M/S Mahagun India Pvt Ltd V/S Anoop Kumar Verma - Consumer Court Case

Uttar Pradesh

StateCommission

CC/543/2017

Anoop Kumar Verma - Complainant(s)

Versus

M/S Mahagun India Pvt Ltd - Opp.Party(s)

Anurag Srivastava

19 Jul 2022

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION, UP

C-1 Vikrant Khand 1 (Near Shaheed Path), Gomti Nagar Lucknow-226010

Complaint Case No. CC/543/2017

( Date of Filing : 28 Dec 2017 )

1. Anoop Kumar Verma

S/O Sri L.R. Verma R/O S.I. 61 Shastri Nagar Ghaziabad U.P.

...........Complainant(s)

Versus

1. M/S Mahagun India Pvt Ltd

Through its Director Having its Zonal Office Situate at A-19 Sector 63 Noida Gautam Buddha Nagar 201307 U.P.

............Opp.Party(s)

BEFORE:
	HON'BLE MR. Rajendra Singh PRESIDING MEMBER
	HON'BLE MR. Vikas Saxena JUDICIAL MEMBER

PRESENT:

Dated : 19 Jul 2022

Final Order / Judgement

RESERVED

State Consumer Disputes Redressal Commission

U.P. Lucknow.

Complaint no. 543 of 2017

Mr Anoop Kumar Verma S/o Sri L R Verma,

aged abou 50 years.

Madhu Verma W/o Mr Anoop Kumar Verma

aged about 48 years.

Both permanent residents of S.I.-61,Shashtri

Nagar, Ghaziabad, UP

Complainants.

Versus

M/s Mahagun India Private Limited through

its Director, having its Zonal Office, situated

at A-19 Sector-63, Noida, Gautam Budh

Pawan Kumar Jain,Chairman,M/s Mahagun

India Private Limited, having its registered office

at B-66, first floor, Vivek Vihar,

New Delhi-110095.

... Opposite parties.

Present:-

1- Hon’ble Mr. Rajendra Singh, Presiding Member.

2- Hon’ble Mr. Vikas Saxena, Member.

Sri Anurag Srivastava, Advocate for the Complainant.

Sri Vikas Agrawal, Advocate for the opposite parties.

Date 24.08.2022

JUDGMENT

Per Mr. Rajendra Singh, Member: This complaint has been filed by the complainants against the opposite parties for the following reliefs.

To direct the opposite parties to pay interest at a rate of 18% per annum on the total cost of flat deposited by the complainant from June 2010uptoJanuary 2013.
To direct the opposite parties to pay simple interest on the total amount payable in clause -i of the prayer clause of the present complaint from February 2013 till the date of actual payment.
To direct the opposite parties to pay ₹ 2 lakhs as compensation for causing harassment and mental injury to the complainants.
To direct the opposite party to pay ₹ 25,000/for the cost of this complaint.

The brief facts of the complaint’s case are that, that the present complaint has been filed against the opposite parties for adopting unfair trade practice and rendering gross deficiency in services towards the consumer, particularly the complainants, by not paying the equitable and adequate compensation for delaying the handing over of the physical possession of the flat. The opposite parties are registered privately developer who run their company in the name and style of “M/sMaghagun (India) Private Ltd., a company registered under the Companies act, to build group Housing residential complex in various cities and to sell them to buyers for a consideration. One of such residential complex was built by them at Crossing Township, Plot no.5, Sector-11,Dundahera Ghaziabad, UP known as “MAHAGUN MASCOT”.

The complainants applied and were allotted on 17.01.2008 a finished residential apartment no 1604 , type HIG-2, Block-Vasto on 16^th floor having a super covered area 1890 sq ft for a consideration amount of ₹4,300,650/- inclusive of car parking, club membership, power backup etcThus the complainant agreed to buy the apartment of opposite parties by hiring their services. As per booking booklet and allotment letter time was the essence of the agreement hence every act between the parties had to be performed within the stipulated time framework and in failing thereof the erring party had to suffer consequences in the shape of monetary penalty. As per clause 2 of the booklet the entire consideration amount was to be paid by the allottee/complainants in various instalments by 30.03.2010 to the builder/opposite parties and the possession of the apartment was to be delivered on or before 31.03.2010 and also as per clause 1 of the allotment letter if the allottee/complainant failed to pay any instalment within the stipulated period, a penalty of 18% per annum on such delayed money would be imposed and also as per clause 4, if the company/opposite parties failed in handing over the possession of the apartment beyond June 2010, it would pay allottee for the delay, ₹ 10 only per square ft per month. Though the actual period of giving possession was March 2010 but three months grace period was taken and only thereafter penalty was to be imposed.

The complainants have deposited ₹3,915,566/- in instalments upto 12.12.2008 and further ₹360,583/- after 29.06.2011.Thus the complainants have deposited total amount of ₹4,276,149/- with the opposite parties. The opposite parties charged a penalty of 18% per annum for the delayed instalments. The opposite parties in utter violation of the terms and conditions of allotment letter did not deliver the possession of the apartment till March 2010 and they could only be able to deliver the actual physical possession of the apartment after enormous amount of delay of 33 months, to wit, in January 2013 despite several oral and written reminders were made by the complainant to opposite parties from time to time. The opposite parties could not be able to show any justifiable cause for the delay and thus caused enormous amount of mental agony, harassment, insult and financial losses to the complainants. Though the opposite parties caused delay of about 33 months in delivering the possession but they only admitted delay of 21 months and consequently paid the compensation at the rate of ₹ 10/- per square ft per month and thus paid ₹529,200/- to the complainants. The payment of ₹ 529,200/- so made has been made for the period from July 2010 to October 2012, that is for the period of 28 months whereas, the compensation for the period of three months is still left unpaid by the opposite parties to the complainants. It is further made clear that though the letter of offer of possession of the concerned department was given to the complainants on 15.10.2012 but the actual physical possession was delivered only in January 2013. It is settled position of law that the date of real possession shall not be counted from the letter of offer of possession but shall be counted from the date of actual physical possession.

