The Supreme Court on Wednesday asked the Central Bureau of Investigation (CBI) to be fair to homebuyers in its ongoing probe into the alleged builder-bank nexus, and pulled up the agency for its reluctance to take up fresh cases involving new builders and for filing charge sheets without custodially interrogating bank officials.
“Going by the way in which the investigation is proceeding, we will have to constitute a monitoring committee headed by a former judge to oversee these investigations. We will not allow the CBI to disappoint millions of homebuyers, as they are now doing,” a bench headed by Chief Justice of India Surya Kant said while hearing a batch of petitions filed by homebuyers affected by the subvention scheme.
Under the subvention scheme — a tripartite agreement between the builder, homebuyer and banks — lenders release loans to builders, who undertake to pay the EMIs until a specified cut-off date or until possession of the flat is handed over.
The CBI is currently probing 28 such cases and was directed in February to examine 44 additional petitions filed by homebuyers who said builders failed to deliver possession while banks pursued them for EMI defaults.
The CBI, represented by additional solicitor general Aishwarya Bhati, said of the 44 fresh petitions, it was willing to probe 20, while suggesting that 22 cases be referred to the economic offences wings (EOWs) of the states where the projects are located.
“CBI seemingly wants to wriggle out of its responsibility given by the court by suggesting that the cases be handed over to the concerned EOWs. We disapprove of such a stand,” said the bench, also comprising justices Joymalya Bagchi and Vipul M Pancholi.
The court directed the agency to take up the 22 cases as well. “If state police was so fair and prompt they would have carried out an investigation so far. We want you to be fair to the homebuyers. Take up these cases and whatever logistical help you need from the states, we will provide you,” the bench said.
It also directed the agency to specify a timeline for completing the pending probes. “Prolonging the investigation will lead to more agony for homebuyers who have already been harassed enough by the developers/builders apparently in connivance with banks and financial institutions,” the order said.
Bhati informed the court that the 22 cases involve new builders with projects spread across several states. The bench responded: “Assuming what you say is correct, should we discriminate between homebuyers then? Matters that we have entrusted you are also across states. Do we then have two sets of investigations? It will create chaos.”
Advocate Rajiv Jain, assisting the court as amicus curiae, pointed out that although the builders in the 22 cases may be different, the lending banks and financial institutions in most cases are common with those already under investigation.
The court directed the CBI to register regular cases in all 42 matters within a week and allowed it to seek assistance from the directors general of police of the concerned states for officers from the EOW. The court said the DGPs would be obligated to provide officers with the required expertise within a week of such a request.
While reviewing the CBI’s status report, the bench also noted that charge sheets had been filed in some cases but there was nothing to show that bank officials had been examined in custody. “How have you filed a charge sheet without subjecting bank officials to custodial interrogation? If in these matters they are not caught, this investigation will again lead to an eyewash,” the bench said.
Bhati said she did not have clear instructions on whether bank officials had been subjected to custodial interrogation. The court recorded that “as of now, we do not want to comment on the quality, depth and investigation skills in the ongoing investigation”, but reminded the agency that “nobody should be treated above law” and that all persons involved must be examined to get to the bottom of the matter.
Jain pointed out that he had flagged the issue in a report to the court last year. Agreeing, the bench said, “This was the nexus that alone had to be investigated. One has to find out what conditions gave these builders an extreme advantage while homebuyers were made to run from pillar to post.”
The court directed a senior CBI officer to file an affidavit before the next hearing explaining how this aspect had been examined in the investigation so far. “Ultimately, it is the country’s money which has been siphoned off. The banks would offer a one-time settlement but where has the rest of the money gone?” it asked.
The 28 cases currently under CBI probe involve 39 housing projects and 17 financial institutions. The projects are located in Noida, Greater Noida, Yamuna Expressway, Gurugram and Ghaziabad, while several petitions relate to projects of the Supertech group across the country.
