Delhi HC dismisses plea by home buyers against loan EMIs without possession of flat, Real Estate News, ET Real Estate

New Delhi: The Delhi High Court The apex court has dismissed petitions by several home buyers seeking a direction to banks and financial institutions not to charge EMIs till the real estate developers hand over the possession of their respective flats.

Justice Purushendra Kumar Kaurav declined to entertain the writ petitions on the ground that the petitioners have alternative remedies under various laws such as the Consumer Protection Act. Insolvency and Bankruptcy Code and Real Estate Regulation and Development Act.

Since the interests of a large number of home buyers are involved in these matters, if they avail alternative remedies, the same may be considered and decided expeditiously in accordance with law, the judge said.

The petitioners before the Court included Supertech Urban Home Buyers Association (SUHA) Foundation, comprising 123 home buyers, and so on, who have availed home loans from banks and financial institutions on the basis of the subvention scheme.

Under the scheme, the sanctioned loan amount was disbursed directly to the builder, who had to pay either the pre-EMI or the full EMI.

However, in the present case, the builders did not fulfill their obligation of payment of EMIs along with giving possession, but the banks sought repayment from the borrowers.

Justice Kaurav held that the rights of the borrowers in the present case are primarily governed by the terms of the contract, and any order “to compel the authorities to stop breach of contract” under writ proceedings under Article 226 of the Constitution cannot be issued.

“Perusing the various clauses of the relevant agreements, be it ‘buyer-developer agreement’, ‘loan agreement’ or ‘tripartite agreement’, the rights claimed by the petitioners ultimately flow from the relevant agreements itself. It is also to be noted The judge, in his order dated March 14, observed that the allegation of violation of the RBI circular by the petitioner homebuyers is disputed by the respondents.

The court noted that the cases before it are “purely contractual in nature” and some of the agreements also have a provision for arbitration between the parties, and in some cases proceedings are already pending before other tribunals.

There are various laws like Rare Act, Consumer Protection Act, Insolvency and Bankruptcy Code, 2016, SARFAESI Act etc., where petitioners can lodge their grievances. Under the facts of the present case, it would not be appropriate to entertain a writ petition under Article 226 of the Constitution.”

“In the present case, not only the rights of the petitioners are flowing from the private contract but complex and disputed questions of facts are involved and the parties are not remediable. Alternative forums are already in place. The present matters under any interference by the Writ Court of facts would amount to usurpation of powers vested with the respective forums,” it ruled.

The court clarified that it has not expressed any opinion on the merits of the case and has also not made any findings regarding infringement/non-infringement 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 had argued that more than 200 home buyers cannot be left without a remedy and a subvention regime has been banned by the RBI and many builders are facing bankruptcy proceedings.

The petitioners claimed that the RBI guidelines were not followed by the banks and urged the court to ensure that no recovery is made from them and no coercive action is taken.