Home Run: Supreme Court Calls For CBI Probe Into ‘Builder-Bank Nexus’

New Delhi, March 20, 2025: The wheels of justice are grinding out good news for homebuyers. The Supreme Court has now called for a CBI probe into the alleged builder-bank nexus that strands homebuyers and their wealth in delayed projects. The apex court has sought a detailed proposal from the agency on this issue.

On Tuesday, a Supreme Court bench of Justices Surya Kant and N Kotiswar Singh said the builder-bank nexus had made lakhs of homebuyers suffer. The court was having to deal with multiple such cases on a daily basis, the bench said.

“We will definitely have a CBI probe. That is clear. Thousands of people are crying. We can’t wipe their tears but we can address their issues. Something very effective has to be done in a time-bound manner,” the bench said. The CBI was asked to come up with a proposal in two weeks on how to conduct the probe- by projects or areas.

Considering that such an inquiry would be a huge exercise, the bench sought the assistance of former Intelligence Bureau chief Rajiv Jain. The 1980-batch IPS officer was made amicus curiae and asked to file a note on how to proceed.

The court was hearing petitions filed by thousands of homebuyers in various NCR projects who allege that they are being forced by banks to pay EMIs despite not getting possession of their flats because of delay by developers. Under the subvention scheme, banks disburse the sanctioned amount directly to the builders, who pay EMIs on the amount till flats are handed over to homebuyers. As builders started defaulting in paying EMIs as per the tripartite agreement, banks took action against homebuyers to recover the payments.

Some financial institutions have urged the court not to bring the agency into the picture as it would create instability and requested that RBI be asked to look into the matter. Senior advocates Abhishek Manu Singhvi and Ranjit Kumar, appearing for financial institutions, urged the court not to paint all banks with the same brush and said their clients had already placed all information before the bench as sought by it.

Additional solicitor general Aishwarya Bhati, representing CBI, said at the outset that the agency would take the case if the court directed and suggested that the probe could start with investigation into any project in Greater Noida. The court, however, asked the agency to come back with a detailed proposal.

The SC decided to take stern action after very few builders and banks complied with its order to give details of their projects and loans sanctioned. Out of roughly 40 builders and 30 banks/financial institutions which are party in the proceedings, only nine banks and five builders filed their compliance affidavits. “This blatant disregard and ignorance of the court’s directions, coupled with their reluctance in appropriately assisting the court, hints towards a possible collusion between builders-cum-developers and banks/financial institutions,” the bench said.

Last year, the Supreme Court had moved to protect homebuyers, directing that no coercive action be taken against them by banks or builders regarding payment of EMIs and no complaint be entertained against them for cheque bounce cases.

The aggrieved homebuyers said they were victims of illegal disbursal of loans by banks directly into the account of builders in violation of RBI guidelines, which are statutory in nature.

“This is a classic case where one rich man (bank/financial institution) gave money to another rich man (builder). The rich man who received the money (builder) ran away with it without fulfilling his obligations. The rich man who gave the money (bank/financial institution) disbursed it in violation of the law of the land. The poor man (homebuyer) is now made a victim and is pushed into litigation by the bank when he has not received a single rupee. And is deprived of his dream home,” one petition had then said.