OC: A messy affair for home-buyers

IN PERSPECTIVE

Purchasers of flats in apartment blocks and individual houses developed by builders have been fighting tooth and nail for obtaining the Occupation Certificate (OC). In the absence of OC, they are put through many hardships. Firstly, they are unable to occupy the flats or houses. Secondly, they are forced to pay maintenance charges by the builders because they have notoriously added a clause in the agreements, which the purchasers have overlooked. Finally, purchasers are made to pay electricity and water charges, though it is the obligation of the builder to pay them till the property is handed over. Thanks to the Supreme Court and the National Consumer Disputes Redressal Commission (NCDRC) the builders have been made responsible to obtain the OC and they can't collect any charges from purchasers till the OC is provided to them.

The court was hearing a case filed by the members of the Samruddhi Co-operative Housing Society Ltd, who had purchased flats from the builder, Mumbai Mahalaxmi Construction Pvt Ltd. The builder failed to get the OC even 24 years after giving possession. However, the builder collected water, electricity and other charges from the members of the society. On a complaint by the members to the Maharashtra State Consumer Disputes Redressal Commission, the builder was directed to obtain the OC within four months and also pay Rs 1 lakh as compensation. But this was not followed by the builder. Instead, they sent a legal notice to the society to pay Rs 3,56,42,257. The members filed a complaint with the NCDRC seeking payment of Rs 2,60,73,475 towards reimbursement of excess charges and tax paid by members. They also demanded Rs 20 lakh towards mental agony and inconvenience caused to them.

The NCDRC dismissed the complaint as time-barred as petitions under the Consumer Protection Act (CPA) have to be filed within two years after the cause of action arose. It also held that the builder was not the provider of the services for which the property tax or water charges were levied and held that the members of the society do not fall under the definition of ‘consumer’ as per the CPA. The decision of the NCDRC was questioned in the Supreme Court.

The property purchasers argued that the cause of action is of a ‘continuing nature’ since they have been paying a 25% higher amount for property tax and an additional 50% towards water charges as the builder failed to provide the OC. The builder argued that the houses were not offered for occupation, members made unauthorised alterations to the building and that the complaint is time-barred as the cause of action arose in 1997.

Refusing to buy the arguments of the builder, the Supreme Court said that a continuing wrong occurs when a party continuously breaches an obligation imposed by law or agreement. It said that under the Maharashtra Ownership Flats Act (MOFA), the builder is not supposed to grant possession of a flat until the OC is given by the local authority. Therefore, the members are entitled to damages arising out of this continuing wrong and the complaint is not barred by limitation. The case was remitted back to the NCDRC to dispose of the complaint within three months.

Nearer home, the VDB Whitefield Development Pvt Ltd and two other companies of the same group have been directed by the NCDRC not to collect any maintenance charges till the receipt of OC. In this case, a group of 12 complainants had approached the NCDRC on the grounds that they had booked residential flats on various dates between 2012 and 2016 and were allotted incomplete possession of apartments without OC and other promised amenities. On their part, the builders argued that a substantial portion of the building was complete in May 2017 and they applied for OC. They said the project was delayed due to Covid-19 and a dispute between them and landowners. Further, they said that the purchasers pressured them to allot the flats and they have incurred Rs 2,37,16,000 as maintenance cost and pleaded to dismiss the complaint.

The NCDRC, in view of the recent decision of the Supreme Court (discussed above), said that there has been an unreasonable delay in completing the construction despite the purchasers paying a substantial amount. Quoting other decisions of the Supreme Court, the NCDRC said that compensation at 9% is reasonable for the delay. Regarding maintenance charges, it said that the purchasers have taken possession of the flats and there would be some maintenance charges; yet it can be considered as paper possession only. In view of its own decision in another similar case, the NCDRC said that charging maintenance charges is not proper and should not have been collected till the OC was obtained. The NCDRC directed the builder to complete the construction of flats and obtain the OC within three months from the date of the order. Further, it directed the builder to pay compensation for delay at 9% per annum. Regarding maintenance charges, the builder was directed to not collect them in future and adjust the amount already paid against the charges to be paid after the OC is obtained.

(The writer is Founder, Consumer Rights Education and Awareness Trust)