The complainant objected and refused to take the said compensation of ₹ 10/- per square ft but the opposite parties threatened the complainants and said at the time of execution of sale deed that it is mandatory on their part that the Vendee complainants owe no claim to the vendor opposite parties hence in such circumstances they would not be able to execute the sale deed and since in view of the fact that there was already delay of 33 months in handing over the possession of the apartment and also the entire consideration amount has already been paid by the complainants hence they had no option except to yield to the pressure of opposite parties. On 24.12.12 the opposite parties executed and registered the sale deed of the apartment in favour of the complainants in the office of sub- registrar and finally gave actual possession of the flat in January 2013. The complainants under undue pressure and having no other option signed the sale deed were in the head accepted that thereafter no claim against the opposite parties. The opposite parties had utilised very large amount of money of the consumers including the complainants to their benefit and advantage for a significant period of more than 33 months whereas on the other hand if the allottees could not be able to pay instalments on due date, the opposite parties would charge interest at a rate of 18% per annum on such delayed payment and if any instalment remains in arrears for more than 15 days, the allotment would automatically stood cancelled without notice. Thus it is clear that the opposite parties have deliberately, arbitrarily and malafidely inserted inequitable conditions in the allotment letter which are not only unacceptable but also illegal in view of the law laid down by the Hon’ble Supreme Court and also as per relevant provisions of law as contained in the Indian contract Act wherein it is specified that there should be equitable grounds between the contracting parties.

The opposite parties are liable for deficiency in service, for adopting unfair trade practice. The complainants suffered not only mental agony but also financial losses. The complainant sent a legal notice on 14.03.2012 to the directors of the opposite party no 1 and demanded compensation at the rate of 18% per annum on its amount for the delayed. But the opposite parties neither paid the compensation nor replied the notice. After 15 days the complainant filed the complaint before the learned District Forum, Ghaziabad which was dismissed by the learned Forum on 13.01.2015. Aggrieved by the judgment of the learned Forum, the complainant preferred an appeal before the Hon’ble state commission where the respondents appeared and filed their objections. This appeal was decided on 10.04.2017 and it was partly allowed with the observation that the valuation of the complaint is more than ₹ 20 lakhs as the complainant was not within the pecuniary jurisdiction of the learned District Forum so the order of the learned Forum was set aside. The Hon’ble State Commission observed that the appellant/complainant is free to institute a fresh complaint in a forum/commission having jurisdiction in accordance with law. Thereafter this complaint has been filed before this Hon’ble institution.

The total cost of the flat in question is ₹4,300,065/- inclusive of cost of car parking, club membership and cost of power backup et cetera and the amount of ₹ 1,999,209.38 has to be returned to the complainant by the opposite party for causing delay in handing over the possession of the flat and since out of the amount of ₹1,999,209.38, the builder/opposite party has returned ₹529,200/- to the complainant has only amount of ₹14,70,009/- left to be paid by the opposite party and since ₹14,70,009/- was due on the opposite party in January 2013 and since the same has not been paid up by the opposite party simple interest at a rate of 5% will be charged on the said amount from January 2013 upto the date of actual payment. Hence the complainant prays for reliefs mentioned in the complaint.

The opposite parties have filed their written statement stating that as per registered sale deed dated 24.12.2012, clause 2 (a) complainants are stopped to initiate any complaint, qua the subject flat, which runs as follows :

“2(a) that upon taking possession of the said flat space from the vendor, the vendee shall have no claim against the vendor as to any item of work, quality of work, measurements, specifications, facilities, amenities, materials, installations, costs et cetera or on any other ground whatsoever for the said flat space.”

Similarly clause 7 of the registered sale deed dated 24.12.2012 provides:

“7 the vendees shall not raise any objection or claim any reduction in the price of the flat of agreed to be acquired or claim any compensation on the ground of inconveniences due to cause aforementioned or any other cause whatsoever.”

The complaint is barred by section 24 A of Consumer Protection Act 1986 as the complainant has not been filed within two years from the date on which the cause of action has arisen. The difference of exclusion of time taken to follow prior complaint before District Consumer Forum cannot be taken, as the opposite party 1 in the present proceedings was not a party in the prior proceeding. The initiation of the cause of action in the subject complaint is from 1 April 2013. With the filing of the complaint against OP 1 on 27 December 2017, the complaint is barred by time and liable to be dismissed. The complainant is not maintainable against opposite party 2 . There is no privity of contract between complainants and a opposite party 2 , the question of applicability of Consumer Protection Act 1986 does not apply. Opposite party no.2 is neither proper nor necessary party and is to be excluded/dropped from the array of parties in view of facts and law. Although the reply/ WS has been filed on behalf of opposite parties, this reply be subject to the outcome of the application moved on behalf of opposite party 2 to be dropped from the array of parties.

The complainant is vexatious and frivolous. The complainants have been paid penalty of ₹529,200/– for the period July 2010 to October 2012. The said payment has been as per accepted terms between the parties although the complainant defaulted in payment of instalments. The relevant clause 4 under the head “possession” of allotment letter dtd 17.01.2008 is as under:

“4 In case the allottee is not in arreas of payments of any kind whatsoever, the company would pay the allottee (s) at a rate of ₹ 10 per square ft per month for the delay attributable to the company in handing over of the apartment only beyond June 2010 for phase -I and December 2010 for phase II . Similarly the customer would also be liable to pay holding charges at a rate of ₹ 10 only per square ft per month if the customer fails to take the possession within 30 days from the date of issuance of the offer of possession.”

In acceptance of penalty and having no objection that the complainants took possession of the subject flat and in further acceptance of no claims against the opposite party, took possession and executed sale deed dated 24.12.12. The complainants are not entitled for any sum as sought in its reliefs. The relevant clauses of the sale deed further reiterate the fact of the complainants not to have any further surviving rights in respect to the subject flat against opposite party.

