Supertech Urban Home Buyers Association Foundation v. Union of India

10. Respondent No. 2-Reserve Bank of India, while adopting the counter affidavit filed in the petition being W.P.(C) 9491/2020, states that the cause of action has not arisen within the territorial jurisdiction of this court and therefore, these writ petitions should not be entertained only on account of the fact that seat of Government bodies situates in Delhi. It is the specific case of RBI that the dispute between the members of the petitioner-association and respondent No. 3builder is a subject matter of a contractual agreement executed between the parties. The respondent No.2 only enjoys regulatory power under Section 35A of the Banking Regulations Act, 1949 to

- 27 – Neutral Citation Number 2023:DHC:1872 issue necessary directions to banking companies generally or to any banking Companies in particular from time to time. The RBI has issued various directions to ensure that the banking affairs in the country is uniformly conducted as per the required standard to secure proper management of bank‟s finance as well as to the interest of depositors and banks. The RBI is empowered under Section 47-A of the Banking Regulation Act, 1949 to impose monetary penalty on the banks for contravening the provisions of Banking Regulations Act, or if any default is made in compliance with the requirement of that Act. It is stated that Master Circular on Housing Finance dated July 01, 2015 (hereinafter referred to as „Master Circular‟) was issued which has advised the banks to ensure proper use of funds and to prevent diversion/siphoning of funds by the borrowers/lenders. The directions of Master Circular were further reiterated in another Circular dated July, 15, 2015 (Annexure R-2). It has been emphasised that subvention schemes are offered by builders/developers, and regulations of RBI/National Housing Bank (hereinafter referred to as „NHB‟) are applicable to banks and the Housing Finance Companies only. The schemes are not under the regulatory purview of the bank. The decision to be a party to the subvention scheme of developers/builders is purely an individual decision. However, it is stated that in terms of the Circular dated July 19, 2019, the Housing Finance Companies shall desist from offering loan products involving such schemes. Copy of Circular dated July 19, 2019 issued by NHB has been placed on record as (Annexure R-5). It is also stated that the RBI has performed its duty to the best of its ability in discharge of its statutory obligation under various statutes, including those under the Banking Regulations Act, 1949 and therefore, the writ petition should be dismissed. - 28 – Neutral Citation Number 2023:DHC:1872

11. Learned counsel appearing on behalf of the respondent-UOI in petition being W.P.(C) 372/2023 also filed a written note objecting the maintainability to entertain these writ petitions. According, to him, a writ is a public law remedy and is not available in the private law field, that is, where a non-statutory contract governs the matter. To substantiate the submissions, he placed reliance on the decisions in the cases of State of Gujarat & Ors. v. Meghji Pethraj Shah Charitable Trust 7 and K.K. Saksena v. International Commission on Irrigation and Drainage & Ors. 8. He also placed reliance on a decision in the case of State of Bihar and Ors. v. Jain Plastics and Chemicals Ltd. 9 to state that the High Court should not grant relief in the case of a breach of private contract. According to him, the law to address breach of contract already exists in the form of the Indian Contract Act, 1872, Arbitration and Conciliation Act, 1996 (hereinafter referred to as „AC Act, 1996‟) and the Consumer Protection Act, 2019 and especially the RERA Act. Since sufficient mechanism is provided ensuring adequate remedies under the prevailing law, writ court should refrain from exercising its extraordinary jurisdiction. According to him, in so far as the prayer with respect to a direction to frame appropriate guidelines or regulations is concerned, the same is also not possible in view of the law laid down by the Hon‟ble Supreme Court in the case of V.K. Naswa v. Home Secretary, UOI and Ors.10.

12. In the petition being W.P.(C) 1225/2021, learned counsel for respondent No. 8- TransUnion CIBIL Limited submitted that any rectification in the data base of credit information or change in the credit information can only be made in accordance with the provisions

- 29 – Neutral Citation Number 2023:DHC:1872 of Credit Information Companies (Regulations) Act, 2005 (CICRA). It states that the Credit Information Company is governed by the provisions of CICRA. It further states that a person aggrieved by the information disseminated by the credit institution can either approach the concerned credit institution or can approach the RBI for redressal of their grievances and further in case the dispute persists, the same shall be settled by conciliation and arbitration as provided under AC Act, 1996. Relying on Section 18 of CICRA, it is submitted that the said respondent is not a necessary party and the petition against it deserves to be dismissed.

13. The respondent No.6-Punjab National Bank Housing Finance Limited (hereinafter referred to as „PNBHFL‟), while filing its counter affidavit states that it is a company incorporated under the Companies Act, 1956 (hereinafter referred to as „Companies Act‟). The respondent No. 6 claims to be the largest Housing Finance Company duly registered with the NHB. It is primarily engaged in the business of rendering home loans/finance facilities pre-dominantly against security of immovable property. It states that the petitioner-association has not filed any list of members of the association. It further states that the members of the petitioner-association chose the answering respondent to avail financial assistance on their own volition and they availed the services of respondent No. 6-PNBHFL without any compulsion. The respondent-builder offered interest on subvention of the loan, which was accepted by the members of the petitionerassociation. The members of the petitioner-association in furtherance to avail the financial assistance have entered into a tripartite agreement. As per the tripartite agreement, it was the principal liability of the borrower, that is, the members of the petitionerassociation to honour all the EMIs as well as pre-EMIs of the loan - 30 – Neutral Citation Number 2023:DHC:1872 advanced. It is stated that respondent No. 6-PNBHFL has funded 144 customers in the project „Supertech Azalia‟ and 50 customers in the project „Supertech Hues‟. It is stated that there is no element of State involvement in the matter and the issue is purely private in nature. The relationship between respondent No. 6-PNBHFL and its customers rests on respective loan agreements and is completely contractual in nature. Various terms and conditions of the loan documents have been relied upon to indicate that the parties are bound by the terms and conditions of the respective agreements. According to respondent No. 6-PNBHFL, as per tripartite agreement, the respondent-builder had assumed the liability of the members of petitioner-association to the limited extent of payment of pre-EMIs only for a certain period of months from the date of first disbursement or till possession/completion of the flat, whichever was earlier. It is stated that such liability of the builder has in no way, relinquished or reduced the liability of the members of the petitioner-association towards respondent No. 6-PNBHFL to repay the borrowed amount. It is stated that the obligation to repay the loan/EMI including the pre- EMI is a distinct and independent obligation of the borrower.

