Bombay HC Refuses To Recall Order Restraining Financial Institutions From Recovering EMIs From Cheated Home Buyers In A Stalled Project [Read Order]

The Bombay High Court on Tuesday dismissed an interim application filed by Housing Development Finance Corporation (HDFC) seeking recall of a previous order directing various financial institutions not to recover EMIs from home buyers who have majority of their savings stuck in a scam scheme floated by a developer wherein they were collecting fixed deposits from unsuspecting citizens and had failed to repay the same on maturity.Division bench of Justice Ujjal Bhuyan and Justice Abhay Ahuja was hearing HDFC's interim application filed in original writ petition filed by Anandghan Griharachana Sahakari Sanstha Maryadit, a co-operative housing society registered under the Maharashtra Co-operative Societies Act, 1960 that represents a group of flat purchasers who have purchased flats in the project called 'Anandghan'.Previously, in an order dated June 26, 2019, the High Court had as an interim measure, restrained the financial institutions in the case (Respondents 3 to 26) not to recover the EMIs from the members of the petitioner i.e. home buyers till report is submitted by the Resolution Professional.Case BackgroundThe builder of this project namely, DS Kulkarni Developers Limited had declared a scheme for construction of residential flats in a plot of land measuring approximately 10,000 sq.mtrs. situated at Village Kirkatwadi, Taluka Haveli, District Pune. According to the petitioner, the project consisted of 11 residential towers, each having 12 floors of different areas. In all, there are about 930 flats in the said project.Following advertisement by the developer, several persons came forward to buy flats. As a matter of fact, 460 flats out of total 930 flats were booked. 426 have entered into flat booking agreements out of whom 34 have received allotment letters during the period 2014-15. It is stated that many of the flat purchasers had paid more than 90% of the cost of the flat to the developer prior to December, 2016. As per the agreement, the flats were to be handed over to the buyers on or before December, 2016.Notwithstanding such assurance, construction of the flats came to a halt in 2018 leaving the flat buyers high and dry. They had invested their life savings in the purchase of flats and had obtained housing loans from various financial institutions including banks. They had deposited the necessary amounts with the developer but possession of the flats was not handed over to them. On the contrary, they have been forced to pay EMIs to the respective banks.The developer had executed agreements with flat buyers under section 4 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963, which have been duly registered.Tripartite agreements were entered into between the respective bank, builder and flat buyer. The finance was made available under a scheme called 'Aadhi Ghar Paise Nantar' meaning that firstly the purchaser will get home and only thereafter he would have to pay. In view of such assurance, many of the flat buyers had booked flats. As per such agreement, the developer had agreed to pay the EMIs till possession of the flats was handed over to the flat buyer. Period of two years was specified on the basis of the promise made by the developer that possession would be handed over to the flat buyers within a period of two years. Since the flats were not ready despite the flat buyers having paid the entire agreed consideration in most cases, a request was made by the flat buyers to the developer to resume and complete the construction and thereafter to hand over the vacant possession of the respective flats to the buyers.However, in 2016-17, several FIRs came to be lodged against the directors of DS Kulkarni Developers Limited and its officials. The FIRs were primarily lodged for commission of various offences under the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999. Under the Prevention of Money Laundering Act, 2002. Directors of DS Kulkarni Developers Limited have been arrested and are presently in custody in Yerwada jail.The developer has been accused of running a scam scheme whereby and whereunder it was collecting fixed deposits from unsuspecting citizens and had failed to repay the same on maturity. Furthermore, the flat buyers were staring at a situation where they had invested all their hard earned money for purchasing flats and in addition had availed loans from financial institutions but construction of flats was nowhere near completion, not to speak of handing over possession of the flats to the buyers. While construction and delivery of flats have become completely uncertain, the flat buyers on the other hand are being compelled to pay EMIs to the banks and financial institutions.Thus in these circumstances, petitioner Society approached the Real Estate Regulatory Authority (RERA) seeking revocation of registration of the builder. However, the authority declined to intervene in...

Bombay HC Refuses To Recall Order Restraining Financial Institutions From Recovering EMIs From Cheated Home Buyers In A Stalled Project [Read Order]

Nitish Kashyap

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