Relief for homebuyers from coercive EMI refund

The High Court holds PNB Housing Finance Ltd to go after those who had taken out a loan

home buyers will recall the landmark judgment of the Karnataka High Court on a motion for an order challenging the coercive measures to collect housing loans by a well-known financial institution.

The Karnataka High Court issued a Mandamus warrant on September 14 preventing PNB Housing Finance Limited from taking enforcement action against homebuyers who filed suits to recover any amounts in loan agreements and tripartite agreements.

The High Court also issued an order of Mandamus ordering the Reserve Bank of IndiaNational Housing Bank, National Bank of Punjab Housing Finance Limited and TransUnion CIBIL Limited process complaints from homebuyers to forbear CIBIL score and to issue a certificate of non-due according to law within 60 days. He also led Mantri Developers Private Limited to comply with orders of the subject made by the arbitrating agent, Real Estate Regulatory Authority (RERA) within 60 days.

The case

The homebuyers had previously booked their apartments with Mantri Developers Private Limited under the Pre-EMI Scheme, which is a three-party pre-sanctioned loan agreement between homebuyers, developers and National Bank of Punjab Housing Finance Limited (NBHFL). When the home buyers, unhappy with the pace at which the developer was building the apartment, tried to withdraw their reservations, the bank had already disbursed the loan amount directly to the developer without verifying the construction stages although RBI requires such validations before disbursements.

Home Buyers had made payments to the developer and when asked to return the money after the cancellation, the developer did not. They filed complaints with the Karnataka RERA under Section 31 of the RERA Act 2016.

RERA ordered the developer to return the money to homebuyers that they paid the developer with 10.25% interest. He also ordered the developer to discharge the loan taken out on behalf of the homebuyers with all EMIs and interest, if any. The promoters did not honor the orders placed by RERA, the bank initiated a coercive procedure to recover the loan from the buyers.

“The buyers have no accommodation, the promoter Mantri Developers has not honored the RERA orders and the banks have initiated proceedings to recover the mortgage. Under these circumstances, the home buyers have decided to take the help of the Karnataka High Court and it has passed the following order to safeguard the interests of the home buyers,” said Dhananjaya Padmanabhachar, Sanchalak, Karnataka Home Buyers Forum .

It takes the High Court to wake up K-RERA and do its job?

The HC also said that the authority, after hearing the case, should issue orders on the matter within a reasonable time. “If the Authority, after hearing the case, sleeps on the case, the purpose and objective of the law would be defeated. This is therefore an appropriate case where the Authority should be directed to pass the appropriate orders on the petitioner’s complaint within four weeks,’ the HC said.

He said when the RERA Act 2016 was implemented in Karnataka in 2017, homebuyers were under the impression that RERA was going to help homebuyers get justice. “But the reality on the ground is that homebuyers have to go to court for making RERA orders to be implemented. Why RERA is unable to enforce its own orders, even though the law has excellent provisions for imposing a penalty of 5%, imprisonment under various articles of the RERA order does not is not enforced,’ he added.

Relief for home buyers

Mudit Saxena, who has booked an apartment at Mantri Webcity, said: “I welcome the High Court order. Many buyers have suffered all these years. Now Mantri Developers, who got the money from the Punjab National Bank without completing the construction of apartments, must return the money.

Welcoming the order, Mohan C Pullaiah, one of the homebuyers, said, “I started paying EMIs in 2014 and finished in October 2020. But the construction of the apartment complex of 21 floors did not progress more than the first floor. said.


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