Builder's Failure to Procure Occupancy Certificate a Deficiency in Service

The Supreme Court has said that the failure of a real estate developer to obtain an occupation certificate is a ‘deficiency in service’ under the Consumer Protection Act 1986 and that homebuyers are within their rights as ‘consumers’ to demand compensation for high charges incurred by them. The bench was hearing a case wherein the complaint was filed by Samruddhi Co-operative Housing Society Ltd of Mumbai for refund of the excess taxes and charges paid to the municipal authorities, due to the alleged deficiency of service of the builder- Mumbai Mahalaxmi Construction Pvt. Ltd. The Supreme Court bench in its order observed that Sections 3 and 6 of the MOFA indicate that the promoter has an obligation to provide the occupancy certificate to the flat owners. Apart from this, the promoter must make payments of outgoings such as ground rent, municipal taxes, water charges and electricity charges till the time the property is transferred to the flat owners. Where the promoter fails to pay such charges, the promoter is liable even after the transfer of property. Owing to the failure of the respondent to obtain the certificate, there has been a direct impact on the members of the appellant in terms of the payment of higher taxes and water charges to the municipal authority. This continuous failure to obtain an occupancy certificate is a breach of the obligations imposed on the respondent under the MOFA and amounts to a continuing wrong. The appellants, therefore, are entitled to damages arising out of this continuing wrong and their complaint is not barred by limitation, the order said. The bench has allowed the appeal against the order of the NCDRC and hold that the complaint is maintainable. "We direct the NCDRC to decide the merits of the dispute having regard to the observations contained in the present judgment and dispose the complaint within a period of three months from the date of this judgment,” the order noted. The Supreme Court has taken note of the plight of homebuyers and has rightly held that failure to obtain OC is a deficiency of service, said advocate Kumar Mihir. This will also help thousands of homebuyers who are forced to take possession by the builders even when the projects are not complete and OC/CC has not been issued for the same by the competent authority, he added.