Delhi HC rejects home buyers plea against loan EMIs without possession of flat

The Delhi High Court has rejected petitions filed by home buyers seeking directions to banks and financial institutions not to charge EMIs until real estate developers deliver possession of their respective flats. The writ petitions were dismissed on the basis that the petitioners have alternative remedies under various laws, such as the Consumer Protection Act, Insolvency and Bankruptcy Code, and the Real Estate Regulation and Development Act.

Justice Purushaindra Kumar Kaurav refused to entertain the writ petitions and stated that the petitioners have alternative remedies available to them, which should be considered and decided expeditiously in accordance with the law. The petitioners, including Supertech Urban Home Buyers Association (SUHA) Foundation, consisting of 123 home buyers, and other similarly placed people who have taken home loans from banks and financial institutions on the basis of subvention schemes.

Under the scheme, the sanctioned loan amount was disbursed directly to the builder, who was supposed to pay the pre-EMIs or full EMIs. However, in the present case, the builders did not fulfill their obligation of delivering possession, as well as payment of EMIs, but the banks demanded repayment from the borrowers.

Justice Kaurav stated that the rights of the borrowers in the present case are mainly governed by the terms of the contract, and no order can be issued under writ proceedings under Article 226 of the Constitution to “compel the authorities to remedy a breach of contract.” The court noted that the cases before it are “purely contractual in nature,” and some of the agreements in question even provide for arbitration between the parties, and proceedings before other tribunals in some instances are already pending.

The court clarified that it has not expressed any opinion on the merits of the case and has also not given any finding with respect to the violations/non-violations on the part of the parties. The central government argued that writ petition is a public law remedy and is not available in private disputes. The petitioners argued that more than 200 home buyers could not be left remediless and a subvention arrangement itself has been prohibited by the RBI, and several builders are facing insolvency proceedings. The petitioners claimed that RBI guidelines were not followed by the banks. (with inputs from PTI)