News: No coercive action to recover EMIs for stuck realty projects: Delhi HC-04-02-2022
Justice Rekha Palli recently granted an interim stay in favour of the homebuyers who invested in projects where the builders were supposed to pay EMIs till possession, but stopped doing so midway
NEW DELHI: Delhi high court has come to the rescue of hundreds of “beleagured” homebuyers by restraining banks/housing finance companies (HFCs) from taking any coercive action to recover EMIs for incomplete projects.
granted an interim stay in favour of the homebuyers who invested in projects where the builders were supposed to pay EMIs till possession, but stopped doing so midway.
“The balance of convenience at this interim stage lies in favour of the beleaguered homebuyers, keeping in view that they are being penalised despite not being at fault,” Justice Palli noted, adding that “grave and irreparable loss will be caused to the petitioners if they are not granted any interim protection”
The court observed that the petition “brings into light the well-known sorry state of affairs, which has been recently going on in the construction industry”
Appearing for some of the petitioners, advocate Aditya Parolia said that having booked their flats by giving the initial advance instalments from their hard-earned income, the petitioners were now being asked to pay EMIs despite the fact that none of the projects was complete or the builders had gone into insolvency while the homebuyers were still waiting for the possession of their dream house.
The petitioners highlighted that the banks and financial institutions had disbursed loans to the builders at one go without verifying the actual status of the projects, leading to a situation where the banks were demanding payment of EMIs from the buyers despite the fact that the builders had undertaken to discharge this liability till possession.
The court noted 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 own residential homes, the construction of the residential flats/apartments have not been completed till date”.
The court said “prima facie, it appears” that the loans were disbursed without any regard to the advisories of Reserve Bank of India and National Housing Bank. It said the banks and HFCs disbursed the loan when the construction was incomplete and were now asking the homebuyers to pay the amount initially required to be paid by the developers. The petitioners cannot be made to suffer the consequences of this apparent collusion between the banks/HFCs and the developers, it added.
