Supreme Court Issues Notice on Plea Seeking ED Investigation into Alleged Diversion of Jaypee Homebuyers’ Funds

Court : Supreme Court

Brief :

The Supreme Court has taken cognizance of a writ petition filed by a homebuyer associated with the Jaypee Wishtown housing project in Noida, alleging large-scale diversion and misuse of funds collected from thousands of flat purchasers. The petitioner sought a court-monitored probe into the alleged financial irregularities and requested regulatory scrutiny of lending institutions connected with the project.

The matter was heard by a Bench led by Chief Justice of India Surya Kant along with Justice Joymalya Bagchi. The Court issued notices to the Union Government, Enforcement Directorate (ED), Ministry of Corporate Affairs, Reserve Bank of India (RBI), Uttar Pradesh Real Estate Regulatory Authority (UP RERA), NOIDA authorities, Jaiprakash Associates Limited (JAL), Jaiprakash Infratech Limited (JIL), and other related entities. The next hearing has been fixed for July 15.

The petition was filed by homebuyer Vandana Sabharwal under Article 32 of the Constitution, raising concerns regarding alleged diversion of homebuyers’ money, delayed housing projects, and failure of regulatory mechanisms under laws including the Prevention of Money Laundering Act (PMLA), Real Estate (Regulation and Development) Act (RERA), and Insolvency and Bankruptcy Code (IBC).

According to the plea, the petitioner had booked a residential unit in the “Kasablanca” project situated in Jaypee Wishtown, Sector 128, Noida. Despite more than ten years having elapsed, possession of the flat has reportedly not been handed over and no refund has been granted. The petition contends that the issue extends beyond an individual grievance and affects a substantial number of homebuyers.

During the hearing, senior advocate Prashant Bhushan, appearing for the petitioner, informed the Court that investigations by the Enforcement Directorate allegedly indicated that thousands of crores collected from over 21,000 homebuyers may have been diverted for non-construction purposes. It was argued that such alleged diversions have become a recurring issue in real estate projects, leaving homebuyers without effective remedies.

The plea referred to an Enforcement Directorate prosecution complaint dated January 8, 2026, which allegedly recorded findings regarding diversion of a significant portion of funds collected from purchasers. It was further stated that former officials connected with the group had already faced enforcement action and that only a limited amount of assets had been provisionally attached so far.

The petitioner also alleged that funds were transferred through multiple channels including related entities, undervalued land transfers, and transactions allegedly undertaken without compliance with RERA escrow obligations. Concerns were additionally raised regarding alleged inaction against external developers despite ED searches conducted at multiple premises in May 2025.

Apart from seeking further investigation, the plea requested directions for comprehensive RBI audits of banks’ exposure to real estate projects, scrutiny of loan end-use monitoring systems, project-wise escrow audits under RERA, and restrictions on mortgaging project lands without consent of homebuyers and regulatory approval.

The petition further sought directions against certain successful resolution applicants under the Insolvency and Bankruptcy Code to initiate proceedings relating to allegedly undervalued transactions undertaken prior to commencement of insolvency proceedings. It also requested that any recovered assets or attached proceeds be utilised primarily for completion of stalled projects and restitution of affected homebuyers.

Citation :

Writ Petition under Article 32 of the Constitution of India

(Citation / Diary Number not available at the time of reporting)

Judgement :

At the present stage, the Supreme Court has not passed any final judgment on the merits of the allegations. The Court has issued notices to the concerned authorities and entities and sought their responses in the matter. The Bench has scheduled the matter for further consideration on July 15.

The proceedings presently remain at the notice stage, with the Court examining the allegations relating to alleged diversion of homebuyers’ funds, regulatory oversight, and enforcement action connected with the Jaypee real estate projects.