The complainants are in order to take benefit/advantage has filed the captioned complaint. The offer of possession was made to the complainants on 15 October 2012. After issuance of offer of possession, complainants were not entitled to receive any penalty for delay. The demands as purportedly raised through the subject complaint by in itself not tenable in view of the waiver as referred in the terms of sale deed. The complainants after accepting penalty for delay, and execution of sale deed in its favour had embarked upon institution of the subject complaint for malafide reasons. The complainants are being unable to particularise and substantiate the allegations in the subject complaint has opted for making scandalous and irrelevant allegations which has no concern with subject complaint. The verbatim usage of the statutory definition is nothing but a blatant misuse as not co relating with the subject complaint. It is wrong and denied that there any unfair trade practice adopted by opposite party in making false and misleading facts. The complaint is nothing but a device employed to blackmail, harass and torment the opposite parties.

The Liberty to institute fresh complainant for an appropriate forum was qua the opposite parties as arrayed in the complaint who were Mr. Dheeraj Jain/Amit Jain, directors and Mr. P. K. Jain, Chairman and not Mahagun India Private Limited. Whereas in the present complaint opposite party no 1 for the first time has been impleaded. Thus the cause of action for instituting this complaint is said to have been accrued on 1 April 2013, whereas this complaint is instituted on December 2017 which is beyond the period prescribed. The present opposite party no 1 , MIPL has no bearing with the prior complaint instituted before the District Consumer Forum against which appeal has been filed. The subject complaint is thus otherwise barred by time. There Has Been No Condonation of Delay by the State Consumer Commission in respect of the proceedings conducted before the District consumer Forum. The complainants have now to take the subject complaint by impleading opposite party no.1. The opposite party no.1 is a separate party and a legal entity. Without admitting the contention made in the complaint, a fresh cause of action has accrued and the period of limitation is to be reckoned qua opposite party no 1 from the time of the institution of this fresh complaint. Therefore it is prayed that the complainant being without any basis is liable to be dismissed with cost.

We have heard the learned counsel for the complainant Mr. Anurag Srivastava and counsel for the opposite parties Mr. Vikas Agrawal and also perused the pleadings, evidence and documents on record.

In this case the complainant has been filed on 14 May 2013 before the learned District Consumer Forum, Ghaziabad. The learned District Forum vide its judgement dated 01 January 2015 dismissed the complaint without going into the fact of pecuniary jurisdiction. The complainant thereafter preferred an appeal before the Hon’ble State Consumer Commission. The Hon’ble State Commission vide its order dated 10 April 2017 held that the appeal is partially allowed and the impugned judgement and order of the learned Forum is amended and dismissed with liberty that the complainant may file a complaint before the competent Forum. Thereafter this complaint has been filed by the complainant on 28.12.2017 before this commission. So this complaint is not time barred because the complainants were given opportunity to file the complaint before the competent Forum on 10 April 2017. So the period before this date cannot be taken into account for filing of this complaint. There is no such order that the complainant be returned to the complainant for filing in the competent court therefore he may file a fresh complaint before the competent court. It is not part by the said order of the Hon’ble State Commission. So as for as the matter related to time barred is concerned, it is not time barred. As far as the matter is concerned regarding making opposite party 1 is a party is also not hit by the order of the Hon’ble State Commission.

We have seen the copy of allotment letter. It says that timely payment of instalments as indicated in the payment plan is the essence of the agreement. No separate letter for payment of instalments on their due dates will be issued. It will be obligatory on the part of the allottee/allottees to make the payment on or before the due dates. If any instalment as per the payment schedule is not paid by the due date, the company will charge 18% interest per annum on the delayed payment for the period of delay. However, if the payment remains in in arrears for more than 15 days, the allotment will automatically stands cancelled without any further information/notice to the allottee/allottees and the allottee/allottees will cease to have any lien on the unit in such a case the amount deposited of the unit, and the payment is made to financing bodies/allottee/allottees for loans repaid against this unit will stand forfeited and the balance amount received by the company if any, will be refunded without any interest. This is one-sided terms and condition imposed by the builders and it cannot be accepted as against the contract act.

It is also there in the allotment order that the proposed date of possession for face –1 is March 2010 and for face –II is September 2010. The complainants were allotted on 17 January 2008 the said flat and was promised to get the possession of the flat in June 2010. The opposite parties have stated that they gave possession and executed the sale deed on 24 December 2012. According to a opposite parties is the offer of possession was made to the complainants on 15 October 2012. The condition imposed on the complainant during execution of sale deed cannot be treated as binding because it is against the provision of public policy and Contract Act. Whatever a person is entitled to get, he should get it and this is the justice. Before discussing further we have to see the main objects of the Consumer Protection Act.

This Consumer Protection Act covers entire goods and services of all sectors that are public, private, or cooperative sectors, except those exempted by the central government. The act provides a floor for a consumer where one can file their complaint against the product and the forum takes an action against the concerned supplier and compensation is granted to the consumer for the inconvenience he/she has encountered. The main objects of the consumer protection act are ;

To Provide better and all round protection to consumer.
To Provide machinery for the speedy redressal of the grievances.
To Create framework for consumers to seek redressal.
To Provide rights to consumers.
To Safeguarde rights of Consumers.

Let us know more about the rights and responsiblities of consumer. Listed below are the Rights of the Consumer

Right to Safety- Before buying, a consumer can examine on the quality and guarantee of the goods and opt for ISI or AGMARK products.
Right to Choose- Consumer must have the right to choose from a variety and number of goods and in a competitive price
Right to be informed- The buyers must be provided with complete information with all the necessary and adequate details of the product, make her/him act wise, and change the buying decision.
Right to Consumer Education- The consumer must be aware of his/her rights and avoid exploitation.
Right to be heard- The consumer will get due attention to express their grievances at a suitable platform.
Right to seek compensation- The consumer has the right to seek or ask for redressal against unfair and inhumane practices or exploitation of the consumer.

