Delhi High Court Dismisses Supertech Homebuyers Plea Seeking to Stop Banks from Charging EMIs from them

Delhi High Court Dismisses Supertech Homebuyers Plea Seeking to Stop Banks from Charging EMIs from them

The Delhi High Court dismissed the Supertech Urban Home Buyers Association (SUHA) Foundation and other home buyer’s petitions seeking directions for financial institutions to not charge the pre-EMIs or full EMIs from them till delivery of possession of flats by the real estate developer Supertech Limited.

The single judge Justice Purushaindra Kumar Kaurav was dealing with batch of petitions filed by the association with a common prayer, that prayed that banks be asked to refund the EMIs and flats be delivered in a time bound manner. The petitioner also sought action against the banks for alleged violation of the rules and regulations of the RBI.

The petitioner is an association by the name of Supertech Urban Home Buyers Association (SUHA) Foundation consisting of 123 home buyers. The respondent No.3-Supertech Limited is a builder and respondent Nos. 4 to 11 are the banks/financial institutions.

The respondent No. 3-builder (hereinafter referred to as “builder”) in the year 2013-2018 publicized its project being developed by it at Sector-68, Gurgaon, Haryana, namely, “Supertech Hues”, “Azalia” and “Scarlet” (hereinafter referred to as “Projects”) through various newspapers.

The members of the petitioner-association booked their flats and in order to meet financial demands, they took home loans for their respective residential units through respondent banks/financial institutions. The home loans were availed by the members of the petitioner association on the basis of subvention schemes, whereby, the respondents-banks/financial institutions would disburse the sanctioned amount to the respondent-builder directly and the respondent-builder was supposed to pay the pre-EMIs or full EMIs on the sanctioned loan.

The separate agreements were executed between the members of the petitioner-association and the respondents-banks/financial institutions. As per the terms and conditions of respective agreements, the builder paid pre-EMIs or full EMIs to the respective respondent-banks/financial institutions.

However, around December, 2018, the builder started defaulting in payments of the pre-EMIs or full EMIs and the respondent banks/financial institutions started sending payment reminders to the members of the petitioner-association. According to the petitioners, the builder was obligated to deliver the possession of the residential flats by December, 2019.

However, in none of the cases the respondent-builder has fulfilled its obligation. When the builder stopped paying pre-EMIs, the Banks have started sending demands to the members of the petitioner-association. The members of the petitioner-association raised the grievance that the respondent banks/financial institutions have not followed the guidelines issued by the Reserve Bank of India (hereinafter referred as 'RBI') and have disbursed the amount without taking into consideration the fact that the builder has not made any construction of flats.

The Court noted that there were various agreements - buyer-developer agreement, loan agreement or tripartite agreement – between the homebuyers, the builder and the banks, and the rights claimed by the homebuyers are eventually flowing from the respective agreements only.

The case at hand was purely contractual in nature. Further the judge noted that “builder-buyer agreement” also categorically provided for an arbitration clause, whereby, any dispute pertaining to the said agreement was to be referred to arbitration. In some of the cases, the homebuyers have already approached the alternate forums and their cases are pending. In some cases where the banks have initiated insolvency proceedings against them, the homebuyers can raise their claim before the concerned Tribunal.

The Court was of the view that it would not be advisable to entertain a writ petition under Article 226 of the Constitution, as there are various statutes such as RERA Act, Consumer Protection Act, Insolvency and Bankruptcy Code, 2016, SARFAESI Act etc., where the petitioners can raise their grievances.

In this regard, the Court had observed, “in the instant case, not only the rights of the petitioners are flowing from private contract but the complex and disputed question of facts are involved and the parties are not remediless. Alternative forums are already in place. Any interference by the writ court under the facts of the present case would amount to usurpation of powers vested with the respective forums. Such an exercise is not permissible unless extraordinary circumstances exist which are apparently non-existent in the instant cases.”

The judge opined that since the homebuyers were claiming their rights on the basis of terms of the contract or on the basis of RBI Circulars, their rights are governed by the terms of the contract which they have entered into and to enforce the terms of the contract, no writ or order can be issued under Article 226 of the Constitution so as to compel the authorities to remedy a breach of contract pure and simple.

The Court remarked that the pleadings between the parties indicated that the respondents-financial institutions were alleging breach on the part of the petitioners and were claiming full adherence of the RBI Circular. In any case, since the rights of the homebuyers were flowing from the terms of the contract and if, there was any breach of RBI Circulars at the instance of banks/ financial institutions, the same by itself cannot entitle the homebuyers for the relief, which they have claimed in the instant writ petitions. In any case, the breach of RBI Circular is again a question of fact that can still be gone into before the appropriate Court.

In view of the availability of alternative remedies, the Court did not deem it to be appropriate to entertain these writ petitions and therefore, the same were dismissed.

The court clarified that it had not expressed any opinion on the merits of the case and had consciously not given any finding with respect to the violations or non-violations on the part of the respective parties.

Therefore, since the interests of large number of homebuyers were involved in these cases, if the homebuyers' avail alternative remedies, as may be available to them, the same may be considered and decided expeditiously in accordance with law, the Court stated.