SC orders CBI probe into ‘unholy nexus’ between builders, banks in NCR

A bench comprising justices Surya Kant and N Kotiswar Singh passed the order after examining an affidavit filed by the CBI. Read further on Dynamite News

New Delhi: In a significant move to address alleged corruption in the real estate sector, the Supreme Court on Wednesday directed the Central Bureau of Investigation (CBI) to register seven preliminary inquiries against several builders in the National Capital Region (NCR), including the prominent firm Supertech Limited.

A bench comprising justices Surya Kant and N Kotiswar Singh passed the order after examining an affidavit filed by the CBI.

The court found prima facie evidence indicating a nexus between leading banks and real estate developers operating across Noida, Greater Noida, Gurugram, the Yamuna Expressway region, Mohali, Mumbai, Kolkata, and Allahabad.

Describing the alleged collusion as an “unholy nexus,” the bench also instructed the Directors General of Police of Uttar Pradesh and Haryana to furnish a list of suitable officers including deputy superintendents, inspectors, and constables who can be deputed to assist the CBI in constituting a Special Investigation Team (SIT) for the probe.

EMIs Deducted

The Supreme Court noted that there are banks/non-banking financial companies (NBFCs) on the one hand and builders on the other and there is a "nexus" between them. Homebuyers' EMIs, it observed, are being deducted on schedule without possession being provided.

The bench noted Supertech has more than 21 projects in six cities, involving 19 financial institutions. A report by the amicus curiae, who is assisting the court in the case, said the "nexus" between Supertech and eight banks should be investigated on a priority basis and three others could be done at a later date.

Dictating its order, the court said the cases involve over 1,200 houses and the cluster of over 170 petitions has raised a very important issue - that there is a failure by authorities to discharge their functions

Builders, it noted, advertised schemes assuring that homebuyers would be given residences by a specified date and they began paying EMIs/pre-EMIs accordingly. Loans were mostly issued through tripartite agreements between banks, homebuyers and builders/developers.

While these projects were launched between 2013 and 2015, most builders/developers started defaulting in 2018-19. Banks started demanding payments from homebuyers despite the fact that the units were incomplete, and coercive action was taken, the bench noted.