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January 13, 2022

Builder liable to pay damages for delay in getting occupation certificate says SC

by facelesscompliance in Compliance Law

Builder liable to pay damages for delay in getting occupation certificate says SC

In the recent Judgement of Supreme Court, directed builder to pay the damages in case of occupation certificate is not obtained even after 25 years of completion of contruction. The Supreme Court in Samruddhi Co-operative Housing Society Ltd. vs Mumbai Mahalaxmi Construction Pvt. Ltd. held that it would amount to deficiency in services on the part of real estate company if it failed to get occupation certifi­cate and homebuyers could se­ek compensation.

Homebuy­ers were living in the society for the last 25 years without oc­cupation certificate which the builder had failed to procure as a result of which flat owners 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 charges.

A bench of Justices D Y Chandrachud and A S Bopan­na said that builders would be liable to refund the money if the homebuyers were forced to pay higher taxes and water charges arising from the lack of an occupancy certificate for their flats.

The Court said ” Based on these provisions, it is evident that there was an obligation on the respondent to provide the occupancy certificate and pay for the relevant charges till the certificate has been provided. The respondent has time and again failed to provide the occupancy certificate to the appellant society. The Society complaint was instituted in 1998 against the builder. 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 builder has failed to provide the occupancy certificate.

This 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, are entitled to damages arising out of this continuing wrong and their complaint is not barred by limitation.

In the present case, the builder was responsible for transferring the title to the flats to the society along with the occupancy certificate. The failure of the builder to ob­tain the occupation certificate is a deficiency in service for which the builder is liable. Thus, the members of the society are well within their rights as `consumers’ to pray for compensation as are compense 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 above judgement will provide relief to millions of homebuyers who are forced to take possession of their flats and start living due to delay on the part of the builder to get all clearances including occupancy certificate

Read the Entire Judgement

Samruddhi Co-operative Housing Society Ltd. … Appellant Versus Mumbai Mahalaxmi Construction Pvt. Ltd. …Respondent

Samruddhi-Co-operative-Housing-Society-Ltd.-…-Appellant-Versus-Mumbai-Mahalaxmi-Construction-Pvt.-Ltd.-…Respondent

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