NCR Builder-Bank Loan Fraud Nexus | Supreme Court Asks Delhi Magistrate To Proceed After Considering CBI Chargesheets

The Supreme Court today ordered the Metropolitan Magistrate, Rouse Avenue Court, Delhi, to proceed with the trial in the charge sheets filed by the CBI in the cases related to builder-banks fraud nexus exploiting homebuyers in the National Capital Region.

The bench of CJI Surya Kant and Justices Joymalya Bagchi and Vipul Pancholi was hearing grievances of homebuyers in the National Capital Region, who claimed that banks were forcing them to pay EMIs without having obtained possession of flats due to the delay by the builders/developers.

The issue related to deep-rooted nexus between builders and banks in the National Capital Region (NCR) in cases involving loan subvention schemes, in which homebuyers were trapped through collusive arrangements. Under these schemes, banks disbursed substantial housing loans directly to builders on the assurance that the latter would service EMIs during the construction period. However, when builders defaulted or projects stalled, banks proceeded against unsuspecting homebuyers, even though possession was never handed over.

In September last year, the Court directed the CBI to register cases after an investigation signalled at the commission of cognisable offences.  Today ASG Aishwarya Bhatti appeared for the CBI. 

The bench directed the Magistrate before whom the chargesheets have been filed by the CBI to proceed with the trial of the case. 

"During the course of the hearing, we are informed that the charge sheets have been filed in the Court of the Metropolitan Magistrate in Rouse Avenue Courts, Delhi. We direct the Court to consider the chargesheet filed and proceed with the matter as per the course of law within 2 weeks." 

The bench also referred to the detailed report submitted by  Amicus Adv Rajiv Jain, on the actions of 7 banks/ financial institutions and the further cause of action. The report also details how unfair treatment is meted out to the homebuyers. 

The Court also directed the amicus to give a soft copy of the report to the CBI to aid in the ongoing investigation.

"We therefore impress upon the amicus to handover a soft copy of the report to the ASG Aishwarya Bhatti representing the CBI for further information and necessary action."

The bench has also directed the AORs of the petitioners and intervenors in the present matter (the home buyers) to furnish complete details of the loans taken, instalments paid (if any) within one week. The Court asserted that "wherever such information has not been supplied, the writ petitions or the IAs will be dismissed for non-prosecution." 

The bench also ordered the CBI to handover the case documents to the Amicus when the investigation is completed so that he can assist the court in ensuring the fairness of the probe. 

"We also deem it appropriate to direct the CBI that, in future, as and when the investigation is complete, and a chargesheet is filed, the complete documents shall be submitted to the amicus to enable him to give his opinion to this court with respect to the fairness in the investigation ." 

In July 2024, a bench of Justices Kant and Ujjal Bhuyan had granted interim protection from coercive action to the homebuyers, making it clear that no such action, including in terms of a complaint under Section 138 of Negotiable Instruments Act (check-bounce), shall be entertained on behalf of the Banks/Financial Institutions or Builders/Developers against the homebuyers.

Case Title: HIMANSHU SINGH AND ORS. Versus UNION OF INDIA AND ORS., SLP(C) No. 7649/2023 and other connected matters