The Supreme Court ordered that no coercive action be taken against NCR home buyers by banks or builders. The buyers argued in their petition that they were victims of illegal loan disbursements, with banks transferring funds directly to builders’ accounts, violating RBI guidelines.
New Delhi: In a significant relief for home buyers awaiting possession of their flats in the National Capital Region (NCR), the Supreme Court ruled that no coercive actions shall be taken against them by banks, financial institutions, or builders regarding EMI payments. Furthermore, no cheque bounce cases will be accepted against these buyers.
The Supreme Court hearing a series of appeals against a Delhi High Court order that dismissed petitions from numerous home buyers. These petitions sought to prevent banks and financial institutions from charging Equated Monthly Instalments (EMIs) until the real estate developers handed over possession of the flats.
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Dissatisfied with the high court’s decision, the home buyers approached the Supreme Court, which decided to review the matter and requested responses from the involved parties.
A bench comprising Justices Surya Kant and Ujjal Bhuyan issued notices to the Centre, banks, and others in response to the appeals against the Delhi High Court order dated March 14, 2023.
The bench stated in its July 15 order,
“In the meantime, there shall be interim stay in all the matters, to the effect that no coercive action including complaint under section 138 of the Negotiable Instruments Act, 1881 shall be entertained on behalf of the Banks/Financial Institutions or Builders/Developers against the home buyers,”
The case scheduled for hearing before the Supreme Court on September 27.
The home buyers argued in their petition that they were victims of the banks’ illegal loan disbursements directly into the builders’ accounts, violating RBI guidelines.
The Delhi High Court dismissed the writ petitions, citing that the petitioners had alternative remedies available under various laws such as the Consumer Protection Act, Insolvency and Bankruptcy Code, and the Real Estate Regulation and Development Act.
The petitioners, including the Supertech Urban Home Buyers Association (SUHA) Foundation, which consists of 123 home buyers, and other similarly situated individuals, had taken home loans from banks and financial institutions based on a subvention scheme. This scheme involved disbursing the sanctioned loan amount directly to the builder, who was supposed to pay the pre-EMIs or full EMIs. However, in this case, the builders failed to deliver possession and did not pay the EMIs, leaving the banks to demand repayment from the borrowers.
The high court observed that the cases presented “purely contractual in nature,” with some agreements including provisions for arbitration between the parties, and ongoing proceedings before other tribunals in certain instances.
The high court stated,
“There are various statutes such as the RERA Act, Consumer Protection Act, Insolvency and Bankruptcy Code, 2016, SARFAESI Act etc., where the petitioners can raise their grievances. It would not be advisable to entertain a writ petition under Article 226 of the Constitution under the facts of the present cases,”
This decision expected to significantly impact the real estate landscape in the NCR, where numerous projects have been delayed, leaving buyers in a lurch. By preventing coercive actions, the Supreme Court ensures that home buyers not unduly harassed while they wait for their homes to be completed and handed over.
Overall, this ruling highlights the judiciary’s recognition of the plight of home buyers and its commitment to providing them with a fair and just resolution, potentially setting a precedent for similar cases across the country.