Listed below the responsibilities of the consumers

Responsibility to be aware – A consumer has to be careful of the safety and quality of products and services before purchasing.
Responsibility to think independently– Consumer should be well bothered about what they want and need and hence make independent choices.
Responsibility to speak out- The buyer should be fearless to speak out their problems and tell to traders what they exactly want
Responsibility to complain- It becomes the consumer’s responsibility to express and file a complaint about their dissatisfaction with goods or services in a sincere and fair manner.
Responsibility to be an Ethical Consumer- Consumer must be fair and not engage themselves with any deceptive practice.

The Consumer Protection Act 1986 was enacted to provide for better protection of the interests of consumers and for that purpose to make provision for the establishment of Consumers Councils and other authorities for the settlement of consumers’ disputes and for matters connected therewith (Preamble).

The Act Inter alia, seeks to promote and protect the rights of consumers such as —

right to be protected against marketing of goods which are hazardous to life and property;

(2) right to be informed about the quality, quantity, potency, purity, standard and price of goods to protect the consumer against unfair trade practices;

(3) right to be assured, wherever possible, access to variety of goods at competitive prices;

(4) right to be heard and to assured that customers’ interests will receive due consideration at appropriate forums.

(5) Right to seek redressal against unfair practices or unscrupulous exploitation of consumers; and

(6) Right to consumer education

The objects are sought to be promoted and protected by the Consumer Protection Councils to be established at the Central and State levels.

The Act applies to all goods and services, except if otherwise provided by the Central Government by Notification. To provide speedy and simple redressal of consumer disputes, a quasi judicial machinery is set up at the District, State and Central levels. The three tier system of quasi judicial bodies will observe the principle of natural justice and are empowered to give relief of a specific nature and to award, wherever appropriate, compensation to consumers. Penalties for non-compliance of the orders given by the quasi judicial bodies have also been provided.

Thus the Consumer Protection Act is to serve the interests of the consumers. Consumer education and redressal of consumers’ grievances are the two aspects of the Act. It makes good the loss a consumer suffers and increases the feeling of responsibility of the manufacturer, trader, supplier or businessman.

The provisions of the Act have to be construed in favor of the consumer to achieve the purpose of enactment as it is social benefit oriented legislation. The primary duty of the Court while construing the provisions of such an Act is to adopt a constructive approach subject to that it should not do violence to the language of the provisions and not contrary to attempted objective of the enactment.

Extent of Consumer Protection:

While other legislations may be either punitive or preventive, the Consumer Protection Act compensates the consumer. The provisions of the Act are in addition to and not in derogation of the provisions of any law at the time being in force (Sec 3). In Maine Container Services South Pvt Ltd v Go Garments 1998 (3) SCC 247 it has been held that the Contract Act applies to all litigants before the Commissioner under the Consumers Protection Act. Passengers traveling in train suffering injuries and loss of Jewelry as a result of assault by unruly crowd are eligible for filing of complaint before State Commission is maintainable notwithstanding the provisions of sections 100 and 103 of Railways Act, 1889. The Consumer Protection Act therefore gives the consumer an additional remedy besides those which may be available under other existing laws. Existence of an arbitration clause in the agreement is no bar to the entertainment of complaint by the Redressal Agency as the remedy under the Act is in addition to the provisions of any other law. However, the Consumer Forums under the Act have not taken over the jurisdiction of civil Courts. If the dispute between the parties is pending in Civil Court no Consumer Forum will adjudicate the dispute. Similarly if evidence be laid by the parties to the dispute is voluminous or complicated the parties will be referred to the appropriate Civil Court.

Consumers Protection Act, thus enshrines the rights of a consumer to be informed about the quality, quantity, potency, price etc., of the goods to be protected against unfair trade practices, to seek inexpensive and expeditious redressal of grievances before the Consumer Forums. Consumer Protection Act is a benevolent piece of legislation to protect a large body of consumers from exploitation.

With the passage of time, the populace of the country is on hike and so are their opinions. Their opinion forms the basis for their interpretation, it may be a good or a bad interpretation. What would happen in the situation where people starting interpreting the laws? We might be flooded with several interpretations. The interpretations will be in such huge number that the laws will become unclear. This is the reason why lawmakers, while making the law, formulate it in accordance with the aim, set out by them, before penning down the legislations. The aim of any legislation defines the basis of the act. It becomes the ground norm of the act, based upon which the judiciary interprets the disputed texts.

The aim of any act forms the indispensable element, because it acts as the cord that delivers the real intention of the legislators behind the act. Whenever there is clash between two legislations, it is the aim of the legislation which makes the judges to derive at the endpoint in deciding which law has the superseding effect. It is through the doctrine of pith and substance that judges are able to derive at the major inclination towards one act over another act. This inclination is decided on the basis of the aim/goal of the act and the facts of that particular case.

Somewhat similar situation aroused in front of Supreme Court in the case of Aftab Singh and Others v. Emaar MGF Land Limited and Another (Review Petition (C) Nos. 2629-2630 of 2018 in Civil Appeal Nos. 23512-23513 of 2017). In this case the Supreme Court cleared out the battle between arbitration and the statutory remedy when it comes upon solving the consumer disputes, which also upheld the decision of the National Consumer Disputes Redressal Commission (NCDRC). In this case, the apex body for the consumer dispute in India (NCDRC) ruled in the favor of the statutory remedy over the arbitration.

The beneficial legislation of Consumer Protection Act aims at reducing the grievances of the all classes of customers by providing them the preferential treatment. According to the Consumer Protection Act, the consumer dispute is the entity where the consumer/ customers have been given the convenient safeguards against ample exploitation like bad customer service, faulty goods or any unfair trade practices. The interest of the customers is protected by setting up, the three tier quasi-judicial consumer Redressal machinery which are at national, state and district levels as per section 9 of Consumer Protection Act. The Consumer Protection Act, 1986 (CPA) has been enacted in light of certain concerns related to public policy and the benefit of consumer.

