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Journalism of Courage
Navneet Singh Sahni ticked all the right boxes — he found a steady job in Gurgaon as an IT professional, got married, and had a child. Buying a house for his family seemed like the next logical step.
So, he invested in a two-bedroom flat in Ambrosia by Ajnara India Limited in Noida’s Sector 118. It cost him Rs 49 lakh.
Ten years later, Navneet, now 40, regrets the decision. His flat was supposed to be handed over in 2017 — but is nowhere near completion.
What makes his situation worse is that he’d purchased the home under a subvention scheme — in which the builder agrees to pay monthly installments of the loan taken by the homebuyer till they are handed possession of the flat.
While the project is only around 40% complete, Navneet claimed the bank has disbursed the entire loan amount to the builder — and is now demanding that he pay.
“Why did I buy an under-construction flat?” he rued. “I keep wondering if it was a mistake.”
He is not alone.
Hundreds of homebuyers across the country are fighting a case in the Supreme Court alleging that banks are using a variety of ways to coerce them to pay back the loans despite their houses not being delivered.
The apex court then ordered the Central Bureau of Investigation (CBI) to probe what it called an “unholy nexus” between builders and banks to cheat homebuyers. On July 30, the CBI registered 22 cases against different builders in the National Capital Region (NCR) and unknown officials of financial institutions.
The subvention scheme
Homebuyers — initially from Delhi-NCR but now from other major cities as well — alleged they were lured into purchasing flats under ‘subvention schemes’ between 2013 and 2015.
On paper, it seemed too good to be true. Builders promised to pay loan installments back to the bank, either monthly EMIs or pre-EMIs (only interest), until a specified date or till possession of the flat was handed over. After the homebuyers get possession, they will commence paying EMIs to the bank.
The arrangement was usually formalised through a tripartite agreement between the bank or financial institution, the builder, and the homebuyer.
However, from 2018 onwards, several builders began defaulting on payments. Banks then started asking homebuyers to pay up, which many couldn’t. This led to coercive recovery action by banks — even though the flats remained incomplete.
Homebuyers approached the Delhi High Court initially. When they failed to get relief, they went to the SC. They alleged that banks and housing finance corporations made upfront loan disbursals to builders, without linking them to the stages of construction of the project.
They further alleged that builders did not comply with the Real Estate (Regulation and Development) Act (RERA) provisions. As per these guidelines, builders have to create a separate escrow account to maintain 70% of funds received from homebuyers, solely for construction of the project, and withdrawals from the account will be “in proportion to the percentage of completion of the project.”
They requested the top court to direct banks to charge monthly installments from builders directly instead of homebuyers; banks to refund the money already taken from homebuyers and recover it from builders; and that the Reserve Bank of India (RBI) take action against the banks.
On March 4, the apex court “prima facie found some unholy nexus between banks/housing financial corporations on one hand and the builder-developers on the other”. It appointed Rajiv Jain, former Intelligence Bureau director and former member of the National Human Rights Commission, as amicus curiae to look into the case.
On April 29, once again pointing to a “nexus” between renowned banks and builders in the execution of projects in Noida, Greater Noida, Yamuna Expressway, Gurgaon, and Ghaziabad, the SC bench of Justices Surya Kant and N K Singh had asked the CBI to conduct seven preliminary inquiries (PEs) against developers, including Supertech Limited.
The court had said these cases “have raised an issue of paramount importance re: the systematic failure of statutory and government authorities to discharge their functions, circumvention of regulatory framework by banks and housing financial corporations, and the resultant illicit benefits said to have been drawn by builders/developers at the cost of the homebuyers, who are now bearing the brunt of such failures.”
Post the submission of the PEs, it asked the probe agency to register the cases and proceed with investigations.
So far, the CBI has registered 22 cases and conducted searches at 47 locations in Delhi-NCR and claims to have found incriminating evidence. Its inquiry into cases outside the NCR is yet to be submitted.
A tale of three builders
A total of 174 petitions have been filed in court by 1,205 homebuyers, accusing 40 builders and developers of cheating them. The highest number of petitions — 799 — is against Supertech Limited.
