HC Delhi (2026.08.18) in N Siddharth vs Union of India and Ors. [W.P.(C) 11883/2026] held that;
For the said reasons, I am satisfied that the petitioner has a prima facie case, the balance of convenience lies in favour of the petitioner. The petitioner would suffer irreparable loss and injury as the petitioner was a victim of collusion between the respondent No. 2 and 4. This Court cannot allow the petitioner to suffer on account of fraudulent actions of the respondent No. 4.
Excerpts of the Order;
CM APPL. 55007/2026
Exemptions granted, subject to all just exceptions.
The application is disposed of.
W.P.(C) 11883/2026
# 1. This is a writ petition filed under Article 226 of the Constitution of India seeking the following prayers:-
“a. Issue an appropriate writ, order or direction m the nature of Mandamus, directing Respondent No. 2 not to initiate or continue any coercive recovery proceedings against the Petitioner, including recovery of the outstanding housing loan amount, declaration of the loan account as a Non-Performing Asset (NPA), or any other adverse action, in respect of the housing loan sanctioned for Flat No. 903, 9th Floor, Tower Luxor, Sikka Kamna Greens, Sector-143 , Noida, during the pendency of the present proceedings.
b. Issue an appropriate writ, order or direction directing Respondent No. 2 to keep the Petitioner's housing loan account in abeyance and suspend the recovery of EMIs, interest, penal interest and all other charges until the Petitioner is handed over lawful possession of the allotted flat or until the rights and liabilities of the parties are finally adjudicated in accordance with law.
c. Issue an appropriate writ, order or direction directing Respondent No. 2 not to report or communicate any adverse information relating to the Petitioner's loan account to any Credit Information Company, including CIBIL, and, if any adverse reporting has already been made, to suitably rectify and restore the Petitioner's credit records in accordance with law.
d. Issue an appropriate writ, order or direction directing Respondent Nos. 1 and 3 to examine the ·legality of the sanction and disbursement of the housing loan by Respondent No. 2 in the light of the applicable RBI Master Directions, NHB Circulars and other governing regulatory framework, and to take appropriate action in accordance with law.
e. Issue an appropriate writ, order or direction directing Respondent No. 2 to produce before this Hon'ble Court the complete loan file, including the loan disbursement records, stage-wise construction verification reports, inspection reports, internal approvals and all other records relating to the release of the loan amount in respect of the Petitioner's housing loan. ..”
# 2. For the reasons stated in the petition, issue notice.
# 3. Mr. Beriwal, learned SPC, accepts notice on behalf of the respondent No. 1, seeks and is granted time to file a reply/ obtain instructions before the next date of hearing.
# 4. Issue notice to all other respondents through all modes, including electronic, on the petitioner taking steps within 1 week from today, returnable on 27.10.2026.
# 5. Mr. Raman, learned counsel for the petitioner, presses for interim relief. However, no application for the same has been filed. Accordingly, the matter is taken up for hearing.
# 6. The brief facts of the case are that the petitioner is a home-buyer and respondent No. 4 is a company incorporated under the Companies Act engaged in the business of construction of houses, flats, villas, developed residential plots, buildings, and other facilities, including the project “Sikka Kamna Greens”, situated at Plot No. GH-03/B, Sector-143, Noida (“the Project”).
# 7. The respondent No. 2, i.e., HDFC Bank Limited, is a scheduled commercial bank registered with and regulated by the Reserve Bank of India (“RBI”). Respondent No. 3, i.e., RBI, is a statutory body, constituted under the Reserve Bank of India Act, 1934, entrusted with the management of currency and business of banking in India.
# 8. The petitioner booked a residential apartment bearing Flat No. 903, 9th Floor, Tower Luxor, in the Project developed by the respondent No. 4. The petitioner and the respondent No. 4 entered into a Flat Allotment Agreement dated 31.07.2012. The said flat was allotted to the petitioner under a subvention scheme wherein the respondent No. 4 was required to pay pre- EMI payments to the respondent No. 2, i.e., EMIs till the date of handover of possession to the petitioner. Thereafter, the respondent No. 2 bank sanctioned a housing loan of Rs. 26,00,000/- in the favour of the petitioner under a construction linked payment plan.
