The real estate sector of the country has welcomed the decision of the Supreme Court. The apex court has ordered a Central Bureau of Investigation (CBI) investigation into the ‘dangerous nexus’ between developers and financial institutions. In the petition filed in the Supreme Court, more than 1,200 home buyers and borrowers had said that they have not been handed over the houses yet but are being pressurized to pay the installments every month.
G Hari Babu, Chairman of National Real Estate Development Council (NARDECO), a self-regulatory body under the Ministry of Housing and Urban Affairs, said that this decision of the court will bring more transparency among home buyers and will fix the accountability of developers as well as banks.
G Hari Babu told Business Standard, ‘The apex court’s decision is in favor of customers and we welcome it. As developers we serve customers. We have to take responsibility and be accountable for their investments in our projects. Customers have the right to ask questions to the builder. Banks also have the responsibility to monitor and supervise the construction work and not to give loans in advance. This decision will bring more transparency among home buyers.
A senior industry official said the Supreme Court’s decision emphasizes greater checks and balances not only on real estate practices but also on financial institutions. This will also help prevent such issues in future. He said, ‘Protecting the rights of home buyers should be the top priority. “With continued regulatory oversight and a strong sense of responsibility across the industry, the sector can focus more on consumer needs.”
As per the Supreme Court order, the Central Bureau of Investigation has been asked to conduct seven preliminary investigations into the dangerous nexus between real estate developers and others. These include Supertech and banks of Delhi-NCR region.
A bench of Justices Surya Kant and N Kotishwar Singh said, ‘This is a complete collusion between banks and builders and innocent home buyers have been duped.’ The court found prima facie a nexus between big banks and builders in completing projects in Noida, Greater Noida, Yamuna Expressway, Gurugram and Ghaziabad.
Supertech was declared a major defaulter and the court has directed the CBI to take action in a phased manner before registering the FIR. A Special Investigation Team (SIT) comprising officials from the Real Estate Regulatory Authority (RERA) of Uttar Pradesh and Haryana, police officers from Uttar Pradesh and Haryana and a chartered accountant nominated by the Institute of Chartered Accountants of India (ICAI) will be constituted. Alat Rizvi, managing partner of Accord Juris, said the CBI investigation can bring more transparency and accountability in the real estate sector. “This could lead to tighter regulation and monitoring, which would ensure that financial institutions and developers operate fairly,” he said. Ultimately, this may also save home buyers from such troubles in the future and instill a sense of confidence in the housing market again.
Akshat Pandey, managing partner of Alpha Partners, said that the issue of involvement of banks despite the monitoring of the Reserve Bank has come to the fore only through this decision. He asked, ‘What did the Reserve Bank of India do in cases where loans were sanctioned under dubious circumstances. Apart from this, if any action was taken, what was its effect. The subsidy schemes are flawed because they attract the provisions of the Reserve Bank Act. This makes the developer like a non-banking financial company (NBFC) without the approval of the Reserve Bank. Apart from this, it also creates a collective investment scheme without the approval of the Securities and Exchange Board of India (SEBI). Pandey said flat buyers should review real estate transactions. This will ensure that there are no flaws in the purchase of every flat or shop or office.
First Published – May 1, 2025 | 10:37 PM IST