14. Respondent No.5–Housing Development Finance Corporation Limited (hereinafter referred to as „HDFCL‟) also filed its short affidavit stating therein that respondent No. 5-HDFCL is a registered Housing Finance Company and is a major provider of finance to Housing in India. The same is a private corporate body incorporated under the provisions of the Companies Act. It does not discharge any functions or duties of public nature and is regulated by the National Housing Finance Companies Directions, 2010 as amended from time to time. It is also stated that it is also regulated by the RBI. It is further stated that since respondent No. 5-HDFCL cannot be said to be - 31 – Neutral Citation Number 2023:DHC:1872 an instrumentality or agency of Government to fall within the contours of the expression „State‟ under Article 12 of the Constitution, therefore, writ petition against respondent No. 5-HDFCL would be a gross abuse of the process of law. It is the case of respondent No. 5- HDFCL that the delay in handing over the possession in time bound manner is a dispute between homebuyers and the respondent-builder, which is purely contractual in nature. The homebuyers have remedy against the builder. It is stated that the dispute between the members of the petitioner-association and the builder is governed by the builder-buyer agreement and, therefore, the same must be referred to the sole arbitrator in terms of the provisions of the AC Act, 1996. Besides that, it is stated that the members of the petitioner-association have other efficacious statutory remedies available under the RERA Act and under the Consumer Protection Act, 2019. While relying on the home loan agreement executed between respondent No. 5-HDFCL and one of the homebuyers, it is stated that the borrower‟s liability to repay the loan is an independent contractual obligation. The homebuyers have executed separate independent contract with the developer and home loan lenders for independent services and obligations. It is the specific case of respondent No. 5-HDFCL that it has not funded homebuyers for respondent No. 3‟s project known as „Supertech Scarlet‟. This respondent has only acted in a limited capacity to fund the homebuyers who had taken an informed decision to invest in the project.

15. The respondent No. 8-Aditya Birla Housing Finance Limited also filed its counter affidavit reiterating the same submissions. It is stated that the said respondent is a non-banking financial company which is covered under Clause (f) of Section 45-I of the RBI Act,

1934. In table-1 of its counter affidavit, the names of borrowers and - 32 – Neutral Citation Number 2023:DHC:1872 co-borrowers against loan amount sanctioned to them have been mentioned. It has been pointed out that after the receipt of loan applications from respective borrowers, the said respondent sanctioned the home loan facilities against mortgage of the units/flats as mentioned in table 2 of its counter affidavit. It is stated that separate home developer agreement dated 29.07.2017 was executed between respondent-builder and the borrower. The loan agreement is an independent agreement executed by the said respondent with each of the borrowers. It is also stated that the tripartite agreement was also executed between respective borrowers, builder and the respondent financial institutions, agreeing therein that respective borrowers are under obligation to repay the loan. However, the builder undertook to pay only interest to the said respondent on behalf of the borrower for the loan disbursed to them as per applicable provisions of the MoU for the subvention period. It is the case of the respondent No. 8 that in exercise of its right as a secured creditor under the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as „SARFAESI Act‟), the said respondent had served upon the borrowers notices under Section 13(2) of the Act of 2002 calling upon them to discharge their liability.

16. The stand of respondent No. 10-M/s L&T Housing Finance in its short affidavit is that respondent No. 10-M/s L&T Housing Finance has merged with L&T Finance Limited w.e.f. 12.04.2021. It is stated that respondent No. 10 is a non-banking financial company incorporated under the provisions of Companies Act. Similar objections have been raised with respect to maintainability of the writ petition against the said respondent as has been taken by other respondents-banks/financial institutions. It is the case of this - 33 – Neutral Citation Number 2023:DHC:1872 respondent that several homebuyers approached the said respondent for seeking financial assistance for the project of respondent No. 3 being „Azalia‟ and „Hues‟. Besides the execution of loan agreement, homebuyers have also entered into tripartite agreement which provided for subvention period. According to this respondent, after the expiry of subvention period, the homebuyers were liable to make the payments towards the pre-EMIs and EMIs.

17. The respondent No. 9-ICICI Bank Ltd., also filed its short counter affidavit stating therein that the same is a private corporate body incorporated under the provisions of the Companies Act and does not discharge any functions or duties, which are public in nature. Similar objections have been raised by this respondent, taking a specific ground that the petitioners have alternative and efficacious remedies available under various laws. According to this respondent, the petitioners cannot be allowed to seek for amendment or rewriting of the contract (loan agreement) under the garb of enforcement of fundamental rights. It is stated that this respondent has sought payment of EMI from the petitioners, names thereof, have been mentioned in the reply in terms of the contract executed between them (loan document). In addition, issue with respect to territorial jurisdiction has also been raised and it is stated that the accounts of some of the homebuyers have been classified as Non-Performing Assets (NPAs) and the accounts of some of the homebuyers are regular.

18. Respondent No. 4-Indiabulls Housing Finance Limited has also filed its short counter affidavit stating therein that the writ petition is not maintainable against private entities. According to this respondent, the obligation to repay the loan/EMI/interest is distinct and - 34 – Neutral Citation Number 2023:DHC:1872 independent that flows from the respective loan agreement and, therefore, this court should not entertain the instant writ petitions.

19. Respondent No. 11-IIFL Home Finance Limited has also filed its counter affidavit, wherein similar objections have been raised with respect to the maintainability of the instant writ petitions.

20. In the petition being W.P.(C) 14859/2021, the State Bank of India has also filed its written submissions stating therein that the concerned branch of the said respondent was located at Ghaziabad, which does not fall within the territorial jurisdiction of this court. It emphasized that the tripartite agreement was executed and certain terms and conditions stipulated therein does not absolve the borrowers from the repayment of the disbursed amount. Various factual issues have also been referred in the said written submissions.

21. In the petition being W.P.(C) 8604/2022, the respondent No.- 3/Futureworld Greenhouse Pvt. Ltd. has also raised similar objections, and it is specifically stated that the disputed question of facts are involved which cannot be gone into in these proceedings. The parties are bound by the terms of tripartite agreement and the builder-buyer agreement and the Circular of RBI are not binding on respondent Nos. 1 & 2 in the said writ petition.

22. Learned counsel appearing on behalf of the respondents while elaborating their submissions on justifiability to entertain these writ petitions made extensive submissions which can be summarised as under: -

(i) The writ petitions are not maintainable in view of the availability of efficacious alternate remedies to the homebuyers under the relevant provisions of RERA Act, Consumer Protection Act, Insolvency and Bankruptcy Code, 2016 and SARFAESI Act, etc. - 35 – Neutral Citation Number 2023:DHC:1872

(ii) The writ petitions are not maintainable against respondents/financial institutions since challenge is arising out of agreement between private parties and the reliefs sought for in these writ petitions are flowing from individual agreements.

(iii) There is no violation of any directives of RBI or NHB that would render the present writ petitions maintainable. Even in case of any violations also, no writ would lie against them.

(iv) This court lacks the territorial jurisdiction to entertain these writ petitions.

