The Supreme Court of India on Tuesday permitted the Central Bureau of Investigation (CBI) to register six additional cases in connection with the “unholy nexus” between banks and developers targeting homebuyers in real estate projects located in Mumbai, Bengaluru, Kolkata, Mohali, and Prayagraj. This essential ruling marks a significant step towards accountability in the ongoing investigations concerning fraudulent practices in the real estate sector.
A bench consisting of Justices Surya Kant, Ujjal Bhuyan, and N Kotiswar Singh granted the CBI the authority to act after Additional Solicitor General Aishwarya Bhati disclosed that the agency completed its preliminary inquiries into numerous builders’ projects, with the exception of Supertech Ltd, which falls outside the National Capital Region (NCR).
The bench acknowledged the CBI’s assertion that a cognizable offence exists, thus enabling it to proceed with the registration of regular cases and further investigations. Bhati indicated the agency’s readiness to file six regular cases to expedite the inquiry, along with conducting search and seizure operations related to the suspicious dealings.
In an earlier ruling on July 22, the Supreme Court allowed the CBI to register a total of 22 cases aimed at unearthing the collusion between banks and developers that led to homebuyers in Delhi-NCR being duped. The earlier mandate provided the CBI with a six-week timeframe to conclude preliminary inquiries for projects outside the NCR, specifically focusing on builders in urban locations like Mumbai and Bengaluru.
These 22 cases include builders operating in the NCR region and development authorities within Uttar Pradesh and Haryana, emphasizing the widespread nature of the alleged deceit. Under the controversial subvention scheme, banks disburse funds directly to builders, who then are supposed to manage the Equated Monthly Installments (EMIs) until the flats are delivered. However, many builders defaulted on their EMIs to banks, leading to financial institutions demanding payments directly from homebuyers.
The Supreme Court has consistently recognized the troubling trend where homebuyers find themselves in a predicament—forced to repay loans for properties they do not possess. A batch of petitions filed by over 1,200 homebuyers from Noida, Greater Noida, and Gurugram illustrates this plight, revealing how banks imposed the burden of EMIs despite the absence of flat possession.
Previously, on March 29, the Supreme Court authorized the CBI to initiate five preliminary inquiries into builders and projects located in Noida, Greater Noida, Gurugram, Yamuna Expressway, and Ghaziabad. Additionally, a preliminary inquiry specifically targeting Supertech Ltd emerged, driven by complaints from 799 homebuyers submitting 84 appeals related to various projects across eight cities.
The Supreme Court’s scrutiny of CBI findings presented in sealed reports allowed the bench to acknowledge a prima facie nexus between leading banks and builders involved in projects across Noida, Gurugram, Yamuna Expressway, Greater Noida, Mohali, Mumbai, Kolkata, and Prayagraj. This connection leads to strong suspicions of collusive practices designed to defraud innocent homebuyers.
The amicus curiae’s assessment pointed to Supertech Ltd as a significant entity in the fraudulent schemes impacting homebuyers. Notably, Corporation Bank has facilitated over Rs 2,700 crore in loans to builders through various subvention schemes, raising serious concerns about the ethical implications of such practices.
The report indicated that since 1998, Supertech Ltd alone secured a staggering loan amount of Rs 5,157.86 crore, suggesting systemic exploitation within the real estate financing framework. As investigations proceed, stakeholders await further developments, hopeful for justice in the wake of these troubling revelations.