In India, people are least aware with the consumer’s rights and lags behind having low general understanding of arbitration as dispute resolution mechanism. The arbitration clause can curtail the grounds on which the consumers can raise the disputes, whereas on the other side the consumer protection act may grant the consumer various grounds on which he can file the complaint which may not be otherwise permitted in the standard form agreement having the arbitration clause.”

Now we come to see the judgement of the Hon’ble Supreme Court regarding timeframe for the construction of a flat or giving possession of a flat or plot by the builder to the consumer.

The Hon’ble Supreme Court in CIVIL APPEAL NO(S). 3533-3534 OF 2017 M/S. FORTUNE INFRASTRUCTURE (NOW KNOWN AS M/S. HICON INFRASTRUCTURE) & ANR. VS TREVOR D’LIMA & ORS. ( Judgement March 12 , 2018 ) has held:

In the above-mentioned case Hon’ble Supreme Court also held regarding payment of compensation or quantum of compensation as follows:

“15. Moreover, a person cannot be made to wait indefinitely for the possession of the flats allotted to them and they are entitled to seek the refund of the amount paid by them, along with compensation. Although we are aware of the fact that when there was no delivery period stipulated in the agreement, a reasonable time has to be taken into consideration. In the facts and circumstances of this case, a time period of 3 years would have been reasonable for completion of the contract i.e., the possession was required to be given by last quarter of 2014. Further there is no dispute as to the fact that until now there is no redevelopment of the property. Hence, in view of the above discussion, which draw us to an irresistible conclusion that there is deficiency of service on the part of the appellants and accordingly the issue is answered. When once this Court comes to the conclusion that, there is deficiency of services, then the question is what compensation the respondents/complainants is entitled to ?”

Further the Hon’ble Supreme Court has held regarding payment of compensation:

“18. This Court in Ghaziabad Development Authority v. Balbir Singh, (2004) 5 SCC 65, has observed that there is no fixed formula for fixing damages in the following manner

‘8. However, the power and duty to award compensation does not mean that irrespective of facts of the case compensation can be awarded in all matters at a uniform rate of 18% per annum. As seen above, what is being awarded is compensation i.e. a recompense for the loss or injury. It therefore necessarily has to be based on finding of loss or injury and has to correlate with the amount of loss or injury. Thus, the Forum or the Commission must determine that there has been deficiency in service and/or misfeasance in public office which has resulted in loss or injury. No hard-and-fast rule can be laid down, however, a few examples would be where an allotment is made, price is received/paid but possession is not given within the period set out in the brochure. The Commission/Forum would then need to determine the loss. Loss could be determined on basis of loss of rent which could have been earned if possession was given and the premises let out or if the consumer has had to stay in rented premises then on basis of rent actually paid by him. Along with recompensing the loss the Commission/Forum may also compensate for harassment/injury, both mental and physical. Similarly, compensation can be given if after allotment is made there has been cancellation of scheme without any justifiable cause. That compensation cannot be uniform and can best be illustrated by considering cases where possession is being directed to be delivered and cases where only monies are directed to be returned. In cases where possession is being directed to be delivered the compensation for harassment will necessarily have to be less because in a way that party is being compensated by increase in the value of the property he is getting. But in cases where monies are being simply returned then the party is suffering a loss inasmuch as he had deposited the money in the hope of getting a flat/plot. He is being deprived of that flat/plot. He has been deprived of the benefit of escalation of the price of that flat/plot. Therefore, the compensation in such cases would necessarily have to be higher. … We clarify that the above are mere examples. They are not exhaustive. The above shows that compensation cannot be the same in all cases irrespective of the type of loss or injury suffered by the consumer.” (emphasis supplied)

In this case the opposite parties have not submitted any layout plan or any letter showing that they did any work towards acquiring the said land for the construction of the project. The cause of action in this case is continuing cause of action because the unit has not been allotted to the complainant within a reasonable time of three years and the complainant has requested many times to the opposite parties to allot the unit. After a period of three years, everyday cause of action is arising. The complainant is a consumer and he paid consideration for the allotment of a unit. Till 2022 the complainant did not get the possession of his flat for which he deposited total amount after procuring loan from various persons.The present case witnesses the fact that the unit has not been allotted to the complainant till date. This is a clear case of deficiency of service and unfair trade practice.

In Pioneer Urban Land and Infrastructure Limited v. Govindan Raghavan, (2019) 5 SCC 725, there was a delay of almost two years in obtaining an occupancy certificate after the date stipulated in the ABA. As a consequence, there was a failure to provide possession of the flat to the purchaser within a reasonable period. This Court dwelt on the terms of the ABA under which the builder was entitled to charge interest at 18 per cent per annum for the delay in payment of instalments by the purchaser. On the other hand, the failure to provide possession on the part of the developer was subject to a grace period of twelve months followed by a termination notice of ninety days and a further period of ninety days to the developer to effect a refund. Adverting to these clauses, the court noted:

“6.4. A perusal of the apartment buyer's agreement dated 8-5- 2012 reveals stark incongruities between the remedies available to both the parties. For instance, Clause 6.4(ii) of the agreement entitles the appellant builder to charge interest @18% p.a. on account of any delay in payment of instalments from the respondent flat purchaser. Clause 6.4(iii) of the agreement entitles the appellant builder to cancel the allotment and terminate the agreement, if any instalment remains in arrears for more than 30 days. On the other hand, as per Clause 11.5 of the agreement, if the appellant builder fails to deliver possession of the apartment within the stipulated period, the respondent flat purchaser has to wait for a period of 12 months after the end of the grace period, before serving a termination notice of 90 days on the appellant builder, and even thereafter, the appellant builder gets 90 days to refund only the actual instalment paid by the respondent flat purchaser, after adjusting the taxes paid, interest and penalty on delayed payments. In case of any delay thereafter, the appellant builder is liable to pay interest @9% p.a. only. Another instance is Clause 23.4 of the agreement which entitles the appellant builder to serve a termination notice upon the respondent flat purchaser for breach of any contractual obligation. If the respondent flat purchaser fails to rectify the default within 30 days of the termination notice, then the agreement automatically stands cancelled, and the appellant builder has the right to forfeit the entire amount of earnest money towards liquidated damages. On the other hand, as per Clause 11.5(v) of the agreement, if the respondent flat purchaser fails to exercise his right of termination within the time limit provided in Clause 11.5, then he shall not be entitled to terminate the agreement thereafter, and shall be bound by the provisions of the agreement.”