23. Learned nodal counsel appearing on behalf of the respondents/ financial institutions in order to substantiate their submission, have explained various clauses of „buyer-developer agreement‟, „loan agreement‟ and „tripartite agreement‟ to indicate that respective agreements and their clauses would be applicable as per the terms of the concerned agreement which cannot be gone into in these writ petitions. They state that in some of the cases, the request for disbursal of the amounts was made by the borrowers to the concerned builder. According to them, each case will have different set of facts and the parties are bound by their individual agreements. According to them, if an efficacious alternate remedy is available, the writ jurisdiction ought not to be exercised. They placed reliance on the decisions in the cases of Upendra Choudhary v. Bulandshahar Development Authority & Ors.11, Gulshan Arora & Ors. v. Miss SRS Real Estate Ltd. & Ors.12, Shelly Lal v. Union of India & Ors13., Assistant Commissioner of State Tax v. Commercial Steel Limited,14 Sunil Kumar Pandey & Anr. v. Union of India & Ors.,15 Baljit Singh

- 36 – Neutral Citation Number 2023:DHC:1872 Bhatia & Ors. v. Union of India & Ors.,16 and Radha Krishan Industries v. State of Himachal Pradesh17.

24. To substantiate their submissions that the financial institutions are not amenable to writ jurisdiction as the respondents are not „State‟ in terms of the Article 12 of the Constitution, they rely on the decisions in the cases of Phoenix ARC Private Limited v. Vishwa Bharati Vidya Mandir & Ors.,18 Federal Bank Limited v. Sagar Thomas and Ors.,19 Rajpur Hydro Power Ltd. v. PTC Indian Financial Services Ltd.,20 Sushmi Mukherjee v. NHB & Ors.,21 Radhakrishna v. Aditya Birla Finance 22 and Mr. Ajay Hasia & Ors. v. Kahlid Mujib & Ors. 23.

25. With respect to their submission regarding scope of interference into contractual matters arising out of an agreement between the builder and homebuyers and the terms and conditions of the private contracts, they rely on the decisions in the cases of Orix Auto Finance (India) Ltd. v. Jagmander Singh,24 Orissa State Financial Corpn. v. Narsingh Ch. Nayak25 & Rajasthan State Industrial Development and Investment Corporation and another v. Diamond and Gem Development Corporation Ltd. and Ors. 26.

26. With respect to territorial jurisdiction, they seek to rely on the decisions in the cases of Sectors Twenty-one Owners Welfare W.P.(C) 6466/2021

- 37 – Neutral Citation Number 2023:DHC:1872 Association (STOFWA) v. Air Force Naval Housing Board 27 and Bernard D’mello v. Industrial Finance Corpn. Ltd. 28.

27. Learned counsel specifically points out that the Division Bench of this court in the case of Sunil Kumar Pandey & Anr. (supra) has affirmed the view of learned Single Judge not to entertain a petition under similar circumstances.

28. Learned counsel appearing on behalf of respondents also clarified that the decision relied upon by the petitioners, rendered by learned Single Judge of the High Court of Karnataka, Bangalore dated 14.09.2022 in W.P.(C) 17696/2021 and other connected matters has been stayed by the Division Bench of the said High Court in Writ Appeal No. 1062/2022 titled as PNB Finance Housing Limited v. Union of India & Ors. in terms of order dated 02.12.2022.

29. In response to the submissions made by learned counsel appearing on behalf of the respondents, learned counsel for the petitioners submitted that the objections so raised by the respondents are bereft of merit and the writ petitions are maintainable in view of the various pronouncements of the Hon‟ble Supreme Court and this court. It is submitted that the writ petitions are maintainable even against a private sector bank, if there is a dereliction of statutory duty imposed on the said bank. According to them, the writ jurisdiction under Article 226 of the Constitution is very wide and is meant to remedy injustice wherever it is found. It is submitted that the Banks and financial institutions are bound by the directions/guidelines issued by the RBI. The RBI is also supposed to monitor whether the guidelines are being truthfully followed or not. Despite the fact that though there was no construction on ground, no units were built up and no possessions were handed over, the concerned financial

- 38 – Neutral Citation Number 2023:DHC:1872 institutions continued to disburse the pre-EMIs/EMIs in favour of the builder, which is in gross violation of the RBI guidelines. According to learned counsel for the petitioners, the financial institutions may have remedy against the builder but there is no remedy available to the petitioners homebuyers against non-adherence of the RBI guidelines by the respondents. Such a question cannot be agitated before any of the authorities. According to them, the tripartite loan agreement clearly records that it would be the liability of the builder to make repayment of the loan if the buyer defaults in repayment. A reference is made to Clause 7 at Page No. 162 and Clause 8 at Page No. 168 besides reference being made to various other Clauses. It is also submitted that the financial institutions have the first charge over the mortgaged property as per the tripartite loan agreement and the MoU between the homebuyers and builder specifically mentions that no EMI would be payable till possession is handed over, which the bank/financial institutions were aware of. According to them, the RBI Circulars have been issued under Section 21(A) and 35(A) of the Banking Regulations Act, 1949 and thus have statutory force and are binding. The Circulars clearly state that the disbursal of the housing loan sanctioned to individuals is closely linked to the stage of construction of the housing projects and upfront disbursal of the amount to the builder should not be made. Even an Architect is required to be appointed by the bank to certify the stages of construction. It is, therefore, submitted that the RBI can levy a penalty and take other necessary actions against financial institutions, but this court can also grant relief to the beleaguered home buyers. The homebuyers are being made to pay loan which was disbursed directly to the builders in contravention to RBI guidelines and without receiving any payment. It is pointed out that the respondents-financial - 39 – Neutral Citation Number 2023:DHC:1872 institutions can recover their amount from the insolvency resolution process, where they are adequately represented in the committee of creditors having the first charge over the property. However, the petitioners cannot be compensated as they have already lost the hope of having their own shelter and also have to suffer the recovery proceedings at the instance of financial institutions. They placed reliance on the decision in the case of Federal Bank Ltd. (supra), Andi Mukta Sadguru Shree Muktajee Vnds Swami Suvarna Jayanti Mahotsav Smarak Trust & Ors. v. V.R. Rudani & Ors29, Dwarka Nath v. Income Tax Officer, Kanpur & Anr. 30, Air India Statutory Corporation & Anr. v. United Labour Union & Ors. 31, M/s Sterling Agro Industries Ltd. v. Union of India & Ors., 32 Peerless General Finance and Investment Co. Ltd. and Anr. v. Reserve Bank of India, Central Bank of India v. Ravindra & Ors.34, Bikram Chatterji & Ors. v. Union of India & Ors.35, Supertech Limited v. Emerald Court Owner Resident Welfare Association & Ors. 36 and the decision of the Karnataka High Court in the case of Mudit Saxena v. Union of India37.

30. Separate submissions have been made by learned counsel for the petitioner who appears in the petition being W.P.(C) 11063/2022. It is stated that the RBI and Union of India are admittedly „State‟ therefore, this court can exercise its jurisdiction under Article 226 of the Constitution against parties discharging public functions, where elements of public law is involved. According to this petitioner, the lending obligations of bank are subject to jurisdiction under Article

(1965) 3 SCR 563

W.P.(C) 17696/2021 - 40 – Neutral Citation Number 2023:DHC:1872 226 of the Constitution and this court has territorial jurisdiction as the bodies against whom the writ is sought, situates within the territorial jurisdiction of this court and, if a part of cause of action has arisen within the jurisdiction of this court, this court would have jurisdiction to entertain the petition. It is submitted that there is no alternative remedy available to the petitioners. Learned counsel has placed reliance in the cases of Akshay N. Patel v. RBI38, Peerless General Finance and Investment Co. Ltd. and Anr. (supra), Life Corporation of India v. Escorts Ltd.39, Ashok Amrit Raj v. Reserve Bank of India40, Karnataka State Forest Industries v. Indian Rocks41, Mardia Chemicals Ltd. v. Union of India42, Pearson Drums and Barrels pvt. ltd. v. RBI43, M/s Sterling Agro v. Union of India (Supra) and Adavya Projects Pvt. Ltd. vs Vishal Structural44.

