SC orders CBI probe into builder-bank collusion affecting over 1,200 homebuyers

The Supreme Court of India has directed the Central Bureau of Investigation (CBI) to launch a sweeping probe into alleged collusion between builders, banks, and housing finance corporations (HFCs) that has left thousands of homebuyers in financial distress. The order came during hearings on a batch of over 170 petitions filed by more than 1,200 homebuyers and borrowers, primarily targeting delayed projects, coercive loan recovery, and systemic regulatory failures.

Key Highlights of the Order:

1. CBI Preliminary Enquiries:
   The court sanctioned seven preliminary enquiries (PEs) to investigate:
   • Supertech Ltd.: The builder faces scrutiny for 84 petitions involving 799 homebuyers across 21 projects in six cities. The CBI will probe its ties with 19 banks/HFCs, including Indiabulls Housing Finance, HDFC, and ICICI Bank, which disbursed loans worth ₹5,157 crore under controversial “subvention schemes.”
   • NCR Projects: Five PEs will cover projects in Noida, Greater Noida, Yamuna Expressway, Gurugram, and Ghaziabad.
   • Non-NCR Projects: One PE will address projects in cities like Mumbai, Bengaluru, and Kolkata.
2. Systemic Failures:
   The court noted an “unholy nexus” between developers and financial institutions, where banks allegedly disbursed loans to builders upfront—violating RBI guidelines—while shifting EMI burdens to homebuyers despite incomplete projects. Builders like Supertech defaulted on payments starting in 2018–2019, leading to banks initiating recovery against buyers without delivering possession.
3. Forensic Audits & Nodal Officers:
   • The Institute of Chartered Accountants of India will deploy three forensic auditors to assist the CBI.
   • Nodal officers from development authorities (Noida, Gurugram), RERA (UP and Haryana), RBI, and the Housing Ministry must coordinate with investigators.
4. Interim Protections:
   • Homebuyers granted continued relief from coercive bank actions.
   • Corporation Bank ordered to fund a ₹5 lakh/month honorarium for court-appointed amicus curiae Rajiv Jain, a former Intelligence Bureau director, along with his legal team.
5. State Support:
   Uttar Pradesh and Haryana police will deputize officers to aid the CBI. The court warned states to provide “full logistical support.”

Background

The petitions stem from “subvention schemes” where builders promised to pay EMIs until possession. However, defaults by developers like Supertech left homebuyers liable for loans on unfinished projects. The Delhi High Court’s earlier refusal to halt bank recoveries prompted appeals to the Supreme Court.

Quotes from the Bench:

• Justice Surya Kant observed, “There is prima facie evidence of a nexus between banks and builders, exploiting homebuyers who are now stranded without homes or savings.”
• The court emphasized, “The CBI must unravel this web of financial deceit and ensure accountability.”

Next Steps

• The CBI must submit an interim report by July 22, 2025.
• Notices issued to banks, builders, and authorities for compliance.
• Contempt proceedings initiated against unnamed entities for non-cooperation.

Implications:

This landmark probe could reshape India’s real estate sector, enforcing stricter compliance with RBI norms and RERA mandates. For homebuyers, it offers hope for restitution and systemic reforms to prevent future exploitation.

Also See: Suraksha-led Jaypee Infratech commits Rs 5,500 crore to complete delayed housing projects