Legal Update | Supreme Court of India
When does failure to verify construction progress amount to deficiency in banking services?
In Madhu Kudapa v. M/s Lodha Healthy Constructions and Developer Pvt. Ltd., the Supreme Court upheld a finding of deficiency in service against a bank that failed to produce inspection reports or lead evidence to substantiate its claim of verifying construction progress before releasing housing loan instalments.
The Court clarified that matching disbursements with the builder’s payment schedule does not establish compliance with an independent obligation to verify construction progress.
The award of ₹2,00,000 in compensation against the bank was upheld.
Practical implication: Borrowers should preserve communications questioning construction progress, requests for inspection reports and relevant loan sanction terms.
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