31. The written submissions have also been filed by the petitioner in the petition being W.P.(C) 10686/2022. It is stated that this court, while considering extensive submissions has passed interim order on 31.01.2022, where all issues were considered. According to him, a writ would be maintainable against a private party where rights of an individual are infringed due to non-compliance of statutory duties. It is stated that the respondent-banks/financial institutions function within the statutory guidelines which clearly reflects the concern of the regulatory authorities and unless the said concern translates into substantive reliefs, the petitioners would not be able to get justice. It is stated that there is an infringement of the fundamental and legal rights of private individual on account of non-compliance of the mandatory guidelines/circulars. A reference has been made to various

- 41 – Neutral Citation Number 2023:DHC:1872 Circulars issued by the RBI to indicate that the same should have been followed in their letter and spirit and failure to comply with the said Circulars result in violation of legal rights of the petitioners, therefore, this court must entertain these writ petitions. The reliance is placed on various decisions in the cases of L.I.C. of India & Anr. v. Consumer Education & Research Centre & Ors. 45, Federal Bank Limited (supra), CBI v. Ramesh Gelli46, Kelvin Jute Company Ltd. Workers Provident Fund v. Krishna Kumar Agarwal, President, Waverly Jute Mills Co. Workers & Ors.47, Peerless General Finance and Investment Co. Ltd. and Anr. (supra), A.V. Venkateswaran v. R.S. Wadhwani & Anr. 48 and D.D. Suri v. A.K. Barren & Ors.49

32. Learned counsel Shri Ratnesh Sharma, who appeared in the petition being W.P.(C) 10686/2022 has placed on record various interim orders passed by this court, wherein the interim order dated 31.01.2022 has been followed. Learned counsel made a specific reference to order dated 19.07.2022 passed in this writ petition where learned Single Judge vide order dated 17.08.2022 recorded that primafacie case of maintainability has been made out and accordingly, he directed for issuance of notices.

33. Shri Anshul Gupta, learned counsel who appeared on behalf of the petitioners in the petition being W.P.(C) 9178/2022 has referred to various Circulars and indicated that on a particular date, the entire sanctioned amount was disbursed without following applicable Circulars. He stated that this is a clear case of violation of statutory regulations and a fraud has been committed upon the petitioners.

(1962) 1 SCR 753

- 42 – Neutral Citation Number 2023:DHC:1872 According to him, to do justice, this court must entertain these writ petitions and not relegate the petitioners to any other alternate forum.

34. Shri Anshul Gupta, learned counsel pointed out that on 31.07.2015, 100% amount was disbursed by the financial institutions and he explained that the same is in clear violation of RBI Circulars.

35. Shri Ratnesh Sharma, learned counsel who appeared on behalf of the petitioners in some of the petitions, states that the issue with respect to maintainability has already been examined by this court on 31.01.2022 and by various other interim orders passed from time to time, therefore, the said issue need not be examined again.

36. Shri Aditya Bhattacharya, and Shri Abhinav Jaganathan, learned counsel submitted that in their petitions there are additional prayers, which require consideration. While placing reliance on the decision of the Hon'ble Supreme Court in various cases, they submit that the petitioners cannot be relegated to any other forum.

37. Shri Jagdeep Sharma, learned counsel who appeared in some of the matters submitted that under the facts of the present case, when a large scale of fraud has been committed by builders, this court is the only remedy to seek justice.

38. Shri Shrey Nanda, learned counsel who appeared in the petition being W.P.(C) 1377/2021 submitted that paragraph Nos. 11, 17 and 20 of the decision in the case of Andi Mukta Sadguru Shree Muktajee (supra) clearly support their stand.

39. Shri Bharat Bhushan Singh, who appeared in petitions being W.P.(C) 9101/2022 and W.P.(C) 13929/2022, while placing reliance on the decision of the Hon‟ble Supreme Court in the case of ABL International v. Export Credit Guarantee Corporation of India Ltd and Ors.50 submitted that these writ petitions are maintainable. The

- 43 – Neutral Citation Number 2023:DHC:1872 similar stand is taken by Shri Shubham Kaushik, learned counsel who appeared on behalf of the petitioner in the petition being W.P.(C) 13431/2022 and other learned counsel who appeared in different petitions.

40. The petitioners in addition to the aforesaid submissions also specifically addressed this court as to why, this court should entertain these writ petitions. According to them, all the prayers are capable of being entertained under Article 226 of the Constitution of India. Article 226 of the Constitution of India is an intrinsic feature of the basic structure of the Constitution. The subvention arrangement itself is prohibited in terms of RBI Circular dated 03.09.2019. Most of the builders are under CIRP and moratorium is operating against them. There are more than 200 home buyers who cannot be left remedy less. The regulatory authorities such as RBI or the Union Government cannot remain mute spectator. In some cases the tenure of the loan period and the interest thereon has been unilaterally increased without the consent of the borrower. This is a case where large scale diversion of funds has taken place.

41. Reliance is placed on a decision of the Hon'ble Supreme Court in the case of Godrej Sara Lee Ltd. v. Excise and Taxation Officercum-Assessing Authority and Others51. It is also pointed out that the Division Bench of this court in the case of Vineet Gupta v. Reserve Bank Of India & Ors.52 is also seized with the same issue.

42. I have heard learned counsel appearing on behalf of the parties and perused the record.

43. If the reliefs sought for in the instant writ petitions, and in few other connected matters are perused, the same can summed up as under:-

(i) To direct the respondent-banks/financial institutions not to charge the pre-EMIs or full EMIs from the petitioners homebuyers.

(ii) To direct the respondent-banks/financial institutions not to charge all the pre-EMIs or full EMIs till the possession is not delivered from the respondent builder/real estate developers.

(iii) To direct the respondent-banks/financial institutions to refund the petitioners' pre-EMIs or full EMIs paid by them.

(iv) To direct the respondent-State to frame clear and strict guidelines to regulate the transactions pertaining to the subvention schemes prevalent in the real estate sectors.

(v) To direct respondent-banks/financial institutions not to auction the property of any real estate builder without the consent of the homebuyers who have invested their money.

(vi) To direct the respondent to ensure that the petitioners are provided their respective flats in a time-bound manner.

(vii) To direct the respondents to initiate strict action against respondent-banks/financial institutions for violating the rules and regulations laid down by RBI.