Hon’ble Justice Indu Malhotra speaking for the Court noted:

“6.8. A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder. The contractual terms of the agreement dated 8-5-2012 are ex facie one-sided, unfair and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2(1)(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the builder.” The Court observed that in these circumstances, the flat purchasers could not be compelled to obtain possession which was offered almost two years after the grace period under the agreement had expired. Hence, the NCDRC was held to have correctly awarded interest at the rate of 10 percent per annum.

When buying a home, it is vital to obtain documents, such as the Occupancy Certificate (OC) and Completion Certificate (CC). These are essential documents that allow you to mortgage or sell your home. Hence, homebuyers are advised to take possession of their flat or property only after these documents have been issued.

According to Vikas Bhasin, CMD, Saya Group, “Completion Certificate and Occupancy Certificate are some of the most important documents for a home buyer. Civic authorities can evict the occupants in case of non-availability of the necessary approvals. Before investing in a property, people must be doubly assured that all the certificates and approvals are in place.”

Let us dive a little deeper into the details of these documents and their importance before you make a move to buy your dream home.

Owning a home is the culmination of years of savings, research, and paperwork. After patiently waiting for the construction to be complete, you finally register the property and take possession of your flat. But what if your dream home is declared unauthorised, and you are evicted by the authorities? This is not as far-fetched as it sounds. This nightmare could turn into reality without a crucial link in the property sale process - the Occupancy Certificate (OC).

The majority of apartments in different Indian cities have been occupied by owners without any occupancy certificate. This oversight can turn into a costly mistake, jeopardising the legal status of your dream home. The importance of the occupancy certificate cannot be overstated as it seals the legal status of your property and protects your ownership rights.

Decoding legal documents

To understand the importance of an occupancy certificate and other legal documents, let’s decode the legal jargon and understand their meaning in simple terms. Here’s a ready reckoner of the most important legal documents related to your property:

Occupancy Certificate

An OC certifies that the construction of the building has complied with the approved plans. It is issued by local municipal authorities or the building proposal department once the building has been completed and is ready to be occupied. Simply put, without an OC, your building has not been awarded a ‘pass certificate’.

Completion Certificate

A Completion Certificate (CC) is issued only after the construction meets other building standards like distance from the road, the height of the building, and rainwater harvesting system. A CC alone cannot legalise occupation; the OC is a must.

Commencement Certificate

If you are buying an under construction property, make sure you check the Commencement Certificate before signing the agreement. Many builders do not wait for a Commencement Certificate. This is illegal and can create serious problems in obtaining an OC at a subsequent stage.

Why is it unsafe to buy a flat without OC?

In the absence of a valid OC, the local municipal body can initiate serious action against flat owners. In 2014, residents of a well-known building complex in Mumbai’s upscale Worli area were hit with a bolt from the blue after their complex was declared unauthorised. At the time of possession, buyers overlooked the issuance of an OC from the builder. It was only after that they were forced to evacuate their flats that the writing on the wall became clear to them.

This is just one instance, and if buyers are not careful about getting the OC, they may face the following repercussions:

• In the absence of a valid OC, your building can be demolished as it can be classified as an unauthorised structure.

• The OC is crucial while applying for a home loan or loan to purchase a resale flat. If you wish to sell or hypothecate the property after a lapse of time, you will not be able to do so without a valid OC.

• The water connection, sanitary connection or electricity supply can be disconnected in the absence of an OC.

How to obtain an OC

The OC is obtained from local municipal bodies by submitting an OC application form along with the following documents:

• Commencement Certificate

• Completion Certificate

• Built and Section plan

• NOC for fire and pollution

• Area calculation sheet of floor signed by an authorised architect

• Photographs of the completed building

• Tax assessment with tax paid receipt

• Photographs of rain harvesting and solar panels

• Copy of the sanctioned plan

After submitting the form, authorities inspect the complex and confirm if it has conformed to the approved plan before issuing an OC. Legally and ideally, a builder should submit an application with the municipal commissioner for the OC within 30 days of completion of the property.

How you can apply for an OC

As a flat owner, you can also apply for an OC by approaching the local corporation or municipality, and if all approvals are in place, an OC is issued within 30 days of application. You will have to submit the same documents as the builder to procure an OC.

Know your rights

If the builder refuses to provide an OC, you should consider exercising your legal rights. You can issue a notice against the builder asking him to apply and hand over the copy of the OC within a month. You can also approach consumer forums and file a writ petition demanding the OC.

Some canny builders simply present the receipt of the OC and dupe gullible customers. But you shouldn’t accept anything less than the actual OC as the receipt may be dated.

Landmark legislations like the Real Estate Regulatory Act (RERA) have been passed to regulate the sector, promote transparency and protect consumer rights. However, consumers must be vigilant and understand their rights and responsibilities towards owning a property. Documents like OC are essential and ensure the security of your investment.

Going forward, real estate experts believe that the OC should be made mandatory for the registration of flats and essential services. Until then, buyers must ensure builders get all the necessary approvals before handing over a property. 　　

