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Samruddhi Co-operative Housing Society Ltd. vs. Mumbai Mahalaxmi Construction Pvt. Ltd. - (Supreme Court) (11 Jan 2022)

Failure of a builder to obtain occupation certificate is a deficiency in service under Consumer Protection Act, 1986



The appeal arises from a judgment and order of the National Consumer Disputes Redressal Commission. The complaint was filed by the Appellant for refund of the excess taxes and charges paid by the Appellant to the municipal authorities, due to the alleged deficiency of service of the Respondent. By the impugned order, the NCDRC dismissed the complaint on the ground that, it was barred by limitation and that it was not maintainable since it was in the nature of a recovery proceeding and not a consumer dispute. The Appellant is a co-operative housing society.

The continuing wrong in the present case is the failure to obtain the occupancy certificate. Against this act of the Respondent, the Appellant society has taken appropriate action by filing a complaint before the consumer forum. The Appellant is currently pursuing the execution of the order of the SCDRC arising from that complaint. However, that itself does not preclude it from claiming compensation for the consequences which have arisen out of this continuing wrong.

The failure to obtain the occupancy certificate has resulted in the levy of higher taxes on the members of the Appellant society repeatedly by the municipal authorities. Despite the order of 20 August 2014, the Respondent has failed to obtain the occupancy certificate. This has resulted in a situation where the Appellant, despite having followed the correct course of litigation in demanding the furnishing of an occupancy certificate, will continue to suffer the injury inflicted by the respondent merely due to the delay in the execution of the order against the respondent. 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.

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 its decisions in Wing Commander Arifur Rahman Khan & Others v. DLF Southern Homes Private Limited & Others and Pioneer Urban Land Infrastructure Limited v. Govindan Raghavan, this Court has held that, the failure to obtain an occupancy certificate or abide by contractual obligations amounts to a deficiency in service. In Treaty Construction v. Ruby Tower Cooperative Housing Society Ltd., the Court also considered the question of awarding compensation for not obtaining the certificate. In that case, the Court declined to award damages as there was no cogent basis for holding the Appellant liable for compensation, and assessing the quantum of compensation or assessing the loss to the members of the respondent society.

In the present case, 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. The order of the NCDRC is set aside and the complaint is maintainable. Appeal allowed.


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