(viii) To pass appropriate guidelines to be followed by all nationalised and private banks/financial institutions including the respondent-banks/financial institutions for release/disbursal of funds to Real Estate Companies in cases of loans sanctioned against any real estate project.

(ix) To direct for appointment of a committee of experts to examine the grounds raised in the petitions and their representations with further direction to submit the report in a time-bound manner.

(x) To direct the Union of India to frame guidelines and monitoring system where the aggrieved people can submit their objections which can be monitored in a transparent and time-bound manner. - 45 – Neutral Citation Number 2023:DHC:1872

(xi) To direct the respondents to ensure that no recoveries are made from the petitioners and to stop them from enforcing repayment obligations in pursuant to facility availed by the petitioners.

(xii) To direct the respondents to restore the CIBIL score to declare certain clauses of tripartite agreement as null and void and to direct the respondent to comply with the norms of the subvention schemes, directing the respondent-banks/financial institutions to withdraw the complaint under Section 138 of Negotiable Instruments Act, 1881 pending before the concerned Metropolitan Magistrate.

(xiii) To direct the respondents not to present the ECS/security cheques submitted by the petitioners with the banker of the petitioners before the actual physical possession of the concerned unit is handed over to the petitioners.

(xiv) To stay various proceedings already initiated or likely to be initiated by respondent-banks/financial institutions under the provisions of Payment and Settlement System Act, 2007, Negotiable Instruments Act, 1881, SARFAESI Act or any other coercive action.

(xv) To direct the respondents not to declare the account of the petitioner as NPA.

44. Both sides i.e. the homebuyers and the respondents are relying on various Clauses of respective agreements. It would be appropriate to consider the relevant Clauses relied upon by them. One of the agreements entered between the parties is known as „buyer-developer agreement'. A copy of „buyer-developer agreement‟ has been placed on record at Page Nos. 235 to 253 of the convenience compilation. The same is entered into between Supertech Limited (builder) and Mr. Dhananjay Bhatt-homebuyer on 29.07.2017 which states that buyer has requested for allotment of one residential unit in Supertech „Azalia‟ project with full knowledge and subject to all the laws, - 46 – Neutral Citation Number 2023:DHC:1872 notifications and rules applicable to the said project. Various terms and conditions were mentioned in the said „buyer-developer agreement‟. Clause 3 of the terms and conditions of „buyer-developer agreement‟ dated 29.07.2017 is reproduced as under:-

45. Clause 48 of the said „buyer-developer agreement‟ reads as under:- “48. THAT all or any disputes arising from or out of or touching upon or in relation to the terms or formation of this - 47 – Neutral Citation Number 2023:DHC:1872 provisional Allotment or its termination, including the interpretation and validity thereof and the respective rights and obligations of the Parties shall be settled amicably by mutual discussion, failing which the same shall be settled though arbitration. The arbitration proceedings shall be governed by the Arbitration & Conciliation Act, 1996, or any statutory amendments, modifications or re-enactment thereof for the time being in force. A sole arbitrator, appointed by the Developer, shall hold the arbitration proceedings at New Delhi. The decision of the Sole Arbitrator including but not limited to costs of the proceedings/award shall be final and binding on the Parties, The Allottee(s) hereby confirms that he/she shall have no objection to such appointment and proceedings of arbitration".

46. Another agreement which is executed between the parties is known as „loan agreement‟. The „loan agreement‟ is executed between the buyer being the first party and the respondent-banks/financial institutions as the second party. A copy of one of the loan agreements dated 27.10.2017 executed between Aditya Birla Housing Finance Limited-respondent No. 8 and Dhananjay Bhatt has been placed on record at Page Nos. 254 to 286 of the convenience compilation. Clause 7.[1] stipulates therein that if the borrower fails to pay to the financial institutions any amount when due and payable under the said agreement, the same would be treated to be an event of default and under such circumstances, the financial institutions may, by written notice to the borrower declare all sums outstanding under the loan to become due and payable forthwith and can take any other action as it may deem fit for recovery of its dues and enforce the security interest in relation to the loan upon the occurrence of any one or more of the events of defaults. Clause 7 of the loan agreement dated 27.10.2017 is being reproduced as under:- “7. EVENTS OF DEFAULT: ABHFL may by a written notice to the Borrower(s), declare all sums outstanding under the Loan (including the principal, Interest, Default - 48 – Neutral Citation Number 2023:DHC:1872 Interest, charges, expenses) to become due and payable forthwith, take any other action as it may deem fit for recovery of its dues and enforce the security interest in relation to the Loan upon the Occurrence (in the sole decision of ABHFL) of any one or more of the following events: 7.[1] The Borrower(s) fails to pay to ABHFL any amount when due and payable under this Agreement; 7.[2] The Borrower(s) defaults in performing any of his obligations under this Agreement or breaches any of the terms or conditions of this Agreement, 7.[3] Any information or detail provided by the Borrower to ABHFL is or becomes untrue, incorrect or misleading; 7.[4] The Borrower(s) opts to resign or retires from the employment prior to the age of superannuation or is discharged or removed from service before such date for any reason whatsoever; 7.[5] Any the information provided by the Borrower(s) to avail the Loan or any of his representations and warranties herein being found to be or becoming incorrect or untrue; 7.[6] Any person other than ABHFL commencing any civil/criminal proceedings against the Borrower(s); 7.[7] The value of the property or any security (including guarantee/s) created or tendered by the Borrower(s), in the sole discretion and decision of ABHFL, depreciates entitling the ABHFL to call for further security and the Borrower(s) failing to give additional security, 7.[8] If the Property is destroyed, sold, disposed of, charged, encumbered, alienated, attached or restrained in any manner; 7.[9] The Borrower(s) fails to create the security interest as provided herein;

7.10 ABHFL, for any regulatory or other reasons, is unable or unwilling to continue the Loan;

7.11 The death, insolvency, failure in business, commission of an act of bankruptcy, general assignment for the benefit of creditors, suspension of payment to any creditors or - 49 – Neutral Citation Number 2023:DHC:1872 threat to do so by the Borrower(s), filing of any petition in bankruptcy or winding-up by or against the Borrower(s); or

7.12 The Borrower(s) fails to furnish any information or documents or to submit or execute the relevant post disbursement documents as required by ABHFL”.

47. Clause 10 of the said loan agreement governs the law and dispute resolution. The same is also reproduced as under:- "10.