A Completion Certificate (CC) is an important legal document that certifies that a building is constructed according to the laid down norms and master plan of the city. This document has all the information related to the project, such as the building materials used, building height, and building plan, among other things like provision for green belt.

In a nutshell, this document certifies that the building adheres to all the prevailing rules and has not violated any norms. In fact, this document is to be shown compulsorily to the authorities to obtain electricity and water connection.

Builders are allowed to obtain a provisional Completion Certificate when there are minor works left in the project. Authorities then provide a provisional certificate valid for six months. After the expiry of the six months, the developer is bound to get a final CC.

Who issues a Completion Certificate?

Local authorities issue the Completion Certificate after a thorough inspection of the premises. If the developer violates no rules, authority issues a Completion Certificate.

Why is Completion Certificate important?

Buyers must be aware of the fact that if they are buying or moving into a property that does not have a Completion Certificate, they might be making a risky investment choice. The civic authorities hold the power to slap heavy penalties on the developer, leading to stalling or cancellation of the registered layout of the project. In case the building is already occupied, residents may also have to face eviction in extreme cases.

Difference between Occupancy Certificate and Completion Certificate

Occupancy Certificate examines and certifies a property for adherence to bye-laws, civic amenities, electricity, sanitation and other clearances. On the other hand, a Completion Certificate is a document that certifies that a property is fit for possession by the buyers.

Clarifying the difference, Deepak Kapoor, Director, Gulshan Homz, says, “Completion Certificate is just a reaffirmation that the building has been constructed as per the building byelaws and the layout plan has been approved by various concerned authorities. Occupation Certificate signals that there is no violation of building construction norms, and thus, the structure is safe for occupants.

Generally, these documents are not required at the time of registry, and hence, buyers tend to overlook or ignore these. But for their own benefit and peace of mind, it is warranted that buyers of both ready-to-move-in as well as under-construction properties check these documents before taking possession. This would help avoid any unnecessary dispute or confrontation in the future.”

Supreme Court: The bench of Dr. D.Y.Chandrachud and A.S. Bopanna, JJ has held that failure on the part of the builder to provide occupancy certificate is a continuing breach under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 and amounts to a continuing wrong.

Factual Background

The appellant is a co-operative housing society. The respondent constructed Wings ‘A’ and ‘B’ and entered into agreements to sell flats with individual purchasers in accordance with the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 (MOFA). The members of the appellant booked the flats in 1993 and were granted possession in 1997. According to the appellant, the respondent failed to take steps to obtain the occupation certificate from the municipal authorities.

There was an obligation on the respondent to provide the occupancy certificate and pay for the relevant charges till the certificate has been provided, however, the respondent time and again failed to provide the occupancy certificate to the appellant society. For this reason, a complaint was instituted in 1998 by the appellant against the respondent. The NCDRC on 20 August 2014 directed the respondent to obtain the certificate within a period of four months. Further, the NCDRC also imposed a penalty for any the delay in obtaining the occupancy certificate beyond these 4 months. Since 2014 till date, the respondent failed to provide the occupancy certificate.

In the absence of the occupation certificate, individual flat owners were not eligible for electricity and water connections. Due to the efforts of the appellant, temporary water and electricity connections were granted by the authorities. However, the members of the appellant had to pay property tax at a rate 25% higher than the normal rate and water charges at a rate which was 50% higher than the normal charge.

Analysis

Obligations of Promoter under MOFA

Section 3 of the MOFA imposes certain general obligations on a promoter. These obligations inter alia include making disclosures on the nature of title to the land, encumbrances on the land, fixtures, fittings and amenities to be provided, and to not grant possession of a flat until a completion certificate is given by the local authority. The responsibility to obtain the occupancy certificate from the local authority has also been imposed under the agreement to sell between the members of the appellant and the respondent on the latter.

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.

Limitation

In the instant case, the appellant submitted that since the cause of action is founded on a continuing wrong, the complaint is within limitation.

Section 24A of the Consumer Protection Act 1986 provides for the period of limitation period for lodging a complaint. A complaint to a consumer forum has to be filed within two years of the date on which the cause of action has arisen.

Section 22 of the Limitation Act 1963 provides for the computation of limitation in the case of a continuing breach of contract or tort. It provides that in case of a continuing breach of contract, a fresh period of limitation begins to run at every moment of time during which the breach continues

A continuing wrong occurs when a party continuously breaches an obligation imposed by law or agreement. The 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, were entitled to damages arising out of this continuing wrong and their complaint is not barred by limitation.

“Rejecting the complaint as being barred by limitation, when the demand for higher taxes is made repeatedly due to the lack of an occupancy certificate, is a narrow view which is not consonance with the welfare objective of the Consumer Protection Act 1986.”

Consumer

Section 2(1)(d) of the Consumer Protection Act defines a ‘consumer’ as a person that avails of any service for a consideration. A ‘deficiency’ is defined under Section 2(1)(g) as the shortcoming or inadequacy in the quality of service that is required to be maintained by law.

In the present case, the NCDRC had held that the appellant is not a ‘consumer’ under the provisions of the Consumer Protection Act as they have claimed the recovery of higher charges paid to the municipal authorities from the respondent. Extending this further, the NCDRC observed that the respondent is not the service provider for water or electricity and thus, the complaint is not maintainable.

The respondent was responsible for transferring the title to the flats to the society along with the occupancy certificate. The failure of the respondent to obtain the occupation certificate is a deficiency in service for which the respondent is liable. Thus, the members of the appellant society are well within their rights as ‘consumers’ to pray for compensation as a recompense for the consequent liability (such as payment of higher taxes and water charges by the owners) arising from the lack of an occupancy certificate.

