'Unfortunate Trend': Delhi High Court Expresses Concern Over Builders Resorting To Dilatory Tactics, Defrauding Homebuyers

Highlighting the issued faced by various homebuyers in the country, the Delhi High Court on Tuesday said that it is an "unfortunate trend" that builders often resort to dilatory tactics, defraud homebuyers by selling units to multiple individuals, delay the execution of projects, and execute projects without requisite sanctions.

"Invariably most of such builders also undergo insolvency. The greatest loss is incurred by innocent homebuyers who are not only forced to embroil themselves in litigation but are also divested of their hard-earned savings," said the division bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad.

The court made the observations while dismissing an appeal filed by two homebuyers - husband and wife, alleging that they were defrauded by a builder in collusion with Indiabulls Housing Finance Limited.

The appellants had challenged a single judge order which had dismissed their plea seeking an ad-interim ex-parte stay on the demands of the payment of Pre-EMIs and EMIs by Indiabulls Housing Finance Limited. 

The appellants had booked residential flats in a Project situated in Agra by paying an amount of Rs. 7 Lacs as booking fees. They were given allotment letters in 2014 and 2015. Thereafter, a Builder Buyer Agreements was also executed in favour of the appellants with respect to their allotted unit.

In 2015, a Memorandum of Understanding was entered into between the appellants and the builder, recording that the appellants were to avail a housing loan from Indiabulls Housing Finance Limited and that upon the disbursement of the loan, the builder would pay a mutually agreed upon assured return. However, by 2017, the builder stopped paying the EMI to the appellants and they were not handed over their units.

While dismissing the appeal, the court noted that the appellants had availed other remedies by approaching the State Consumer Disputes Redressal Commission, wherein they had secured an order in their favour, and had later initiated execution proceedings against the Builder when the commission's order was not followed.

The court also noted that although an execution order was obtained from the commission by the appellants, however, the same could not be executed due to the moratorium imposed under IBC as the Builder underwent insolvency in May this year.

It was also noted that the appellants had filed a civil suit seeking injunction restraining the Bank from encashing the cheques given by them and also demanding the EMI from them every month.

In this backdrop, the court said that the prayers sought in the plea dismissed by the single judge vide the impugned order were akin to the prayers sought in the civil suit.

"It is also to be noted that the Project of Respondent No. 4 is situated in Agra, Uttar Pradesh. The Respondent No. 3 is also situated in Agra. It appears that the W.P.(C).11865/ 2022 was filed before this Court only because the Respondent No. 3 has been sued through the Interim Resolution Professional who is a resident of Delhi," the court said.

While the court dismissed the appeal, it recognised that several real estate projects across the country were facing a similar situation.

"The grievances of the Appellants are mirrored in other petitions filed by other innocent homebuyers as well. Such petitions too are pending before this Court, other High Courts, and also, the Hon‟ble Supreme Court," the court said.

The court however added that it must be considered that the cases arising out of such projects involve disputed questions of fact involving myriad issues. It thus observed:

"Although this Court sympathises with the Appellants, and similarly placed innocent homebuyers, Courts cannot possibly take account of all such real estate projects, and the gamut of issues arising from them."

Title: SUNIL KUMAR PANDEY AND ANR v. UNION OF INDIA AND ORS

Citation: 2022 LiveLaw (Del) 1034

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