GOVERNING LAW AND DISPUTE RESOLUTION 10.[1] Laws of India shall govern this Agreement, the security and other documentation pursuant hereto. The courts in the city of Mumbai (unless specified otherwise in this Agreement) will have exclusive jurisdiction over all aspects governing the interpretation and enforcement of this Agreement. 10.[2] The Parties also agree and acknowledge that in case of any dispute or difference arising out of or in connection with this Agreement whether during its subsistence or thereafter between the Parties including any dispute or difference relating to the interpretation of the Agreement or any clause thereof shall be settled by arbitration in accordance with the provisions of The Arbitration and Conciliation Act, 1996, or any statutory modifications thereof and shall be referred to a sole arbitrator, to be appointed by ABHFL alone. 10.[3] The venue for conducting arbitration proceedings shall be conducted at the place mentioned Schedule - I and the language of arbitration shall be in English. 10.[4] Notwithstanding anything contained in the Agreement, in the event, the Loan of ABHFL is assigned to any bank and/or financial institution which have the benefit under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Act ("Securitization Act") or The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (the "DRT Act") and/or the legal status of ABHFL changes or in the event of the law being made or amended so as to bring ABHFL under the Securitization Act or DRT Act (being notified under the Securitization Act and/or DRT Act), to enable ABHFL to enforce the security under the Securitization Act - 50 – Neutral Citation Number 2023:DHC:1872 or proceed to recover dues from the Borrower under the DRT Act, the arbitration provisions contained shall, at the option of ABHFL shall continue and if arbitration proceedings are commenced but no Award is made, then at the option of ABHFL such proceedings shall continue. Provided that neither a change in the legal status of ABHFL nor a change in law as referred to in this sub paragraph, will result in invalidating an existing award passed by an arbitral tribunal constituted pursuant to the provisions of the Agreement”.

48. Another agreement that is known as „tripartite agreement‟ is executed between borrower, builder and financial institutions. A copy of one of the tripartite agreements executed between Manish Kumar Garg (borrower), Supertech Limited (respondent No. 3) and Indiabulls Housing Finance Limited-respondent No. 4 has been placed on record at page Nos. 287-292 of the convenience compilation.

49. Recital in Clause (A) to (G) are reproduced as under:-

Property hence in order to make up their finance for the - 51 – Neutral Citation Number 2023:DHC:1872 purchase approached ABHFL for grant of Housing Loan. The Borrower under the provisions of the housing loan scheme framed by the ABHFL have applied to ABHFL for a loan for the purchase of the Property and ABHFL has agreed to grant a loan for an amount as mentioned under Schedule I to the Borrower (hereinafter referred to as the "Loan") subject to the terms and conditions applicable to the Loan for Purchase of Property. The Borrower have represented that they have not availed any loan from anywhere.

F. ABHFL has considered the said request with a clear understanding and an irrevocable undertaking by the Borrower that subsequent to the disbursements as requested by the Borrower, there would be no repayment default for any reason whatsoever including but not limited to any concern/issues by and between the Borrower and the Builder/Developer.

50. Clause-B of the said 'tripartite agreement' defines that the borrowers have represented that the builder is of their choice and they are satisfied with regard to integrity, capability for quality construction of the builder and the builder‟s ability for timely completion and on timely delivery of the project.

51. Clause-(f) recites that the financial institutions have considered the request of the borrowers with a clear and irrevocable understanding by the borrowers that subsequent to the disbursement, - 52 – Neutral Citation Number 2023:DHC:1872 as requested by the borrowers, there would be no repayment default for any reason, whatsoever, including but not limited to any concern/issues by and between the borrowers and the builder/developer.

52. Clause (5) & (7) stipulates that in respect of the stage of construction, the borrowers shall be liable to pay the EMIs and that in the event of default, the financial institutions shall have the right to recover the amount from the borrowers. Clause (5) & (7) are reproduced as under: -

53. Another „tripartite agreement‟ dated 17.07.2014 between home buyer, Supertech Limited and HDFC Bank has also been placed on record at Page Nos. 293-297. Clause (4) and (9) clearly indicates that the liability of the borrower is independent of the builder. Clause (4) and (9) of the tripartite agreement dated 17.07.2014 are being reproduced as under:-

54. Some of the request letters for disbursal of the amount in favour of financial institutions have also been signed by the borrowers. Some of them have been placed on record at Page Nos. 398-303. Copy of Request for Disbursal dated 31.05.2018 is reproduced as under:- - 54 – Neutral Citation Number 2023:DHC:1872 REQUEST FOR DISBURSAL Dated: 31/05/2018 To, Aditya Birla Housing Financing Limited A-4, Aditya Birla Centre, S.K. Ahire Marg, Worli, Mumbai- 400030 India. Sub: Request for disbursal of Housing Loan sanctioned in our favour vide Sanction Letter dated 30/05/18 Ref: Our Application No. 38949 dated 31/05/18 Dear Sir/Madam This is with reference to my/our facility/ies sanctioned by your office and in furtherance of the same I/we request you to kindly disburse the loan amount in following manner: Favouring 1: Favouring Aditya Birla Sunlife Insurance Company Ltd. Bank Name & A/c No.Citibank AC. No. 9421114 Amount________________________1,36,700 Favouring 2: Favouring. ____________________________________ Bank Name & A/c No.______________________________________ Amount____________________________________________ Favouring 3: Favouring.__________________________________________ Bank Name and A/c No.________________________________________________ Amount_____________________________________________ Favouring 4: Favouring._________________________________________ Bank Name & A/c No.________________________________________________ Amount____________________________________________ - 55 – Neutral Citation Number 2023:DHC:1872 I/We hereby declare that,

1. I/we shall be responsible and liable for the above disbursement made by ABHFL as requested for above and the same shall be treated as a facility under all the documents executed/to be executed with respect thereto.

2. Interest calculation will start from the date of respective disbursal irrespective of the date of realization of funds in my/our account.

3. Interest shall be payable by me/us even in case the disbursement amount instrument is not deposited by me/us in the bank for realization or disbursement amount is not utilized by me/us. _________________ __________________ (Signature of Borrower) (Signature of Co-borrower) Name:Sahil Thakur Name: Geetika Chugh ______________________ ____________________ (Signature of Co-borrower) (Signature of Co-borrower) Name:___________ Name:______________ Note: Every cancellation/correction/modification needs counter signature by borrower and co-borrower.

55. Learned counsel appearing on behalf of the petitioners have specifically pointed out that in one of the 'buyer-developer agreement' dated 21.07.2017 executed between the Supertech Limited-builder and Puneet Verma-homebuyer with respect to Supertech „Azalia‟, the builder agreed to pay penalty to the allottee @ Rs. 5/- per square feet of super area of the allotted unit per month for any delay in handing over possession beyond the given date plus grace period of six months and upto to the offer of possession or actual physical possession, whichever is earlier. - 56 – Neutral Citation Number 2023:DHC:1872 According to him, the possession of the allotted unit was to be given to the allottee by the company by December, 2019 and the same was only extendable for a further grace period of six months. Clause (1) & (2) of the said 'buyer developer agreement' are reproduced as under:-

56. While referring Clause 7 of one of the 'tripartite agreement' dated 01.08.2017 executed between the borrowers, financial institutions and builder, it has been pointed out that the pre-EMIs interest payable under the loan document shall be serviced and borne by builder/developer during the subvention period as primary obligor as per MoU entered between the builder and - 57 – Neutral Citation Number 2023:DHC:1872 financial institutions. Clause (7) thereto is being reproduced as under:-

64. The Hon‟ble Supreme Court in the case of Peerless General Finance and Investment Co. Ltd. and Anr. (supra) has held that the RBI is “a bankers bank and lender of the last resort”. Its object is to ensure monetary stability in India and to operate and regulate the credit system of the country. It, therefore, has to maintain a delicate balance between the need to preserve and maintain the credit structure of the country by strengthening the rupee as well as apparent credit - 61 – Neutral Citation Number 2023:DHC:1872 worthiness of the banks operating in the country and the interest of the depositors. The RBI occupies place of “pre-eminence” to ensure monetary discipline and regulate the economy of the credit system of the country as an expert body. The banks or non-banking institutions shall have to regulate their operations, not only as per the provisions of the Act but also the rules and directions or instructions issued by the RBI in exercise of the powers thereunder. The directions, therefore, are statutory regulations. They are incorporated and have become part of the act itself. They must be governed by the same principles as the statute itself.

