By Dr Sanjay Murari Chaturvedi
Subvention schemes are basically a tie-up between builder and financiers. As the builder do not have enough credit score or credentials to avail loan from financiers, the collateral is demanded by the financiers. Since there is no collateral to offer, the builder introduce the homebuyer who takes responsibility to pay the the EMI and service the loan in the event of builder is failing.
Builder promise the home buyers that he will pay all the pre EMI to the financier ( as it is, he was suppose to pay interest on loan taken from financiers) till the time OC.
Many builders have defaulted in paying the pre EMI to the financiers and stop. In the Tripariate Agreement between Homebuyers, Builder and Financier, onus is on the Homebuyer if builder fails to pay the Pre EMI. A Pre EMI is basically interest component on loan and it will be converted into full EMI which includes repayment of principal.
But the trouble starts when builder either willful or for any reason default in paying the Pre EMI. Builders usually deliberately confront that Part OC or fit out possession is offered hence he is relieved to pay any Pre EMI. This can be disputed by the Homebuyers as only Full OC at when the builder can offer the possession with full amenities in place as per Agreement for Sale.
Financier start initiating the collection of loan from Home buyers. Filing DRT (Debt Recovery Tribunal cases where the Tribunal is very lenient on Financiers) and taking either physical or symbolic possession of the flat declared by it under NPA for want to unpaid Pre EMI. Financier spoil Homebuyers CIBIL, start all legal threatening and collection agents are initiated to recover the loan given under subvention scheme.
What is the catch? Builder and Financier hand in glove utilize entire flat cost as disbursed by the Financiers to Builder at very initial stage of project construction and builder instead of utilizing that funds which Homebuyer have guaranteed to pay to the financier, siphoned it or mismanage it. Financier should have released the funds as per the progress of the project but the Subvention scheme allows the Builder to receive entire purchase consideration even at the start of the project which Homebuyer pay his contribution say 20% in 20:80 scheme and remaining 80% is funded by the financiers.
To this unfair trade practice was reported before Hon’ble Supreme Court and CBI was investigating the nexus between Builder and Financiers.