# 9. Subsequently, a Tripartite Agreement dated 07.11.2012 was executed between the petitioner, respondent No. 4 builder, and respondent No. 2 bank.
# 10. The respondent No. 2 has directly disbursed a substantial amount to the respondent No. 4 without ensuring that the disbursements correspond with the actual stages of construction.
# 11. The terms of the Builder Buyer Agreement stated that possession was to be delivered to the petitioner within 40 months from the date of casting of the raft of the respective tower in which the allotted flat is situated, with an additional grace period of 6 months. However, the respondent No. 4 failed to complete the construction and also did not pay the EMIs. The respondent No. 4 has abandoned and failed to complete the project within the promised timeline. The petitioner was constrained to discontinue further payments. However, despite the failure of the project the respondent bank continued to treat the petitioner liable for repayment of loan amount.
# 12. Thereafter, the respondent No. 4 informed the petitioner that the allotment of the said flat stood cancelled as the petitioner failed to make the payment. Upon enquiring, the petitioner attained knowledge that the respondent No. 4 had created third party rights in the said flat. The petitioner lodged a police complaint in this regard.
# 13. Learned counsel for the petitioner draws my attention to Clause 88 of the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021, which reads as under:
“88. Disbursement of housing loan to individuals linked to the stages of construction
88.1. Disbursal of housing loans sanctioned to individuals shall be strictly linked to the stages of construction of the housing projects/ houses and upfront disbursal shall not be made in case of incomplete/ under-construction/ green field housing project/ houses.
88.2. HFCs while introducing any kind of product shall take into account the customer suitability and appropriateness issues and also ensure that the borrowers/ customers are made fully aware of the risk and liabilities under such products.
88.3. In cases of projects sponsored by Government/Statutory Authorities, HFCs may disburse the loans as per the payment stages prescribed by such authorities, even where payments sought from house buyers are not linked to the stages of construction, provided such authorities have no past history of non-completion of projects.
88.4. HFCs shall desist from offering loan products involving servicing of the loan dues by builders/ developers etc. on behalf of the borrowers.
88.5. HFCs shall have in place a well-defined mechanism for effective monitoring of the progress of construction of housing projects and obtaining consent of the borrower(s) prior to release of payments to the builder/developer.
88.6. HFCs while extending finance shall take into account the stipulations laid down under RERA, as applicable.”
# 14. Learned Counsel states that the respondent No. 2 would be covered by the above Master Directions and also National Housing Bank circular NHB/ND/DRS/Policy Circular No.96/2019-20 dated 19.07.2019, wherein clause 4 which reads as under:
“4. Further, reference is also drawn to the Circular No.NHB(ND)/DRS/Policy Circular No.75/2016-17 dated July 01, 2016 whereby HFCs were again advised that disbursal of housing loans should be strictly linked to the stages of construction and no upfront disbursal should be made in case of incomplete/un-constructed projects. It is reiterated that disbursal of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing project/houses. In cases of projects sponsored by Government/Statutory Authorities, HFCs may disburse the loans as per the payment stages prescribed by such authorities, even where payments sought from house buyers are not linked to the stages of construction, provided such authorities have no past history of non-completion of projects.” (Emphasis supplied)
# 15. A perusal of the aforesaid clauses indicates that respondent No. 3 cautions the banks not to disburse the entire loan in one go but to do it according to the stage of construction. The Master Directions and the circular have been given a total go-by by respondent No. 2.
# 16. In view of the above factual narration, it is clear that the petitioner is, prima facie, a victim of collusion between respondent Nos. 2 and 4. Despite not getting a flat or even the flat having been constructed, the petitioner has paid a sum of INR 12,55,951/- towards the principal and INR 22,66,788/- towards interest to the respondent No.2.
# 17. The actions of respondent No. 2, prima facie, seem to violate the circular dated 19.07.2019 and Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021.
# 18. For the said reasons, I am satisfied that the petitioner has a prima facie case, the balance of convenience lies in favour of the petitioner. The petitioner would suffer irreparable loss and injury as the petitioner was a victim of collusion between the respondent No. 2 and 4. This Court cannot allow the petitioner to suffer on account of fraudulent actions of the respondent No. 4.
# 19. Hence, the respondent No. 2 is restrained from taking any coercive or precipitative action against the petitioner till the next date of hearing.
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