Updated on: Tuesday, January 11, 2022, 11:39 PM IST

FPJ Legal: Supreme Court says builder's failure to obtain OC is a 'deficiency in service'

Supreme Court  | PTI

Supreme Court | PTI


New Delhi/Mumbai: The Supreme Court on Tuesday upheld a complaint of a cooperative housing society of Mumbai against a builder as a consumer dispute and directed the National Consumer Disputes Redressal Commission (NCDRC) to decide the dispute within three months.

The housing society had moved against the fault of the builder in not getting the occupation certificate from the municipal authorities and hence the flat owners were denied electricity and water connections for which they had to later pay at a higher rate.

The court held that the failure of the builder to obtain the occupation certificate is a deficiency in service for which he is responsible and the members of the society are well within their rights as "consumers" to pray for compensation.

The judgment terming as ‘deficiency in service’ developers not obtaining Occupancy Certificates (OC) will have a significant impact in Mumbai, according to activists and legal experts.

There are reportedly around three lakh buildings in Maharashtra, of which 15,000 in Mumbai alone don’t have OCs. The BMC has allowed the residents to stay in these structures on humanitarian grounds, charging them double the amount for water bills and property tax. Further, these buildings do not come under the purview of the fire brigade. Various efforts by the government to regularise them through amnesty schemes have failed as the penalty was too high and unaffordable for the flat owners.

Reacting to the apex court judgement, Ramesh Prabhu, Chairman, Maharashtra Societies Welfare Association, said, “It is a welcome move, as now housing societies will have strong legal remedy with this SC ruling. The apex court ruling says that a building without OC is incomplete. As per Section 59 of the Real Estate (Regulation and Development) Act (RERA), developers should register their ongoing projects and if they fail to do so, a penalty of 10 per cent of the project cost could be imposed. Further, if they fail to abide by this order, then they are liable for imprisonment.

“The ruling means those buildings in Mumbai that are without OCs, as per the SC ruling, are now categorised as incomplete and ongoing. Therefore, the homebuyers can approach MahaRERA and the builders could be held accountable. Till date, the MahaRERA was saying that projects that have been already handed over and completed and having no OCs, are not required to register with it, but now this will stop. Meaning, an old building without OC is also required to register with MahaRERA and the regulator will act,” Prabhu said.

Advocate Poonam Makhijani, who handles cases in consumer courts, told The Free Press Journal that the SC ruling would benefit all co-operative housing societies deprived of OCs by the developers. “The National Consumer Commission had earlier dismissed the plea of Samruddhi Co-operative Housing Society Ltd on the basis that it was not a consumer and that it was a case of recovery of excess amount by the society. However, the SC has made it clear that it is not a case of recovery. Besides, it says the builder not handing over the OC is deficiency in service. It is an unfair trade practice because the builder is supposed to get the OC before giving homebuyers the possession of their homes. The ruling will help several litigants. The ruling defines a society as a consumer. Therefore, several housing societies fighting against their builders will be treated as consumers now as per this order.”

(To receive our E-paper on whatsapp daily, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

Published on: Tuesday, January 11, 2022, 11:39 PM IST