Delhi HC Dismisses Homebuyers' Petitions Against Loan EMIs Without Possession Of Flats; Observes Alternate Remedies Available

A Delhi High Court Bench of Justice Purushaindra Kumar Kaurav has dismissed the petitions of home buyers seeking directions seeking 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.

Counsel Nishant Das, among others, appeared for the Petitioners. SPC Neeraj and GP Archana Surve, among others, appeared for the Respondents.

In this case, the petitioners were people who had taken home loans from banks and financial institutions based on a subvention scheme. As per the scheme, the sanctioned loan amount was disbursed directly to the builder, who was supposed to pay the pre-EMIs or full EMIs. However, the builders did not fulfil their obligation to deliver the possession as well as payment of EMIs and the banks demanded repayment from the borrowers.

Through the petition, it was prayed that the banks be asked to refund the EMIs and that the flats be delivered in a time bound manner. 

The Court observed that "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 the 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 cases in hand clearly indicate that the homebuyers are claiming their rights on the basis of terms of the contract or on the basis of RBI Circulars. Their rights are mainly 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."

In an extension of the same, the Court held that "since the rights of the homebuyers are flowing from the terms of the contract and if, there is 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."

The Court further observed that "The cases in hand are purely contractual in nature. As has been noted, the „builder-buyer agreement‟ also categorically provides 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."

In light of the same, the Court was of the considered view that it would not be advisable to entertain a writ petition under Article 226 of the Constitution under the facts of the present cases.

Cause Title: Supertech Urban Home Buyers Association (Suha) Foundation v. Union of India & Ors.

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