Nexus between renowned banks and builders: Supreme Court of India orders CBI probe

Advocate Rajiv Jain, the amicus curiae, called Supertech the “main culprit” in defrauding homebuyers whereas Corporation Bank advanced more than Rs 2,700 crore to builders through subvention schemes

New Delhi: Observing an “unholy nexus” between the banks and developers to dupe homebuyers, the Supreme Court on Tuesday directed the CBI to register seven preliminary inquiries against builders in NCR, including Supertech Limited.

A Bench of Justices Surya Kant and N Kotiswar Singh found a prima facie nexus between renowned banks and builders in NOIDA, Gurugram, Yamuna Expressway, Greater Noida, Mohali, Mumbai, Kolkata and Allahabad.

---

It took into account an affidavit filed by the CBI and directed the UP, Haryana DGPs to give a list of DSPs, inspector, constables to the agency to constitute a special investigation team (SIT).

The top court further directed the CEOs/administrators of Greater Noida Authority, Noida Authority, secretary, Ministry of Housing and Urban Affairs, the Institute of Chartered Accountants of India and the Reserve Bank of India to notify one nodal officer from among their senior-most officers within a week to extend necessary assistance to the SIT.

The bench said it will be monitoring the status of the investigations on a monthly basis.

Advocate Rajiv Jain, who is amicus curiae in the matter, called Supertech the “main culprit” in defrauding homebuyers whereas Corporation Bank advanced more than Rs 2,700 crore to builders through subvention schemes.

The court was informed that Supertech had 21 projects in six cities with agreement with 19 banks with 800 aggrieved homebuyers. The report of the amicus revealed Supertech alone had secured a loan amount of Rs 5,157.86 crore since 1998.

The underlying nexus between Supertech and the banks was, therefore, required a scrutiny on priority, it added.

Under the subvention scheme, banks disburse the sanctioned amount directly to the accounts of builders, who are then required to pay EMIs on the sanctioned loan amount until flats are handed over to homebuyers.

After builders started defaulting on EMIs to banks, as per the tripartite agreement, the banks sought EMIs from the homebuyers. The apex court previously said thousands of homebuyers were affected by the subvention scheme, where banks paid 60 per cent to 70 per cent of the home loan amount to the builders without projects being completed within the stipulated time.

The apex court had then ordered the CBI to submit a roadmap on how it planned to unravel the “builder-banks nexus” which duped thousands of homebuyers in the NCR and proposed to go into the root of the matter.

The top court was hearing a batch of petition filed by over 1,200 homebuyers, who booked flats under subvention plans in various housing projects in NCR, especially Noida, Greater Noida and Gurugram, alleging that they were being forced by banks to pay EMIs despite no possession of flats.