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Deficiency in service if builder fails to obtain occupancy certificate: Supreme Court

The issue whether a builder or construction company can be held liable for not obtaining occupancy certificate was examined by Supreme Court in a division bench consisting of Justice Chandrachud and Justice Surya Kant in the matters between Samruddhi Co- Operative Housing vs. Mumbai Mahalaxmi Construction Criminal Appeal No.- 4000 of 2019 decided on 11.1.2022.

The facts of the case are complainant rented the flat of the other party in 1993 and bought it in 1997. therefore, the members of the complaining association have to collect a higher rate of additional tax, especially property tax and water fees amounting to Rs.2,60,73,475/. At the application stage, he listened to the lawyer learned for the complainant and examined the report. A complaint was filed by the Appellant for a refund of the excess taxes and duties paid to the municipal authorities due to the Defendant’s alleged lack of service.However, the NCDRC dismissed the complaint on the ground that it was unsustainable because it was barred by limitation and not a consumer dispute. The NCDRC determined that cause of action arose when municipal officials asked the appellant to pay higher fees in the first instance and therefore, a complaint must be filed within two years of the cause of action accruing.

The appellants contended that cause of action is of a continuing nature as the members of the appellant continue to pay higher fees due to the defendant’s failure to present occupancy certificate.

The respondents contended that prior to the order of the SCDRC, the defendant offered to pay an amount of Rs. 1 crore as a one-time settlement amount for payment of additional fees or penalty incurred by the appellant for increased property tax and water fee. The appellant is not a consumer under the provisions of the Consumer Protection Act, as they are requesting a reinstatement. higher wages paid from the defendant to municipal officials. Furthermore, the defendant is not a service provider for water or electricity and therefore the complaint cannot be sustained.

The Apex court held in section 24A of the Consumer Protection Act 1986 provides for the statute of limitations for filing a complaint, and a complaint to a consumer forum must be made within two years of the date on which the cause of action arose. MOFA imposes certain general obligations on an organizer. These obligations include, among others, disclosure of the nature of ownership of the land, obligations on the land, fixtures, fittings and amenities, and not giving possession of an apartment unless a certificate of completion is issued by the local government.The responsibility for obtaining a certificate of occupancy from the local authority is also imposed over the appellant according to the sales contract. Receiving the Document had a direct impact on the members of the appellant in terms of paying higher taxes and water charges to the municipality, as Judge Chandrachud, speaking on behalf of the Court, did not comply with the respondent’s request. Pursuant to the Maharashtra Ownership Flats Act 1963 and means an continuing wrong, and therefore the appellants have the right to claim damages resulting from this continuing wrongdoing and limit complaints. An appeal against the order of NCDRC was allowed and the complaint was held to be sustained.

Judgement reviewed by Bhaswati Goldar

Samruddhi_Co_Operative_Housing_vs_Mumbai_Mahalaxmi_Construction_on_11_January_2022

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