The Delhi High Court extended its January 31 order granting relief to over 1,200 beleaguered homebuyers, against any coercive action by banks and housing finance companies (HFCs) to recover EMIs for incomplete projects, till July 11 this year.
Justice Rekha Palli also directed the banks and financial institutions to provide “appropriate information” regarding the homebuyers to Credit Information Bureau (India) Limited (CIBIL) so that their ratings are “suitably amended”.
The High Court’s direction came while hearing a bunch of petitions filed by homebuyers who had booked their flats by paying their initial advance installments but were yet to get the possession of the flats.
Justice Palli had, in the Janaury 31 order, remarked that the case “brings into light the well-known sorry state of affairs which has been recently going on in the construction industry”.
The homebuyers had booked their flats with various developers after taking home loans, by entering into a tripartite agreement with the developers and the bank/HFCs.
Terms and conditions
As per the agreement between the parties, while the homebuyers took the loans and paid their first installments to the developers, the pre-EMIs and EMIs were to be paid to the banks by the developers until the flats were handed over to the home buyers. The homebuyers were made guarantors for the payments due by the developers towards the banks. The issue arose after the developers stopped paying the EMIs to the banks.
In most cases, it was also provided in the agreement that if the possession of the residential flats was not delivered in the time stipulated by the developers, it would be up to the developers to continue payment of the pre-EMIs, till they finally handed over possession of the flats to the home buyers, advocate Aditya Parolia representing several of the homebuyers said.
However, when the developers started defaulting in their EMIs to the banks/HFCs, action was initiated by most banks and HFCs against the homebuyers.
Mr. Parolia had contended that the bank/HFCs, have acted in collusion with the developers, in releasing the loan amount even without examining whether the developer was in a position to construct the flats or not.
Apparent collusion
On January 31, this year, Justice Palli said that, “the petitioners (homebuyers) who have invested their lifetime savings and their hard-earned income to purchase residential units, cannot be made to suffer the consequences of this apparent collusion between the banks/HFCs and the developers”.
The High Court had said the question as to whether the homebuyers are obligated to pay the loan amount will need to be examined.
“However, at this interim stage, grave and irreparable loss will be caused to the petitioners (homebuyer) if they are not granted any interim protection,” the high court had said while restraining Banks/HFCs from taking any coercive steps against the homebuyers.