Among those who invested in the builder’s project is Pankaj Sabharwal, 48.
In June 2014, he booked a flat in the Supertech Hues in Gurgaon’s Sector 68. The luxury flat, costing over Rs 1 crore, had a super area of 1,430 sq ft and was marketed as a two-and-a-half-bedroom luxury flat — fully furnished with ACs, modular kitchens, and sleek bathrooms.
The project, spread over 32 acres, was to include around 1,000 flats across 23 towers.
Sabharwal was promised possession by December 2017. It is now 2025, and he has still not received the flat.
In 2019, according to a submission made by the builder to the Haryana Real Estate Regulatory Authority (RERA), the project was only 5% complete and it had invested more than half the total estimated cost of the project.
In 2021, the builder was admitted into insolvency and is currently undergoing insolvency proceedings.
Sabharwal, meanwhile, said the bank started debiting a monthly installment from his account. “Then, banks started harassing us and other homebuyers. Different tactics were used to mentally harass people,” said Sabharwal, who is leading the Supertech Urban Homebuyers Association, 105 members of which are petitioners in the case.
“Twice, the bank withdrew Rs 27 lakh from my account without my consent, pushing it into a negative balance and eventually freezing it,” he said, adding that recovery agents are now showing up at people’s offices and neighbourhoods.
Out of the Rs 1.16 crore cost of the flat, Sabharwal made a booking payment of Rs 21 lakh and took a loan for the rest of the amount. He has paid back approximately Rs 30 lakh of the loan. “The best-case scenario is that the project is completed by someone else, and we get our house. If that does not happen, we hope we at least get our money back with some interest,” he said.
Supertech has 21 projects in over six cities, according to a report submitted by Jain, and it entered into tripartite agreements with 19 different banks/housing finance corporations. Eight of them figure in most of its 21 projects. The amicus’s report also points out that Supertech has secured loans worth Rs 5,157.86 crore since 1998.
The CBI FIR against Supertech noted that the builder neither delivered the units to homebuyers as promised nor refunded their deposited amounts. It, instead, misappropriated both the entire upfront booking amounts as well as the loan amounts, “and thus cheated the homebuyers in conspiracy with unknown bank officials”.
The FIR names Supertech Chairman R K Arora; directors Sangita Arora and Mohit Arora; as well as unknown officials of ICICI; Sammaan Capital, formerly Indiabulls Housing Finance Limited (HFL); HDFC HFL, Punjab National Bank (PNB) HFL, among others, and unknown private persons.
When contacted, R K Arora denied allegations of diversion of funds, saying that “all funds are infused in project construction and more than 80% have already been completed and delivered”.
Supertech has also submitted a resolution plan in the Supreme Court for approval to complete pending projects, he said, claiming that the remaining 20% of projects will be delivered within two years of court approval, with some handovers beginning three months after approval.
He added that the subvention scheme was “availed by homebuyers and not developers”. He explained that “most of the subvention allottees in Supertech projects already got possession, which the CBI team has visited and verified”.
On specific projects, Arora said possession had begun at Hues, with more than 300 families already shifting in and that at Azalia (also in Gurgaon Sector 68), construction was “in full swing” and possession would begin by the end of this year.
Arora said that the company is cooperating with the investigation agencies.
Sabharwal, however, alleged that while some families have moved in, the whole project with all of its towers and common facilities is still far from being complete.
Ajnara’s case is similar. The builder is among those booked by the CBI, which has lodged a case of cheating, criminal conspiracy and criminal misconduct by public servants against Vinod Kumar Gupta, Ashok Kumar Gupta (both director/promoter of Ajnara), Ajnara India Limited, other directors of Ajnara during the relevant time period, unknown bank officials at PNB Housing Finance and other banks, and others.
It was entered into insolvency proceedings before it was halted in 2023 by the National Company Law Appellate Tribunal; it directed the Interim Resolution Professional (IRP) to supervise the construction with support and cooperation from the ex-management, employees and other officers.
As per a monthly status report submitted by AVIS Consulting last October to the IRP, construction at Ajnara Ambrosia has come to a halt. “… the future of the projects seems very bleak at this point,” the report noted.
