“The Loan Account Should Be Closed Treating It as Repaid or Fully Paid Up”  Supreme Court Protects Creditworthiness of Home Buyers After Settlement

 “Wisdom Dawned Upon the Three Parties… with a Little Effort by the Court” In a judgment delivered on March 25, 2025, the Supreme Court of India in Akshay Gupta & Ors. v. ICICI Bank Ltd. & Ors. brought finality to a contentious financial and consumer dispute involving housing loan defaults and delayed flat possession. The Court declared complete compliance with a tripartite settlement between the borrowers, ICICI Bank, and the builder, Rajsanket Realty Ltd, and directed that loan accounts be officially recorded as “repaid or fully paid up”, removing the label “settled” to safeguard the borrowers' future creditworthiness.  

Justice Vikram Nath, writing for the Bench, noted the rare cooperation among commercial parties:  

“This is a classic case where wisdom dawned upon the three parties in a commercial arrangement to settle the dispute amicably, of course, with a little effort by the Court.”

The matter had reached the Supreme Court after the National Consumer Disputes Redressal Commission dismissed complaints by several flat buyers, who had challenged loan recall notices issued by ICICI Bank, alleging unfair trade practices and violation of RBI guidelines.

Court-Orchestrated Financial Settlement Receives Full Compliance, Timeline Honoured

In its orders dated October 23, 2024 and November 6, 2024, the Supreme Court meticulously crafted a settlement roadmap. The buyers were to pay off the principal loan amount; ICICI Bank would waive all charges and offer a 30% discount on preEMI interest; and the builder would contribute 50% of the pre-EMI liability. All parties agreed to and honored the terms.

The Court observed:

 “The Bank had extended the discounts, the builder had discharged its obligations of payment of its share of pre-EMI and the borrowers had discharged their obligations by making the deposits with the Bank… and also paying to the builder the 5% of the sale consideration which was outstanding.”

This full compliance led the Court to record:

 “We have perused the affidavits and we find that full compliance of the terms and conditions undertaken by the three parties has been done satisfactorily.”

Borrowers Raise Concerns Over Credit Record and Possession; Supreme Court Intervenes Again

 Even after closure, borrowers raised three residual concerns before the Court:

1. ICICI Bank was using the term “settlement” in its loan account statements, which could negatively affect future loan eligibility.

2. Some flats had not been handed over.

3. The builder had not issued formal acknowledgments for amounts paid under the Court’s directions.

 Addressing these concerns with final clarity, the Court held:

> “Considering the facts and circumstances of the case and the fact that upfront payment has been made by the borrower/appellants under orders of this Court, we are of the view that the loan account should be closed treating it as repaid or fully paid up.”

On the issue of flat possession, the Court recorded the builder’s assurance:

“Possession would be handed over on or before 31.03.2025.”

With regard to payment acknowledgment, the Court directed:

“The builder is directed to issue acknowledgment in writing to have received the entire due amount.”

Supreme Court Declares Litigation Closed; Directs Withdrawal of All Proceedings

Bringing the entire matter to a complete legal close, the Supreme Court directed: “The Bank, which had initiated recovery proceedings before the Debt Recovery Tribunal or before any other Forum… shall forthwith withdraw the same.”

Additionally, the appellants who had moved Real Estate Regulatory Authorities were asked to withdraw their proceedings, thus achieving total cessation of litigation.

In conclusion, the Court recorded:“All matters between the parties stand closed and there shall be complete quietus to the litigation.”

Date of Decision: March 25, 2025