The Central Bureau if Investigation (CBI)’s crackdown on builders comes following directions from the Supreme Court
The Central Bureau of Investigation (CBI), acting on Supreme Court directions, has filed 22 cases to investigate a possible nexus between builders and banks in sanctioning huge amounts under so-called subvention schemes without following any due diligence and carried out raids at 47 locations in the national capital region (NCR), officials said on Wednesday.
The apex court had, in April, passed an order on a bunch of over 170 petitions filed by homebuyers who approached the court complaining that huge loans were disbursed by banks to the builders under the scheme even before construction of the underlying projects was complete. After builders/developers defaulted on getting the flats constructed, the banks demanded EMIs for recovering the loan amounts from the homebuyers.
“In a major crackdown on builders involved in cheating and defrauding thousands of homebuyers in NCR and to investigate the nexus of builders and officials of financial institutions, CBI has registered 22 cases against different builders of NCR and unknown officials of various financial institutions in compliance of the directions of the Supreme Court (SC) and conducted searches at 47 premises across NCR,” a CBI spokesperson said in a statement.
“The Supreme Court observing the unholy nexus between the builders and the financial institutions in cheating the homebuyers by innovating and introducing ‘subvention scheme’ of home loans, directed CBI to register 7 Preliminary Enquiries (PEs),” the spokesperson said, adding that the agency completed enquiry in six PEs within three months and “submitted the status report before the Supreme Court”.
“Upon perusal of the status report submitted by the CBI, the SC directed CBI to register 22 regular cases, against different builders in the NCR area and unknown officials of financial institutions,” the agency said.
Subvention schemes involve a tripartite agreement between the buyer, banker, and developer. Under these, buyers typically pay between 5% and 20% up-front, while the bank loans the rest to the developer in installments. The developer pays the interest on a loan for a certain fixed period, usually two to four years, until the buyer takes possession. The buyer starts paying back the loan in equated monthly installments after this.
The builders and their projects named in the CBI FIRs include – Supertech Limited, AVJ Developers (India) Pvt Ltd, Earthcon Universal Infratech Pvt. Ltd, Rudra Buildwell Projects Pvt. Ltd, Geotech Promoters Pvt. Ltd, Shubhkamna Buildtech Pvt. Ltd, Bulland Buildtech Pvt. Ltd, Decent Buildwell Pvt. Ltd, Rudra Buildwell Construction Pvt. Ltd, Saha Infratech Pvt. Ltd, Dream Procon Pvt. Ltd, Logix City Developers Pvt. Ltd, Shubhkamna Buildtech Pvt. Ltd, Jaypee Infratech Ltd, Sequel Buildcon Pvt. Ltd, Ajnara India Ltd, Vatika Limited, CHD Developers Limited, Ninex Developers Limited, Jaypee Sports International Limited, Idea Builders Private Limited and Manju J Homes India Limited, agency said.
Officials familiar with the development said directors or promoters of several realty firms have also been named in the FIRs, filed on July 28.
Among the banking and other financial institutions, unknown officials of State Bank of India, Indiabulls Housing Finance Ltd, Piramal Finance, HDFC Bank, ICICI Bank, Tata Capital Housing Finance and PNB Housing Finance Ltd among others were named in different FIRs.
A status report by CBI earlier this month said that among the 1,200 homebuyers/borrowers represented before the Supreme Court, the majority pertain to Supertech, which is currently facing insolvency proceedings.
Looking at the vast expanse of the case concerning nearly 40 builders, several banks and housing finance companies and the role of regulatory and land owning authorities, the court had on March 18 appointed senior advocate and former Intelligence Bureau director Rajiv Jain as amicus curiae (friend of the court).
Jain in his exhaustive report told the court on Tuesday that Supertech received a lion’s share of the loans under the subvention scheme.
According to Jain’s report, Supertech got loans of over ₹5,157 crore since 1998. He further pointed out that of the 19 banks and housing finance companies, eight figure in most of the projects and these include some major names such as India Bulls Housing Finance Limited, Punjab National Bank and PNB Housing, Dewan Housing Finance Corporation Limited (DHFL), and India Infoline Finance Limited.
Jain said that the underlying nexus between Supertech and the eight banks and finance companies deserves to be investigated. He also suggested a probe into the loans released by Corporation Bank, IDBI Bank, Punjab & Sind Bank to Supertech.