The Delhi High Court has again come to the rescue of homebuyers who had bought housing units under the subvention scheme and extended the interim stay order in their favour by restraining banks and housing finance companies (HFCs) from taking coercive action against them for recovering EMIs for incomplete projects.
“Interim orders to continue till the next date. It is made clear that the interim orders will bind all the respondents as also the assignees of the debt from the original lenders before this Court. In the light of the interim order dated 31.01.2022, the respective banks/financial institutions are directed to provide appropriate information regarding the petitioners to Credit Information Bureau (India) Limited (CIBIL) in accordance with the interim order dated 31.01.2022 so that the ratings of the petitioners are suitably amended,” said Justice Rekha Palli in the order dated March 28, 2022.
The next date of hearing is July 11, 2022.
On January 31, 2022, the court had observed in its order that banks continued to expect buyers to service the EMIs when it was the builders who had undertaken to pay the amount until possession.
The court had observed that the petitioners “appear to have been left in the lurch and despite paying the advance amount and investing their hard-earned money to purchase their residential homes, the construction of the residential flats/apartments have not been completed till date."
The buyers cannot be made to suffer the consequences of this apparent collusion between the banks/HFCs and the developers, it had added.
The court had said “prima facie, it appears” that the loans were disbursed without any regard to the advisories of the Reserve Bank of India (RBI) and the National Housing Bank (NHB).”
In the order dated February 28, the High Court has extended the interim orders and also said that the order will be applicable to Asset Reconstruction Companies.
“It has said that banks will provide all information to the CIBIL so that the homebuyers’ credit scores, which may have been affected due to this reason, be suitably amended,” said Aditya Parolia of PSP Legal that was representing as many as 1200 homebuyers in 21 different writ petitions.
Parolia said that buyers had prayed before the High Court that their CIBIL score be restored and the pre-EMIs paid for by the buyers be refunded by the builder. They had said that they should also get back ECS default charges that have been levied.
In 2013, the RBI had advised banks to exercise caution while financing interest subvention schemes “in view of the higher risks associated with such lump-sum disbursal of sanctioned housing loans and customer suitability issues.”
It had advised that disbursal of housing loans sanctioned to buyers should be linked to the stages of construction of the housing projects and that upfront disbursal should not be made in case of incomplete or under-construction or greenfield housing projects.
In 2019, the national Housing Bank (NHB) had also asked HFCs to "desist" from offering loans under interest subvention schemes after complaints of default.