Builders have been defrauding gullible home buyers by way of offering units under subvention scheme or promising to pay the EMI till the offer of possession, but have defaulted in paying the EMIs or handing over possession of the property, the banks which have disbursed 100 percent of the loan money to the builders directly are now initiating legal proceedings against buyers who are riddled with debt and don’t even have the unit that was promised by the builder. There is urgent need for relief from various legal proceedings anddamage to credit score caused by errant builders over the past few years. Additionally, the CoViD-19 pandemic situation has led to more difficulties than before in this scenario.
A number of Writ petitions were filed before the Hon’ble High Court of Delhi by home buyers, who are facing multiple legal proceedings initiated by banks against them and who are victims of this fraud by the builders, The Hon’ble High Court of Delhi was pleased to direct for stay of these proceedings and have directed the RBI and Banks to file their replies with respect to the said writ.
Although the Writ petitions are in a nascent stage; interim stay on the DRT proceedings for home buyers has been granted in cases where the Builder, Bank and the buyer have entered into a tripartite agreement and in cases in which the NCLT has declared the Builder insolvent.
It is highly recommend that in cases where the Banks have directly disbursed money to theBuilder (who is presently insolvent) under a tripartite agreement have a strong basis to file and intervene in this case. Further, Home Buyersought to approach the Hon’ble High Court to show the larger nexus between the Banks and the Builders. Additionally, the Buyers may file where the Banks have pre-approved loans from Banks but have not resulted in timely delivery to the Buyers.
The Banks have been able to seek recovery from individual home buyers through DRT and criminal proceedings for the offence of cheque bouncing. These DRT and criminal proceedings are limited in scope and do not give an opportunity for home buyers owing to the collusion and abuse of dominant position of the Builders and Banks.
In this regard, it is recommended that home buyers must intervene and join the petition to exit from the shackles of this problem so that the Hon’ble Delhi High Court may be able to view this problem from a holistic angle, while keeping in mind the difficult position of the home buyers. It is highly important at this stage that home buyers take a step forward on an urgent basis in order to get an early resolution of this issue.