Paying EMIs withour home? SC seeks faster probe into bank-builder nexus

Supertech Limited has been named as the "main culprit" in defrauding homebuyers, whereas the Corporation Bank had advanced more than Rs 2,700 crore to builders through subvention schemes.

Thousands of homebuyers who have been paying EMIs for flats they never received may finally see faster action after the Supreme Court pulled up the Central Bureau of Investigation (CBI) for delays in investigating alleged fraud linked to subvention schemes.

 

The court said prolonging the investigation would only increase the hardship faced by buyers who have already suffered due to stalled housing projects and financial stress.

 

The case involves more than 1,200 homebuyers from Delhi-NCR, particularly from projects in Noida, Greater Noida and Gurugram, who approached the court after being forced by banks to repay loans even though their flats were never delivered.

 

 

A bench headed by Chief Justice Surya Kant, along with Justices Joymalya Bagchi and Vipul M Pancholi, directed the CBI to speed up its investigation and convert preliminary enquiries into full criminal cases wherever necessary.

 

“This court cannot wait indefinitely for the conclusion of the investigation. Delays will only lead to more agony for the homebuyers who have already been harassed by builders and developers, apparently in collusion with financial institutions and banks,” the bench said.

 

What went wrong for homebuyers

 

Many of these buyers had purchased homes under a subvention scheme, which was marketed as a buyer-friendly payment plan.

 

Under this arrangement:

 

• The bank releases the loan amount directly to the builder after the buyer books a flat.
• The builder promises to pay the EMIs on the loan until the home is completed and handed over.
• Once the buyer receives possession, the responsibility of paying EMIs shifts to the buyer.
• However, in many cases, builders allegedly stopped paying EMIs after receiving the loan amount. Banks then turned to the buyers — who were the third party in the agreement — and demanded that they start paying the instalments.
• This left many families stuck paying both rent and EMIs, while the promised homes remained incomplete.

 

Supreme Court says probe cannot drag on

 

The Supreme Court expressed concern that the investigation was moving too slowly and warned that delays would only worsen the situation for homebuyers.

 

The court directed the CBI to continue investigating all the cases and convert preliminary enquiries into full criminal investigations wherever necessary.

 

It also rejected a proposal by the CBI to transfer some cases to state agencies, saying the central agency should complete the probe itself.

 

The court made it clear that it cannot wait indefinitely for the investigation to conclude, especially when thousands of families are already under financial and emotional stress. 

Banks’ role under scrutiny

 

Another concern raised during the hearing was the possible involvement of banks in approving loans under these schemes.

 

The court asked why bank officials had not been investigated more thoroughly, especially since the loans were sanctioned directly to developers. 

It asked the CBI to file an affidavit detailing the progress of the probe and provide a timeline for completing the investigation.

 

The court also directed the agency to examine a report submitted earlier by amicus curiae (court-appointed advisor) Rajiv Jain, which highlighted the alleged involvement of banks, developers and even officials from development authorities.

 

How widespread the problem is

 

The issue is not limited to Delhi-NCR. The Supreme Court noted that similar cases linked to subvention schemes have emerged in several cities including:

 

Mumbai

 

Bengaluru

 

Kolkata

 

Mohali

 

Prayagraj

 

Earlier orders of the court have allowed the CBI to register multiple criminal cases across these regions.

 

In NCR alone, the agency was permitted to register 22 cases involving homebuyers allegedly duped through subvention schemes.

 

Builders and loans under scrutiny

 

The amicus curiae report submitted to the court identified Supertech Limited as a major player involved in these alleged irregularities.

 

The report said large loans were extended to developers under subvention schemes by banks and financial institutions.

 

For example, Corporation Bank reportedly advanced more than ₹2,700 crore to developers through such schemes, while Supertech is said to have taken loans exceeding ₹5,100 crore since 1998.

 

The court observed that there appears to be a prima facie nexus between builders, banks and development authorities in several cases.

 

It has now asked the CBI to submit a report explaining the progress of the investigation and provide a timeline for completing it.

 

If the agency lacks manpower, the court said it could take assistance from the Economic Offences Wings of state police forces. 

What happens next

 

The Supreme Court has asked all stakeholders — including homebuyers, banks and developers — to submit their claims and suggestions to the court-appointed amicus curiae.

 

The amicus will review these submissions and present recommendations to the court.

 

Meanwhile, the court has emphasised that the investigation must move quickly so that affected homebuyers can get relief and accountability can be fixed.