SC allows CBI to probe builder-bank 'unholy nexus' in housing projects

The Supreme Court on Tuesday (September 23) allowed the Central Bureau of Investigation (CBI) to register six more regular cases into the "unholy nexus" between renowned banks and developers to trick homebuyers in real estate projects in major cities like Mumbai, Bengaluru, Kolkata, Mohali and Prayagraj.

A bench of Justices Surya Kant, Ujjal Bhuyan and N Kotiswar Singh allowed the CBI to proceed as per law.

The decision was made after additional solicitor general Aishwarya Bhati, appearing for the investigation agency, mentioned that the agency had completed preliminary inquiry in projects of the various builders except Supertech Ltd, falling outside Delhi-NCR, in Mumbai, Bengaluru, Kolkata, Mohali and Prayagraj.

The bench noted the CBI's submission, found that a cognisable offence was committed after the preliminary investigation, and allowed the agency to register regular cases and proceed according to law.

Bhati said the agency was willing to register six regular cases for speedy investigation and conduct a search and seizure. The top court directed Bhati to share portions of the sealed cover report with the amicus curiae advocate Rajiv Jain.

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CBI investigation

The top court is hearing a batch of petitions filed by over 1,200 homebuyers who booked flats under the subvention plans in various housing projects in NCR, especially Noida, Greater Noida and Gurugram. They alleged they were forced to pay EMIs by the banks despite not having possession of the flats.

Under the subvention scheme, banks disburse the sanctioned loan amount directly to the accounts of builders, who would then be required to pay EMIs on the loan amount until flats are handed over to homebuyers. After builders started defaulting on EMIs to banks, in line with the tripartite agreement, banks demanded the EMIs from homebuyers.

The bench on July 22, while allowing the agency to register 22 cases to probe the "unholy nexus" between banks and developers to dupe homebuyers in Delhi-NCR, granted six weeks to the CBI to complete the preliminary inquiry for projects outside the National Capital Region (NCR).

The 22 cases pertained to builders operating in NCR and development authorities in Uttar Pradesh and Haryana.

The top court had at that time noted that the investigation was still underway in the seventh preliminary enquiry conducted by the CBI. The enquiry was pertained to the various builders except Supertech Ltd, falling outside NCR, in Mumbai, Bangalore, Kolkata, Mohali and Prayagraj.

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Homebuyers forced to pay EMIs

On March 29, the top court allowed the CBI to register five preliminary enquiries into affairs of builders and projects in Noida, Greater Noida, Gurugram, Yamuna Expressway and Ghaziabad. Later, on April 29, it directed the CBI to register seven more preliminary enquiries against builders in NCR, including Supertech Limited. Supertech Ltd is facing 84 appeals from 799 homebuyers over projects in eight cities.

The amicus curiae had called Supertech Ltd the "main culprit" in defrauding homebuyers, whereas Corporation Bank advanced more than Rs 2,700 crore to builders through subvention schemes. The amicus curiae's report revealed that Supertech Ltd alone had secured a loan amount of Rs 5,157.86 crore since 1998.

On July 22, the top court perused CBI's report that was submitted in a sealed cover, suggesting that after preliminary enquiries into the cases to ascertain the commission of a cognisable offence, 22 regular cases were required to be registered for further investig

Frowning upon the collusion of development authorities officials, banks, and builders to trick homebuyers, the top court said it found a prima facie nexus between renowned banks and builders in Noida, Gurugram, Yamuna Expressway, Greater Noida, Mohali, Mumbai, Kolkata and Prayagraj.