Bombay High Court prohibit banks to recovering EMI from Homebuyers


Status as on- 30/09/2020

On 27 August 2020, the Bombay High Court delivered a verdict which has been hailed to offer huge relief to homebuyers. In its decision, the Bombay High Court has prohibited the banks to recover EMIs from home buyers who had purchased units of a stuck real estate project.

Factual Matrix

The factual matrix of the case was such that Petitioner was a co-operative housing society representing a group of home buyers who had purchased units in the project titled ‘Anandghan’ [“Project”]. Pursuant to the advertisement made by the developer of the Project, 460 out of a total 930 flats were booked. As per the builder-buyer agreement, the Project was scheduled to be completed before December, 2016. However, no possession was handed over to the home buyers till 2018. At the same time, many homebuyers who had taken a loan from the banks to pay for their flats in the Project, were being harassed by the banks who were forcing the homebuyers to pay their EMIs.

Interestingly, as per the tripartite agreement between the bank, builder and the home buyers, the home buyers were obligated to make payments to the bank only after they had received possession of the flats. Given that the Project was nowhere near completion and the embroilment of the developer in the scam, the banks started seeking repayment of loans from the home buyers.

The home buyers sought relief from the Real Estate Regulatory Authority [“RERA”], albeit in vain. Thereafter, Bank of Maharashtra initiated insolvency proceedings against the developer. The homebuyers were, thus, constrained to file a writ petition before Bombay High Court.


The Bombay High Court was quick to come to the aid of the homebuyers and restrained the banks from recovering EMIs from the homebuyers. Taking note of the insolvency proceedings against the developer, the Bombay High Court restrained the banks from taking any coercive action against the home buyers till a report is submitted by the Interim Resolution Professional.


While the case appears to offer relief to home buyers, the decision must be read with a pinch of salt. This is primarily because the Bombay High Court has not restrained the banks from recovering EMIs sine die. Only a partial stay has been imposed on the banks. Furthermore, given the peculiar facts of the case, the precedential value of Bombay High Court’s decision is also questionable and will have to be tested against future decisions involving similar interests of the home buyers and the coercive actions of the banks.

Disclaimer– The above article is based on the interpretation of the related laws and judicial pronouncements. The readers are expected to take legal advice before relying on this article. The author can be reached at or call the IP expert at 8383011629.

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