Supreme Court Empowers CBI to Investigate Banks and Builders for Housing Fraud
The Supreme Court has authorised the CBI to register six more cases into alleged fraud involving banks and real estate developers accused of duping homebuyers in major cities across India. This move could reshape real estate financing rules and increase scrutiny on both financial institutions and developers.
CbiReal EstateFraudSupreme CourtHomebuyersReal Estate PuneSep 23, 2025
Additional Solicitor General Aishwarya Bhati, appearing for the CBI, told the court that the agency was prepared to file six regular cases for a faster probe and carry out search and seizure operations. The bench directed her to share relevant portions of the sealed cover report with amicus curiae Rajiv Jain.
This development follows the court’s earlier order on July 22, when it allowed the CBI to file 22 cases into similar allegations within Delhi-NCR. Those cases centred on projects in Noida, Greater Noida, Gurugram, and adjoining areas under the jurisdiction of development authorities in Uttar Pradesh and Haryana. At that time, the court had also given the agency six weeks to complete preliminary inquiries into projects outside NCR. Tuesday’s decision effectively extends the investigation nationwide, reflecting the scale of the alleged nexus between builders and banks.
At the core of the controversy lies the subvention scheme. Under this model, banks directly disburse loans to builders, who are expected to service the equated monthly instalments (EMIs) until flats are handed over. Once builders began defaulting, banks turned to homebuyers, demanding repayment despite buyers not receiving possession of their homes. This has triggered widespread legal battles. Over 1,200 homebuyers, particularly in Noida, Greater Noida, and Gurugram, have petitioned the Supreme Court, saying they were being saddled with EMIs for undelivered flats.
The Supreme Court has been openly critical of the collusion it perceives between banks, builders, and development authorities. Judges noted a prima facie nexus across several regions, including Mohali, Mumbai, Kolkata, and Prayagraj, in addition to NCR hubs. Earlier this year, on March 29, the court allowed the CBI to register five preliminary inquiries into projects in Noida, Greater Noida, Gurugram, Yamuna Expressway, and Ghaziabad, alongside a separate case against Supertech Ltd.
Supertech has been repeatedly highlighted in court proceedings. The amicus curiae described it as the “main culprit,” pointing to the company’s history of raising loans. According to records placed before the court, Supertech has secured borrowings worth over Rs 5,157 crore since 1998. Corporation Bank alone is reported to have advanced over Rs 2,700 crore to various builders through subvention-linked lending.
The ongoing hearings represent one of the most far-reaching judicial interventions in India’s housing sector. For thousands of homebuyers, the case may determine whether responsibility for failed subvention deals rests with banks, builders, or regulators. For policymakers, the outcome could reshape rules governing real estate financing. The Supreme Court’s consistent emphasis on accountability suggests that both financial institutions and developers may face heightened scrutiny going forward.
Frequently Asked Questions
What is the subvention scheme in real estate?
The subvention scheme is a model where banks directly disburse loans to builders, who are expected to service the equated monthly instalments (EMIs) until flats are handed over to homebuyers.
Why are homebuyers being saddled with EMIs for undelivered flats?
When builders default on their payments, banks turn to homebuyers, demanding repayment despite buyers not receiving possession of their homes.
What is the role of the Supreme Court in this investigation?
The Supreme Court has authorised the CBI to register and investigate cases of alleged fraud involving banks and real estate developers, aiming to hold them accountable for duping homebuyers.
What is Supertech Ltd's role in this controversy?
Supertech Ltd has been described as the 'main culprit' in court proceedings, with a history of raising significant loans and being involved in subvention-linked lending.
How might this case impact real estate financing rules?
The outcome of this case could reshape rules governing real estate financing, with the Supreme Court’s emphasis on accountability suggesting heightened scrutiny for both financial institutions and developers.
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