As per the FIR, the CBI enquiry allegedly revealed that officials of PNB Housing Finance, HDFC Bank, ICICI Bank and Indiabulls HFL (now Sammaan Capital) disbursed the loan amount to Ajnara India Limited’s account without undertaking due diligence, ignoring directives of RBI/National Housing Bank, and unduly benefiting the builder.
The FIR claimed the builder “pocketed homebuyers’ own funds and loan funds, did not construct/complete the project… thus cheating homebuyers in conspiracy with unknown officials” of the banks named above.
The IRP overseeing Ajnara India Ltd’s insolvency process has not responded to requests for comment.
Sammaan Capital refused to comment on the allegations, but an official response stated that the share of homebuyers under the subvention scheme was just 1% of its loan portfolio. It added that disbursals under such loans were stopped by the company in 2019.
HDFC, ICICI and PNB Housing Finance did not respond to requests seeking comment.
Meanwhile, in Bengaluru, IT professional Pushkar Sinha bought a two-bedroom flat in 2015. The property was part of Pashmina Developers’ Brookwoods project in Whitefield and cost Rs 33 lakh.
He, too, chose a subvention scheme. The flat was promised by 2017.
While the whole project is not complete, his tower and flat are ready. The builder, however, is offering possession but at a higher price. “They (builder) keep demanding more money on various pretexts,” Sinha claimed. “They claim a new generator has been installed, and now I have to pay for it,” he added.
He is the sole breadwinner of his family. “My father, who is in Kolkata, is dealing with a medical condition. I have to cover the expenses for his treatment. On top of that, I’ve been paying a monthly rent of Rs 37,000 for the past 12 years,” Sinha added.
As per Karnataka RERA’s website, Pashmina Brookwoods is a lapsed project — the project’s registration with the regulatory authority expired because the builder failed to complete it within the allotted time or to apply for and receive a necessary extension. There are 76 complaints against the builder, almost all regarding the delay in delivery, according to the website.
In a case filed by the Pashmina Brookwoods Allottees /Owners Welfare Association in RERA, the authority ordered the builder to pay a delay compensation to all complainants on the amount paid by them already at the rate of 9% per annum for four months and then at 10.75% per annum.
Sinha alleged that the builder has not paid this compensation to homebuyers.
The Indian Express contacted Pashmina Developers via email but received no response.
The way forward
According to a 2023 estimate by the Indian Banks’ Association, around 4.12 lakh housing units are stuck in stalled real estate projects across the country, involving investments worth Rs 4.08 lakh crore. The NCR, however, is the epicentre of this crisis — 2.4 lakh stressed units are located here.
Experts pointed out that unless those responsible for this situation — builders, banks, and regulatory authorities, specifically RERAs of respective states — are hauled up, the situation won’t improve.
Abhay Upadhyay, member of the RERA Central Advisory Council, said the authority was brought in specifically for the purpose of avoiding delivery delays, besides eradicating other prevalent malpractices in the sector, but has not been able to fulfill that.
“RERA has been given wide powers and is responsible for the complete process — from advertising of the project to issuing occupancy certificates for flats. It could have intervened at any stage of the builder-allottee relationship, and penalised developers when it saw such extreme delays,” he said.
Upadhyay, who is also president of the Forum for People’s Collective Efforts, a homebuyers’ body, said state RERAs should have been made parties in the case in the SC.
Vaidehi Tandel, Assistant Professor of Real Estate and Urban Economics at the University of Manchester, thinks differently: “The problem of delays in projects won’t be solved by RERA alone without broader regulations. RERA currently neither has jurisdiction over municipal corporations or development authorities, nor any role in how banks get regulated.”
M S Sahoo, who was a member of the Amitabh Kant-led committee to examine stalled real estate projects and the first chairperson of the Insolvency and Bankruptcy Board of India, said, “Funds diverted or siphoned must be restored to the enterprise. Beyond that, stalled projects can reach closure only if every stakeholder accepts a measure of sacrifice: lenders offering interest rebates, authorities granting higher FAR or waiving dues, and homebuyers contributing additional funds.”
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