Madhusudhan Reddy R and J. Shanthamma & Ors. v. VDB Whitefield Development Pvt. Ltd. (Consumer Complaint No. 763 Of 2020)
1. INTRODUCTION
The complaint in the above case arose out of the allotment of incomplete apartments in a project where the developer had failed to obtain the Occupancy Certificate (hereinafter referred to as “OC”) thereby leading to deficiency in the promised amenities. Further, they were also charged with an advance maintenance fee.
2. FACTS
The complainants had applied for allotment of flats in the Project of the Opposite Party, namely, “VDB Willow Farm”. The project consists of 70 Units in all and the Opposite Parties started advertising the project from 23.09.2011. The complainants executed the Construction Agreement and Agreement to Sale with Opposite Party No.1. The Complainants averred that, they booked their residential flats on various dates between 2012 to 2016 and were allotted incomplete possession of the apartments without obtaining OC and completing the promised amenities. In this agreement, the completion of construction and the possession of the flat was promised by July, 2014 with a grace period of further 6 months. The Complainants averred that the Opposite Party has failed to get the OC till date and the amenities and facilities have still not been provided though they have received physical possession of their respective apartments. The project is still incomplete. The Complainant also stated that in spite of not having obtained the OC, the builder has started levying maintenance charges on the Complainants.
3. ISSUES
Whether a builder/developer can levy maintenance charges on the allottee without obtaining an OC?
4. PROVISIONS OF LAW APPLIED IN THIS CASE
- Section 21(a)(i) of The Consumer Protection Act, 1986: The National Commission shall have jurisdiction to entertain complaints where the value of the goods or services and compensation, if any, claimed exceeds rupees one crore.
- Section 12(1)(c) of The Consumer Protection Act, 1986: A complaint in relation to any goods sold or delivered or agreed to be sold or delivered or any service provided or agreed to be provided may be filed with a District Forum by one or more consumers, where there are numerous consumers having the same interest, with the permission of the District Forum, on behalf of, or for the benefit of all consumers so interested.
5. SUBMISSIONS OF THE COUNSELS
5.1 Contentions raised before the NCDRC by the Complainants:
Direct the Opposite Parties to hand over to the Complainants and other unit /flat owners to grant:
1. The legal possession of the fully constructed and completed flats along with the occupancy certificate and all other promised facilities and amenities which were promised by the opposite party
2. Compensation for the entire period of delay
3. Each of the facilities and amenities which were promised in the agreement.
4. Refund for the advance maintenance paid for 2 years.
5. Compensation of Rs.10,00,000/- for mental harassment and agony caused.
6. To undertake the maintenance of the project at its cost till the time the occupancy certificate is obtained.
5.2 Contentions taken before the NCDRC by the Opposite Parties:
1. A substantial portion of the construction was completed on May 2017 and they applied for the OC on 15.05.2017.
2. The project was delayed due to the changing market conditions, escalation costs, and the COVID-19 pandemic.
3. A portion of the land in question was tied up in a partition suit filed by the family of the land owners.
4. They advised the complainants to await the Occupancy Certificate and the installation of permanent electricity connection by BESCOM prior to taking possession and stated that despite this advice they took possession of their flats.
5. As per the Agreements, for the delay in possession, the Complainants were duly paid the stipulated delay penalty on 02.12.2020.
6. They had received the cumulative advance maintenance charges of only Rs. 32,66,025/- @ Rs. 75 per sq. ft. between 2017 to 2019 out of a total maintenance cost of Rs. 2,37,16,000/- till date, therefore has become financially unviable for them to continue paying these charges.
7. All the facilities have been provided for the units where the Complainants are staying and is being well maintained.
6. OBSERVATIONS MADE BY THE NCDRC
1. As per the Agreement clause 11.1, the date of completion of the flat should have been within 22 months (approx) from the date of construction taking into account the 6 months grace period, the total period for completion of the unit should have been 28 months but even beyond this extended period the Opposite Parties failed to construct the Project and has not obtained OC till date.
2. As per the Agreement dated 29.09.2012, the Complainant was to get possession of the flat within 28 months i.e.. on 29.01.2015. The Opposite Party has applied for the Occupancy Certificate vide letter dated 15.05.2017, but has not obtained the Occupancy Certificate till date which clearly means that the Construction is not complete in all respect.
3. There has been a delay in giving legal possession of about 6 years and the opposite parties have not given any reasonable justification for the delay
After making the above observations it was held that the Complainants are entitled to get fair delay compensation. Further, not obtaining OC till date is a serious deficiency of service.
7. JUDGEMENT
The Opposite Parties were directed to:
1. Complete the construction of the flats allotted to the complainants in all respects, duly obtaining the requisite Occupancy certificate at its own cost and responsibility and offer and give legal possession of the respective flats to the complainants within 3 months of the receipt of this order.
2. Pay compensation for delay to the complainants @ 9% per annum from proposed date of possession, which would include grace period as per their respective agreement on the amount deposited, till obtaining OC within a period of six weeks. In case of delay beyond this period, the delay compensation will be @ 12% per annum.
3. Not to collect any maintenance charge till the receipt of Occupancy Certificate. The advance maintenance charges so far collected should be adjusted towards the maintenance charge to be paid by the Complainants post receipt of Occupancy Certificate.
8. CONCLUSION
In the landmark judgement of Samruddhi Co-operative Housing Society Ltd. v. Mumbai Mahalaxmi Construction Pvt. Ltd, the Apex Court was of the opinion that failure of a builder to obtain an OC is a deficiency in service under the Consumer Protection Act 1986. Further, in Kamal Kishor and Ors. v. M/s. Supertech Limited, it was held that offering possession without obtaining occupancy certificate is meaningless since the allottee is not permitted in law to occupy the house which does not have the requisite OC. Therefore, the maintenance charges would be payable only from the date on which the possession is offered to the complainants after obtaining the requisite OC provided the construction of the villa is complete in all respects at that time.
In view of the above judgements. it can be clearly construed that the OC is an important document which signifies the completion of the project and that is it ready to be occupied. The allottees are not permitted by law to occupy their house and handing over possession without an Occupancy Certificate is meaningless.
This blog is written by Ms. Trisha Prabu, an intern of Smriti Legal LLP.
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