The Delhi High Court has rejected a request by several homebuyers to direct banks and financial institutions to stop charging equated monthly instalments (EMIs) until property developers have delivered the possession of their flats. The petitioners who took home loans based on subvention schemes claimed the banks had not followed RBI guidelines and demanded repayment from them. The court has said that the cases are contractual in nature and that some of the agreements provide for arbitration between the parties. The court further noted that the violation of RBI Circulars is a complex and disputed question of facts that can be resolved through alternative forums.
The Delhi High Court has rejected a request by several homebuyers to direct banks and financial institutions to stop charging equated monthly instalments (EMIs) until property developers have delivered the possession of their flats. Justice Purushaindra Kumar Kaurav said the petitioners have alternative remedies under the Consumer Protection Act, the Insolvency and Bankruptcy Code, and the Real Estate Regulation and Development Act.
The rights of the borrowers in the case are mainly governed by the terms of their contract, the judge said, adding that no order could be issued to "compel the authorities to remedy a breach of contract". The court noted that some of the agreements provide for arbitration between the parties, and proceedings before other tribunals in some instances are already pending.
The petitioners, which included Supertech Urban Home Buyers Association (SUHA) Foundation and other similarly placed individuals who took home loans based on subvention schemes, claimed the banks had not followed Reserve Bank of India (RBI) guidelines and demanded repayment from them. Under the scheme, the loan amount was disbursed directly to the builder, who was supposed to pay the pre-EMIs or full EMIs. In the present case, the builders did not deliver the possession of the properties, nor did they pay the EMIs, but the banks demanded repayment from the borrowers.
The court said that the cases before it are "purely contractual in nature" and some of the agreements provide for arbitration between the parties, adding that the rights claimed by the petitioners are flowing from the respective agreements. The court further noted that the violation of RBI Circulars alleged by the petitioners, which is disputed by the respondents, is a complex and disputed question of facts that can be resolved through alternative forums.
The central government argued that writ petitions are a public law remedy and are not available in private disputes. The petitioners claimed that more than 200 home buyers could not be left without a remedy and that subvention arrangements themselves have been prohibited by the RBI, and several builders are facing insolvency proceedings.
In summary, the Delhi High Court has refused petitions by homebuyers seeking directions to banks and financial institutions to stop charging EMIs until property developers deliver the possession of their flats. The court ruled that the petitioners have alternative remedies under various laws and that the cases before it are purely contractual in nature. The court also noted that some of the agreements 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 not given any finding with respect to the violations/non-violations on the part of the parties.
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