Supreme Court Blasts Builder-bank Nexus in Home Loan Interest Subvention Scheme, Warns of CBI Investigation
Moneylife Digital Team 13 March 2025
Expressing concern over how homebuyers in the National Capital Region (NCR) have been held 'to ransom', the Supreme Court has hinted at ordering a central bureau of investigation (CBI) probe into an alleged nexus between real estate developers and banks through subvention schemes for various housing development projects in Noida, Greater Noida, Gurugram, and other nearby areas. 
 
While hearing a batch of petitions filed by aggrieved homebuyers earlier this month, a bench of justice Surya Kant and justice N Kotiswar Singh, says, "The blatant disregard and ignorance of the Court's directions, coupled with the reluctance of builders and financial institutions to assist the Court, hints towards a possible collusion." 
 
The bench warned that it might be necessary to constitute a special investigation team (SIT) to investigate the alleged collusion between builders and banks. "...it may be necessary to constitute an SIT to uncover the nexus between the banks or financial institutions and the builders-cum developers with respect to the development projects where the homebuyers have paid substantial amounts and where the development projects have not even been launched, have not completed construction, or have not begun construction."
 
The case revolves around allegations that several builders-cum-developers, with the assistance of banks and financial institutions, exploited homebuyers through subvention schemes. Under these schemes, builders advertised that they would bear the burden of equated monthly instalments (EMI) or pre-EMI payments until possession. However, when the builders defaulted on payments in 2018 and 2019, the banks turned to the homebuyers, demanding payments despite incomplete or stalled projects.
 
The apex court was particularly critical of banks for disbursing substantial loans—up to 70%-80% of the sanctioned amounts—without ensuring that project milestones were achieved, thereby violating the 2013 guidelines issued by the Reserve Bank of India (RBI). This failure of due diligence led to many projects remaining incomplete or unlaunched, leaving homebuyers burdened with EMI payments without possession of their properties.
 
The SC directed around 40 builders and 30 banks to file compliance affidavits detailing payment statuses, construction progress and possession dates within four weeks. However, only nine banks and five developers have complied, prompting the apex court to seriously consider an investigation by the CBI.
 
The apex court also noted that many of the builders are now undergoing a corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code (IBC), 2016, which complicates recovery efforts. Meanwhile, the bench also instructed that no recovery certificates be executed against the homebuyers until further notice.
 
The Supreme Court has asked the counsel for the CBI to be present at the next hearing to discuss the feasibility of forming an SIT or initiating a direct investigation. "He may also have instructions as to why the CBI should not be asked to register a case and then proceed to investigate the nexus between the banks and the builders. Alternatively, the constitution of a SIT at (on) its own will also be considered by this Court."
 
The matter is scheduled to be heard again on 18 March 2025.
Comments
sanjeevpanicker
5 days ago
With so many cases filed against the Builders in various bodies like NCDRC, RERA, HC. NCLT etc and yet the state government turns a blind eye to the apathy of their very bodies meant to protect the common people. The biggest joke is RERA-K whose recovery orders fail to be executed by the DM. The petitioners have to approach courts to enforce the orders and even then the builders gets a stay issued. The rest of the bodies adjudicating on various cases seems to be dragging it out to milk the petitioners further of their hard earned savings as if it was'nt enough that the Builder and Banks have taken most of it. The NHB and RBI is not even addressing the issue to avoid getting shamed. The banks meanwhile like the goonda moneylenders are using their financial clout and large legal teams to threaten section 138 on the poor defaulters. A lay person who goes through the facts will surely be able to see evidence pointing to a lack of due diligence by the banks ( could be a possible collusion between some officers of the bank). They dont want this coming out as it could adversely impact their share price. In such a situation , the common man will like the RK Laxman cartoon be in a perplexed state forever wondering " will i ever see an end of this ?"..I wonder is there hope in the above article ?
Ravi Bassi
5 days ago
India definitely need better regulations for estate / property market.
Please abroad / NRIs have lost the trust in Indian market and have stopped investing in India….

It’s hard to understand, how a democratic country allowing few groups of people called builders to do illegal activities and looting people ? ???????
ppradhan774
5 days ago
This matter should be of highest importance for all judiciary body including SC. Despite RERA and all legal framework OZONE dared to cheat thousands of home buyers .. it’s our hard earned money and cannot see this goes down the drain and these fraudsters are going Scot free .. I Appeal to the SC to take care of this matter and give us justice
Else everyone in this country will never hope for a better future for themselves and for the generations ahead
pshukla
5 days ago
SC is requested to take action and include Ozone Urbana Project, it is a big scam, thousands of investors are effected. All illegal nexus between Ozone Builder, Banks, RERA officials and Govt official would come out. Urbana project got stalled from 2018, collected 95% of loans, completed hardly 55%. The fraud Ozone developers sold many units double/triple sold and police is not even registering FIR.
prasad.hn
5 days ago
Too class defaulter Ozone Urbana Bangalore.
dlingwal
5 days ago
Ozone Urbana Banglore , More than 200+RERA complaint, 100+ FIR, 200+ writ , NCLT, NCDRC against it. Is his name there in list? No 1 Defaulter , Nexus with Bank and system.
bbipul1
5 days ago
Request SC to include Ozone Urbana Project, CBI should investigate, it is total scam, thousands of investors are effected. All illegal nexus between Ozone Builder, Banks, RERA officials and Govt official would come out. Urbana project got stalled from 2018, collected 95% of loans, completed hardly 55%. The fraud Ozone developers sold many units double/triple sold and police is not even registering FIR. I
Ravi Bassi
Replied to bbipul1 comment 5 days ago
Looks like Police is part of this scam
rajendersingh12071962
6 days ago
SC also need to investigate several projects under different name of same builder .
Even they signed agreements with landowners in different company instead to transfer the land to the company who built sold the project the bank ignore the basics as flat owner become the ultimate for recovery,
When the land and project hit in secondery market they scrap the project and relaunch the same in different name and different company
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