Builder’s Failure to provide Occupancy Certificate is Deficiency of Services- SC

An occupancy certificate is a doc allowing the profession of a creating which supplies obtain to civic utilities these as drinking water, electrical energy, and sewage connections[1]. Occupancy certificates are issued to builders by the local authority less than whose jurisdiction a setting up falls, such as a municipal corporation in a town. They are a prerequisite for legally having possession of a flat in a making. In Samruddhi Co-operative Housing Modern society Ltd. v Mumbai Mahalaxmi Design Pvt. Ltd., the Hon’ble Supreme Court docket held that a builder’s failure to provide the Occupancy Certificate (“OC”) to flat owners is deficiency of service beneath the Purchaser Safety Act, 1986[2].

Short Specifics

Samruddhi Co-operative Housing Modern society Ltd. (“the Appellant”) is a co-operative housing culture in Mumbai, which entered into an settlement with Mumbai Mahalaxmi Design Pvt. Ltd. (“the Respondent”) to construct two wings of flats meant for sale to individual customers. The flat consumers (members of the Appellant Culture) took possession of their flats in 1997, in advance of the OC had been obtained by the Respondent. For that reason, the inhabitants ended up ineligible for h2o and electricity connections. The Appellant managed to get utility connections from the municipal authorities having said that, the inhabitants were being essential to pay out a 25% greater than normal price of assets tax and 50% more than the normal charge for their h2o connections.

In 1998, the Appellant moved the Point out Consumer Disputes Redressal Fee (“SCDRC”) praying for an buy directing the Respondent to get the OC. The SCDRC issued the path in 2014 however, the Respondent neglected to act on the direction. The Appellant then approached the National Client Disputes Redressal Fee (“NCDRC”) searching for INR 26,073,475 as compensation for extra residence taxes and water prices paid by the people, and INR 2,000,000 as payment for the mental agony and inconvenience experienced by them.

The NCDRC dismissed the grievance on two grounds. To begin with, the complaint was barred by limitation, as the cause of motion arose in 1997, and the Client Protection Act, 1986 requires problems to be filed within two a long time of the accrual of the cause of action. Secondly, the criticism was not maintainable as it was basically an motion for restoration of extra costs which were paid to the municipal authorities and not to the Respondent. Hence, the Appellant would not be deemed a client underneath the Client Security Act, 1986. The NCDRC’s order was challenged right before the Hon’ble Supreme Courtroom.

Builder’s failure to deliver Occupancy Certificate is a deficiency of service

The Hon’ble Supreme Court 1st discussed the regulation on continuing results in of action. The Court referred to the circumstance of M. Siddiq v Suresh Das[3], in which the Supreme Courtroom held that a continuing wrong occurs when a authorized or contractual obligation is continually breached. The Court docket observed that the Respondent is obligated to attain the OC from the municipal authorities by the Maharashtra Ownership Flats (Regulation of the Marketing of Construction, Sale, Management, and Transfer) Act, 1963, as properly as the contract entered into by the Appellant and Respondent[4]. The Courtroom also referred to Segment 6 of the Maharashtra Ownership Flats Act, which can make builders liable to spend residence taxes and civic infrastructure fees until finally they have obtained the OC. The Hon’ble Court held that the Respondent had frequently neglected its obligation to receive the OC, which is a continuing erroneous, thus, the trigger of action was also continuing and the grievance was not barred by limitation.

The Hon’ble Courtroom then dealt with the situation of no matter if the Appellant could be deemed a shopper below the Customer Security Act, 1986. The Courtroom famous that any person availing a assistance in trade for thing to consider is a client beneath the Act[5]. The Court also relied on its conclusions in Wing Commander Arifur Rahman Khan & Many others v DLF Southern Properties Pvt Ltd and Pioneer Urban Land Infrastructure Ltd v Govindan Raghavan, where it had held that the builder’s failure to receive the OC or carry out contractual obligations is a deficiency in service[6]. Consequently, in the current case, the Hon’ble Court held that the Respondent’s failure to supply the OC to the Appellant amounted to a deficiency in assistance, and the customers of the Appellant had been properly within just their legal rights as individuals to find compensation for the surplus utility rates and assets taxes paid by them as a consequence of the Respondent’s erroneous.


Several of the homebuyers have to pay out excessive taxes and utility expenses for the reason that of the laxity of builders of not obtaining the OC. The Real Estate (Regulation and Growth) Act, 2016 does allow flat consumers to file a criticism with their state’s Actual Estate Regulatory Authority if they are not granted the OC[7]. Even so, this avenue is not readily available when the constructing in concern was accomplished right before the Act came into force, like the household job in this circumstance. This judgement guarantees that a treatment is out there even to flat consumers who cannot have recourse to the Genuine Estate Regulatory Authority. More importantly, it recognises not just the builders’ obligation to attain the OC, but also the residents’ suitable to get payment for extra fees and taxes compensated.





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