In a significant relief for home buyers in the National Capital Region (NCR) who have not received possession of their flats, the Supreme Court has ruled that no coercive measures will be taken against them by banks, financial institutions, or builders concerning EMI payments, and no cases of cheque bounce will be entertained.
The Supreme Court issued this directive while hearing a series of appeals against a Delhi High Court decision that had rejected petitions from several home buyers asking for a suspension of EMI charges until real estate developers delivered possession of their flats.
Dissatisfied with the order, the home buyers appealed to the Supreme Court, which agreed to review the matter and requested responses from the involved parties.
A bench of Justices Surya Kant and Ujjal Bhuyan issued notices to the Centre, banks, and other parties regarding the appeals filed against the Delhi High Court's order dated March 14, 2023.
In the meantime, there will be an interim stay on all related matters, preventing any coercive actions, including complaints under Section 138 of the Negotiable Instruments Act, 1881, from being entertained against home buyers by banks, financial institutions, or builders/developers.
The bench stated in its July 15 order,
"Most financial institutions and banks have already filed their counter affidavits. For those who have yet to do so, a final opportunity is being provided to submit their counter affidavits within the next two weeks."
The petitioners, who are home buyers, brought their case before the highest court, claiming that they had been unlawfully given a loan by the bank, which was then directly deposited into the builder's account, in contravention of RBI regulations.
The writ petitions were dismissed by the high court on the basis that the petitioners have other legal options available to them, including the Consumer Protection Act, Insolvency and Bankruptcy Code, and Real Estate laws.
The petitioners before the high court included the Supertech Urban Home Buyers Association (SUHA) Foundation, representing 123 home buyers, and others who took home loans under a subvention scheme where the builder was responsible for paying the pre-EMIs or full EMIs.
However, in this case, the builders failed to deliver possession and pay EMIs, yet banks demanded repayment from the borrowers.
The high court noted that the cases are "purely contractual" and some agreements include arbitration clauses, with some disputes already in other tribunals.
The high directed, that there are various statutes, such as the RERA Act, Consumer Protection Act, Insolvency and Bankruptcy Code, 2016, and the SARFAESI Act, through which the petitioners could raise their grievances. Given the facts of the present cases, it would not be advisable to entertain a writ petition under Article 226 of the Constitution.
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