[Samruddhi Co-operative Housing Society Ltd v. Mumbai Mahalaxmi Construction Pvt. Ltd, , decided on 11.01.2022]

Now in the present case, nothing on record to show the completion certificate, occupancy certificate and NOCs of different departments. It is clear that if there is no occupancy certificate, the delivery of possession is no possession in the eye of law. We did not find these documents along with the offer of possession or along with the sale deed. The complainant has prayed for 18% interest per annum on the amount deposited by him from June 2010 upto January 2013. It has been clearly held by the Hon’ble Supreme Court and Hon’ble NCDRC that the consumer is entitled to get interest from the date of deposit. Possession of the flat was given in January 2013. The opposite parties promised to deliver the possession by 2010. So they are liable to pay interest of this period.

In the case of PRIYANKA MITTAL & ANR. V. PARSVNATH DEVELOPERS LTD. & ANR. (NCDRC).

The Hon’ble NCDRC held that:

“Brief facts of the cases are that opposite parties/respondents are engaged in the activity of housing construction and accordingly they have launched a project named as Parsvnath Planet situated in Gomti Nagar, Lucknow. The project was demonstrated to be very lucrative and made attractive to the vendees, in order to procure/collect money from the needy persons demonstrating themselves to be excellence in the field of construction activity as compared to other builders and assured the buyers/complainants that it has been duly approved by the Lucknow Development Authority and necessary permission has also been obtained from them. The emphasis was made by the opposite parties that the possession of the Unit shall be given within a scheduled period of 36+6=42 months stipulated in agreements executed in between the parties for the project launched in the year 2006. The complainants/appellants attracted by the promise and assurance of the opposite parties, somehow managed and arranged the money from their personal sources as well as on loan at attractive rate of interest and the hard earned money was paid by them to the opposite parties in a hope that the possession of the units shall be provided to them in the year 2009 and they can leave peacefully in their own houses, since the complainants are living in rented houses.

The complainants visited the construction site of the opposite parties after depositing the entire amount, where it was revealed that the construction activities were on halt and the persons available on the site told the complainants that the apartments are likely to be completed till 2015. Even the partial construction done by the opposite parties was defective and did not match the specifications provided in the agreement. The complainants were shocked on hearing it and observing the site. The complainants immediately contacted the Area Manager, who told the complainants that there is some delay in the construction of the apartment and the apartments shall be ready till June, 2010. The complainants have to repay the amount taken on loan alongwith interest without getting the possession of the allotted units causing irreparable loss and injury to them. The complainants have come to know that the opposite parties have invested the funds earmarked for this project into their other projects in other city due to which they have not been able to complete the project in time. Besides this, it has also come to the light that although the opposite parties had collected huge funds from the buyers but in spite of that the opposite parties have miserably failed to pay the dues of Lucknow Development Authority which forced the Lucknow Development Authority to issue coercive measures against the opposite parties for the recovery of their dues. Alleging deficiency on the part of opposite parties/ respondents, complainants filed separate complaints before State Commission. Aggrieved by the order of Hon’ble State Commission, these appeals preferred before Hon’ble National Consumer Disputes Redressal Commission.

Hon’ble NCDRC discussed various case laws and after hearing the parties held,

“Learned Counsel for appellants submitted that as complainants have been deprived of possession for a long period beyond agreed period, it amounts to restrictive trade practice under and complainants are entitled to get compensation. Section 2 (nnn) runs as under:- means a trade practice which tends to bring about restrictive trade practice manipulation of price or its conditions of delivery or to affect flow of supplies in the market relating to goods or services in such a manner as to impose on the consumers unjustified costs or restrictions and shall include- Delay beyond the period agreed to by a trader in supply of such goods or in providing the services which has led or is likely to lead to rise in the price; Any trade practice which requires a consumer to buy, hire or avail of any goods, or, as the case may be, services as condition precedent to buying, hiring or availing of other goods or services; Perusal of aforesaid provision reveals that when opposite party delays in delivery of goods which leads to rise in the price of goods meaning thereby, more price is charged from complainant, it amounts to restrictive trade practice. In the case in hand, opposite party on account of delayed delivery of possession is not charging higher rate than the agreed rate for delivery of possession of flat, so, it does not fall within the purview of restrictive trade practice under ”

“Admittedly, agreements were executed in 2006 and as per agreements, possession of flats was to be delivered within 42 months, meaning thereby, possession was to be given in the year 2009-2010 and possession has not been handed over so far though year 2016 has started. No doubt, complainants are entitled to get penalty amount for delayed delivery of possession as per clause 10 ( c) of the agreement but opposite party cannot be permitted to avail benefit of aforesaid clause for indefinite period. This penalty clause should be allowed for the benefit of parties for a limited period and in the cases in hand, I deem it appropriate to extend applicability of aforesaid clause for a period of one year beyond 42 months and after that, complainants are certainly entitled to compensation. Opposite party cannot be allowed to avail huge funds of complainants by paying merely Rs. 5/- per sq. ft. for example, complainants who have purchased flat measuring 164.901 sq. mtr., they have made payment of about Rs. 31.00 to 32 lakhs and in the garb of clause 10 (c), opposite party is paying penalty @ approximately Rs. 9,000/- per month against enjoying funds more than Rs. 30.00 lakhs. As complainants have been deprived to shift to their flats for a long period which would not only have given them satisfaction of living in their own house but also have raised their social status and opposite party has enjoyed funds of complainants for a long period, I deem it appropriate to allow compensation @ Rs. 15,000/- p.m. to the complainants who have applied for flats upto 175 sq. mtr and Rs. 20,000/- per month to complainants who have applied for flats above 175 sq. after 54 months of execution of agreement till delivery of possession.”

Against this judgment, parties went to Hon’ble Supreme Court. The judgment of Hon’ble Supreme Court is:-

In Nalin Bhargava vs. Parsvnath Developers Ltd. CA 6662/2018 @ SLP(C) 7596/2016 etc and other related civil appeals on 13 July, 2018, Hon’ble Supreme Court held:-

“Leave granted in all the special leave petitions.CA 6662/2018 @ SLP(C) 7596/2016 etc.