Builder is liable for “deficiency in service” due to failure in obtaining occupancy certificate under Consumer Protection Act: SC

Issue  

Present appeal is regarding refund of the excess taxes and charges paid the appellant to the municipal authorities, due to the alleged deficiency of service of the respondent. Therefore, the judgment and order of the National Consumer Disputes Redressal Commission dated 3 December 2018 has been challenged in this appeal.  

Facts  

• 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. 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. In the absence of the occupation certificate, individual flat owners were not eligible for electricity and water connections. 
• Later, 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. 
• On 8 July 1998, the appellant instituted a consumer complaint before the State Consumer Disputes Redressal Commission Mumbai seeking a direction to the respondent to obtain the occupation certificate. By its judgment and order dated 20 August 2014, the SCDRC directed the respondent to obtain an occupancy certificate within four months. The SCDRC also directed the respondent to pay, inter alia Rs. 1,00,000/- towards reimbursement of extra water charges paid. 
• On 28 December 2015, the appellant sent a legal notice to the respondent demanding the payment of outstanding dues in an amount of Rs. 3,56,42,257/- . The respondent failed to comply with the demand. 
• Thereafter, the appellant filed an application for execution of the order of the SCDRC dated 20 August 2014. The appellant also filed a complaint before the NCDRC seeking payment of Rs. 2,60,73,475/- as reimbursement of excess charges and tax paid by the members of the appellant due to the deficiency in service of the respondent and Rs. 20,00,000/- towards the mental agony and inconvenience caused to the members of the appellant. 
• The NCDRC held that the respondent was not the service provider of the services for which the property tax or water charges were levied. Since these services were provided by the municipal authorities, the NCDRC held that the appellant would not fall under the definition of ‘consumer’ under Section 2(1)(d) of the Consumer Protection Act 1986. Thus, the NCDRC dismissed the complaint as being barred by limitation and as being not maintainable under the Consumer Protection Act 1986. 

Findings  

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. 

Judgement  

Therefore, SC direct the NCDRC to decide the merits of the dispute having regard to the observations contained in the present judgment and dispose the complaint within a period of three months from the date of this judgment. 

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