• Builder not paid loan on the project worth Rs 20 Crore

Dear sir/madam,

Builder has not paid the loan from PSU bank which he had taken to finish the construction project. He is right now in jail for other frauds. We as a buyer have paid full amount to builder and have property possession letter as well as registered on our name. But, builder has not paid loan amount to bank. Bank managers have been insisting to take NOC from bank by paying part of full loan amount, which is around Rs 6 lakhs. If not paid, bank might auction our flat. Bank has filed a case in DRT since 2016 and case is in final stage.

What actions can be taken against bank to stop asking for loan, which builder has not paid? What actions can be taken against builder, who is in jail?
Asked 4 years ago in Property Law
Religion: Hindu

13 answers received in 1 day.

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13 Answers

Pay bank Rs 6 lakhs and obtain NOC from bank

2) file complaint against builder before RERA seek orders to direct builder to repay the bank loan and Rs 6 lakhs paid by you

Ajay Sethi
Advocate, Mumbai
87894 Answers
6207 Consultations

5.0 on 5.0

1. IF you have "possession" of the property and IF the Sale Deed is registered, THEN nobody has the authority to recover or attach or freeze or vacate, auction, whatever, from the registered Flat owner.

2. Bank & DRT, can deal and pass orders ONLY on the Builder and not on the registered Flat Owner. There is simply no legal provision to prosecute Flat Owners, for default of Builders Loan.

Keep Smiling .... Hemant Agarwal

Hemant Agarwal
Advocate, Mumbai
5612 Answers
25 Consultations

5.0 on 5.0

1. Since the bank has prior interest than yours , it has priority in recovering its loan ignoring your interest in the property.

2. Only way to save this is to take physical possession of the property.

3. Another option is to repay the loan on behalf the builder and recover this from the builder.

4. In the alternative file a case before the consumer forum against the builder.

Devajyoti Barman
Advocate, Kolkata
22515 Answers
402 Consultations

5.0 on 5.0

When was the sale deed executed in your favour? Was an injunction ever granted in favour of the bank and against the builder to stop him from executing the sale deed in favour of the buyers? If the sale deed is registered in your favour then bank cannot attach much less auction your flat for the default of the builder. The remedies of the bank are only against the builder not the buyers.

Ashish Davessar
Advocate, Jaipur
30761 Answers
971 Consultations

5.0 on 5.0

If the Builder or the Land Owner has created a charge in favour of any Bank or Financial Institution, a NO OBJECTION LETTER from the institution is required. NO OBJECTION letter should clearly mention the property details, the name of the borrower, the borrower’s account number, the apartment, floor, area, car park etc. and shall be addressed to the Purchaser. The original letter should be in the safe custody of the Purchaser. If in “No Objection letter” if it is mentioned that all the payments by the Purchaser shall be through the financial institution, the same should be complied.

When a mortgage is created between the bank and builder, then the first charge on the property is on bank. When you peruse the encumbrance certificate with regard to the property, you can see such a liability. Since builder failed to repay bank loan then the land owner has no marketable title on the property. In such a case bank shall take step for realizing the amount from the builder. If a construction project has been 'approved' by a bank, the bank can be made a party to the future dispute until the claim is settled, especially when it has lent construction finance separately to the project.

So check about the details liability if any loan on the property (Current or past) / Original Property Documents with Bank. If the loan is closed, then copy of closure letter / NOC issued by the concerned bank.

Remedies available

The Supreme Court has held that a consumer has the right to approach the Civil Court or the Forum under the Consumer Protection Act for relief in a situation where the builder commits breach of his obligations.

A buyer who is the victim of the unfair practices of the builder can approach the following forums for his redressal:

1. He can file a civil suit in a Civil Court

2. He can file a complaint before the consumer Forum

3. He can file a complaint before the Competition Commission of India

4. He can approach Regulatory Forums He can file a Criminal Case.

In your case

1. Pay the amount to bank and settle the issue with bank and file suit for damages and recovery of money from Builder. Or

2. Approach the consumer court for the above same relief

Ajay N S
Advocate, Ernakulam
3990 Answers
93 Consultations

5.0 on 5.0

Hi, it is advisable to file a civil suit for permanent injuction and obtain a stay order to restrain bank from auctioning of property

Hemant Chaudhary
Advocate, Gurgaon
4619 Answers
67 Consultations

4.9 on 5.0

Sir was flat registered to you by taking NOC from.bank as it was a project loan and project financed by bank they need to take NOC for each unit.as he has created interest of bank before you on it.

Further you can pay 6 lakh to secure your flat as bank will give noc for that and you can take physical possession so that it won't be attached.

Against builder a consumer complaint can be done for recovery of amount paid with interest damages and compensation for mental harassment .

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

Vikas action loan taken by the Builder is the first charge on the property show the loan has to be taken by the Builder should be paid off otherwise Bank me take the position of the property as it has the first charge on the property you need to approach to the court against the Builder making the bank as a pary and let the court order for realisation of outstanding amount of the bank from the other property of the Builder.

Vimlesh Prasad Mishra
Advocate, Lucknow
6848 Answers
23 Consultations

4.9 on 5.0


they can not sell your property, which has been registered on your name.

the builder must have mortgaged some other property also, which the bank might auction.

Also, without making you a party to the case in DRT no property can be sold by them.


Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

1. the unsold units in the project would be mortgaged with bank as security for the loan given to builder

2. when flat was sold to you and registered in your name, obviously the bank NOC must have been attached to your sale deed

3. so bank cannot touch your flat.

4. it can only auction the remaining unsold units

5. you can intervene in the DRT case and make an application seeking injunction against bank not to touch your flat

Yusuf Rampurawala
Advocate, Mumbai
6876 Answers
79 Consultations

5.0 on 5.0

The builder has cheated you .since sale deed has been executed in your favour so file a criminal complaint against him .

Mohammed Mujeeb
Advocate, Hyderabad
19029 Answers
32 Consultations

4.5 on 5.0

File criminal complain agasint builder.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

You can pay the loan amount in part to bank and then recover the same from the builder at a later stage otherwise the bank may initiate steps for recovery of amount by due process of law invoking sarfeasi act.

T Kalaiselvan
Advocate, Vellore
78048 Answers
1543 Consultations

5.0 on 5.0

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