65. The Hon‟ble Supreme Court in the case of Supriyo Basu Ors.v. West Bengal Housing board and Ors.54 has held that if a society which is not a department of the State and is also not a creature of the statute but if it is governed by a statute and it is established that the mandatory provision of a statute has been violated, a writ petition could be maintainable. Paragraph No.6 of the said decision is reproduced as under:

66. In the decision of KK Saksena v. International Commission on Irrigations and Drainage55, while noting the decision of the Hon‟ble Supreme court in the case of Federal Bank Limited v. Sagar Thomas and Ors. (supra), it was reiterated that if a person or authority performs public duty, writ petition can lie. Such a private body should either run substantially on State funding or discharge public duty/positive obligation of public nature or is under liability to

- 63 – Neutral Citation Number 2023:DHC:1872 discharge any function under any statute to compel it to perform such a statutory function.

67. In the case of Mathew Varghese v. M. Amrita Kumar and Ors.56, while placing reliance on various earlier decisions including the decision in the case of Ram Kishun and Ors. v. State of Uttar Pradesh and Ors.57, it has been held that a right to hold property is a constitutional right as well as a human right. A person cannot be deprived of his property except in accordance with the provisions of a statute. The condition precedent for taking away someone‟s property by disposing of the secured assets is that the authority must ensure compliance with the statutory provisions. It has been held that although recovery of public dues should be made expeditiously, however, it should be in accordance with the procedure prescribed by law and that it should not frustrate the Constitutional right.

68. While placing reliance on various decisions, the Hon‟ble Supreme Court in the case of Maharashtra Chess Associations v. Union of India and Ors.58 has categorically held that the powers of the High Court in its writ jurisdiction are not subject to strict legal principles. Two clear principles emerge with respect to when a High Court‟s writ jurisdiction may be engaged. Firstly, the decision of the High Court to entertain or not entertain a particular action under its writ jurisdiction is fundamentally discretionary. Secondly, limitations placed on the court‟s decision to exercise or refuse to exercise its writ jurisdiction are self-imposed. It has also been held that writ jurisdiction of a High Court cannot be completely excluded by statute. If a High Court is tasked with being the final recourse to upholding the rule of law within its territorial jurisdiction, it must necessarily have

- 64 – Neutral Citation Number 2023:DHC:1872 the power to examine any case before it and make a determination of whether or not its writ jurisdiction is engaged. Judicial review under Article 226 is an intrinsic feature of the basic structure of the Constitution. (see: Minerva Mills v. Union of India 59 and L. Chandra Kumar v. Union of India60.

69. It is well settled that the remedy under Article 226 of the Constitution being, in general, discretionary, the High Court may refuse to grant it where there exists an alternate remedy, which is equally efficient and adequate. It is equally true that the existence of alternate remedy does not affect the jurisdiction of the court to issue writ, but ordinarily that would be a good ground in refusing to exercise the discretion under Article 226 of the Constitution. Existence of an alternate remedy is not an absolute bar to the relief under Article 226 of the Constitution. However, the same is a rule of policy, convenience and discretion rather than a rule of law. The High Courts‟ normally refrain from exercising their extraordinary power, if the litigant has an alternate efficacious remedy.

70. The jurisdiction of the High Court under Article 226 of the Constitution is equitable and discretionary. The power under the Article 226 can be exercised by the High Court to reach injustice wherever it is found. The powers of the High Court in exercise of its writ jurisdiction cannot be circumscribed by strict legal principles so as to hobble the High Court in fulfilling its mandate to uphold the rule of law. (See: U.P. State Sugar Corporation Ltd. v. Kamal Swaroop Tondon61 and A Venkataraman v. Ram Chandra Sobvraj Vadhwani62 )

1962 2 SCR 753 - 65 – Neutral Citation Number 2023:DHC:1872

71. A survey of long line of decisions would make it clear that a writ would be maintainable against a person or a body which is under a liability to discharge any function under any statute and is compelled to perform such a statutory function.

72. In the case in hand, a perusal of definition of financial institution under Section 45–I of Reserve Bank of India Act, 1934 (hereinafter referred to as „RBI Act, 1934‟) would indicate that any non-banking institution which carries on its businesses or part of businesses; and performing activities as mentioned therein, would fall within the definition of the „financial institutions‟. „Non-banking financial company‟ is also defined under Section 45-I (f) of the RBI Act, 1934. The definition of „banking company‟ is also prescribed in Section 45 A (a) of the RBI Act, 1934. As has been noted the object of the RBI Act, 1934 is to regulate the issue of bank notes and keep the reserves with a view to secure monetary stability in India and generally to operate the currency and credit system of the country to its advantages. Various kinds of banks and financial institutions are defined in the RBI Act, 1934 for their regulations. Section 45 J (a) of the RBI Act, 1934 empowers the RBI to determine policy and issue directions.

73. Banking Regulations Act, 1949 curbs various mischievous activities such as prohibiting non-banking companies from accepting deposits repayable on demand and prohibition of trading with a view to eliminate non-banking risks. It also ensures minimum capital standards limiting the payment in dividends, introduction of comprehensive systems of licensing of banks and their branches, and provides comprehensive definitions of banking so as to bring within the scope of the legislation or institutions, which receive deposits, repayable on demand or otherwise, for lending or investment besides - 66 – Neutral Citation Number 2023:DHC:1872 providing various other provisions. Section 2 (b) defines „banking‟ and Section 2 (c) defines „banking company‟. Sections 35A, 36, 36AA, 36AD and 47A empowers RBI to give direction, remove managerial and other persons including various other powers.

74. The SARFAESI Act regulates securitization and reconstructions of financial assets and enforcement of security interest and provides for a central database of security interest created for property rights and for matters connected therewith and incidental thereto. The entire mechanism for enforcement of security interest and remedies to borrowers is governed by the provisions of the SARFAESI Act.

75. It is thus seen that the respondent banks-financial institutions in the present case are fully governed by various statutes as referred hereinabove. They are required to discharge their function as per the governing statute. They are also bound by the applicable statute and are compelled to perform their statutory function. If the principle laid down in the case of Federal Bank Limited (supra) and various other decisions, as have been referred to hereinabove, are applied in the present case, it can be seen that the respondents in the present case are under liability to discharge their function under the statute and therefore, it is held that the writ petition against the respondents is maintainable.

