institutions and builders-cumdevelopers 4 more weeks to file their compliance affidavits.
# 9. Despite this Court’s repeated instructions, emphasizing the seriousness of the matter, out of roughly 40 builders-cumdevelopers and roughly 30 banks/financial institutions, only 9 banks/financial institutions and 5 builders-cum-developers have filed their compliance affidavits for the order dated 05.11.2024.
# 10. This blatant disregard and ignorance of the Court’s directions, coupled with their reluctance in appropriately assisting the Court, hints towards a possible collusion between the builders-cum-developers and the banks/financial institutions.
# 11. In such circumstances, it may be necessary to constitute a Special Investigation Team (in short, “SIT”) to uncover the nexus between the banks/financial institutions and the builders-cumdevelopers with respect to the development projects where the homebuyers have paid substantial amounts and where the development projects have not even been launched, have not completed construction, or have not begun construction.
# 12. The Standing Counsel for the Central Bureau of Investigation (in short, “CBI”) is directed to remain present in this Court on the next date of hearing for the purpose of constituting an SIT. He may also have instructions as to why the CBI should not be asked to register a case and then proceed to investigate the nexus between the banks and the builders. Alternatively, constitution of a SIT at its own will also be considered by this Court.
# 13. I.A. No. 3130/2025 in SLP(C) No. 18592/2023, I.A. No. 2913/2025, I.A. No. 3158/2025 and I.A. No. 6808/2025 in SLP (C) No. 18598/2023 and I.A. No. 6968/2025 in SLP (C) No. 693/2024 are allowed in terms of the prayer made.
# 14. List on 18.03.2025 as a part-heard matter.
# 15. To be taken up as the first case.
# 16. Meanwhile, proceedings before the Debt Recovery Tribunals or any other Tribunal may continue. However, no Recovery Certificate shall be executed against the home-buyers.
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