76. Having held so, the question that further arises for consideration by this court is whether under the facts of the present case the petitions are “entertainable”? The “maintainability” and “entertainability” of a writ petition are distinct concepts. The question of “maintainability” or the „jurisdiction‟ of the concerned court to decide the controversy goes to the root of the matter. - 67 – Neutral Citation Number 2023:DHC:1872

77. However, the question of “entertainability” is entirely within the realm of discretion of the High Courts. As has been noted, writ remedy being discretionary, despite being petition maintainable, the same may not be entertained by the High Court for many reasons. It is also to be noted that where the controversy is purely legal one and it does not involve the disputed question of fact but only question of law, it should be decided by the High Court instead of dismissing the writ petition on the question of an alternate remedy being available. Violations of all rights may not necessarily be entertained in a writ jurisdiction.

78. The Hon‟ble Supreme Court in the case of Upendra Choudhary (supra) while considering the nature of relief prayed therein had noted that entertaining a petition involving multiple issues relating to various enactments would be virtually carrying out a day-to-day supervision of a building project. Paragraph Nos. 2, 6 to 9 are being reproduced as under:-

79. The Hon‟ble Supreme Court in another case of Gulshan Arora and Ors. (supra) was considering the petition filed on behalf of the homebuyers to issue the writ to the bank, not to precipitate the action under Section 13 (4) of the SARFAESI Act. The Hon‟ble Supreme Court noted that the grievances of the writ petitioners and similarly placed persons (homebuyers) of such project can be assuaged and redressed by RERA in the light of the decision of the Hon‟ble Supreme Court in the case of Vikram Chatterjee and Ors. v. Union of India63.

80. The Division Bench of this court in the case of Sunil Kumar Pandey (supra) has considered almost the similar issue. While relying on various decisions including the recent decision of the Hon‟ble Supreme Court in the case of M/s Radha Krishan Industries v. the State of Himachal Pradesh64, it has been held that the High Court should not interfere when the party can pursue an alternate remedy such as civil suit, although exception exists. In paragraph No. 15 of the said order, it has been observed that there was an arbitration clause in the agreement entered into between the appellant therein and the respondent. The Division Bench of this court, while dismissing the LPA has also noted that there may

- 70 – Neutral Citation Number 2023:DHC:1872 be various innocent homebuyers and there might be various petitions pending before this court and other High Courts, however, such litigation arising out of projects involving disputed question of facts ranging myriad issues, cannot be entertained as the courts cannot possibly take account of all such real estate projects and the gamut of issue arising from them. Paragraph Nos. 17 to 20 of the decision in the case of Sunil Kumar Pandey (supra) are reproduced as under:-

81. It be also noted that the Coordinate Bench of this court in the case of Baljit Singh Bhatia & Ors. (supra) has considered a similar prayer to direct the respondent banks-financial institutions not to charge any EMI or take coercive action against the petitioners therein till the CIRP reaches its conclusion. It was also prayed therein that the respondent-banks/financial institutions be directed not to charge all pre-EMIs or full-EMIs till the possession is delivered to the petitioners from respondent-builder. It is seen that there were various other similar prayers as have been made in the present set of cases. This court while dealing with the submissions of respective parties in detail, has held that the payment obligation under the loan agreement were not honoured by the borrower and since that was the main controversy, therefore, no exception can be carved out to exercise jurisdiction under Article 226 of the Constitution, as the subject matter is - 72 – Neutral Citation Number 2023:DHC:1872 governed purely by the terms of the contract. Paragraph No.13 of the said decision is being reproduced as under: -

82. In the case of Baljit Singh Bhatia (supra), a specific argument of the homebuyers has been noted in paragraph No. 8 that the disbursal of the loan amount to financial institutions was in flagrant violation of statutory circulars issued by RBI or by NHB.

83. The Hon‟ble Supreme Court in the case of Phoenix ARC Private Limited (supra) has also held that writ petition against the private financial institution-ARC (Asset Reconstruction Company) against the proposed action under Section 13(4) of the SARFAESI Act, would not be maintainable.

84. A perusal of various clauses of respective agreements, be it „buyer-developer agreement‟, „loan agreement‟ or „tripartite agreement‟, the rights claimed by the petitioners are eventually flowing from the respective agreements only. It is also to be noted that the violation of RBI Circulars has been alleged by the petitioners homebuyers, which is disputed by the respondents.

85. In the instant case, 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 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.

86. The cases in hand clearly indicate that the homebuyers are claiming their rights on the basis of terms of the contract or on the - 74 – Neutral Citation Number 2023:DHC:1872 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. Reference can be made to the decision of the Hon‟ble Supreme Court in the case of Bareilly Development Authority (supra).

87. The pleadings between the parties would further go on to indicate that the respondents-financial institutions are alleging breach on the part of the petitioners and are claiming full adherence of the RBI Circular. In any case, 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.

88. 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. There are various statutes such as RERA Act, Consumer Protection Act, Insolvency and Bankruptcy Code, 2016, SARFAESI Act etc., where the petitioners can raise their - 75 – Neutral Citation Number 2023:DHC:1872 grievances. It would not be advisable to entertain a writ petition under Article 226 of the Constitution under the facts of the present cases.

89. The Division Bench in the case of Vineet Gupta (supra) is seized with the matter where the order passed by the DRT is under challenge. No final opinion has been expressed in the same. However, the Division Bench in the case of Sunil Kumar Pandey (supra) has clearly declined to entertain the writ appeal involving almost similar issues. The nature of the relief, as has been quoted in the preceding paragraphs, which are multiple in nature, are apparently not capable of being decided in summary jurisdiction of the writ court.

90. So far as the decision of the learned Single Judge of the High Court of Karnataka in the case of Mudit Saxena (supra) is concerned, firstly the same is not binding on this court and secondly, it has already been stayed by the Division Bench of the Karnataka High Court and therefore, it would not be appropriate to take any view on the basis of the said decision. Nevertheless, this court has considered the submissions made by the respective parties and has taken a view not to entertain these petitions in exercise of power under Article 226 of the Constitution of India.

91. In view of the aforesaid, this court, in view of the availability of alternative remedies, does not find it appropriate to entertain these writ petitions and, therefore, the same are dismissed alongwith the pending application(s), if any.

92. This court has not expressed any opinion on the merits of the case and has consciously not given any finding with respect to the violations/non-violations on the part of the respective parties, - 76 – Neutral Citation Number 2023:DHC:1872 as the same would prejudice their rights before different forum where multiple proceedings are going on. However, since the interests of large number of homebuyers are involved in these cases, if the homebuyers‟ avail alternative remedies, as may be available to them, the same may be considered and decided expeditiously in accordance with law.

JUDGE MARCH 14, 2023 p’ma/Priya/MJ