Failure To Obtain Occupancy Certificate Constitutes A Deficiency: NCDRC Holds Sushma Buildtech Liable For Deficiency In Service

The National Consumer Disputes Redressal Commission, presided by Mr. Subhash Chandra and Dr. Sadhna Shanker (member), held that a builder's failure to obtain an occupancy certificate for the property makes him liable for deficiency in service. Brief Facts of the Case The complainant booked a flat in the Sushma Buildtech's /builder's “Sushma Crescent” project for Rs 47,47,801 under a Time-Linked Payment Plan. They obtained a loan of Rs 25,00,000 from Punjab National Bank. The builder provided discounts totaling Rs 11,22,869. Despite the promised possession date, the complainant did not take possession and filed a consumer complaint before the State Commission of Chandigarh seeking a habitable unit and compensation. The builder cancelled the allotment but was directed by the State Commission to hand over possession and compensate the complainant with interest. The builder handed over the possession but denied compensation and appealed to the National Commission regarding the same. Contentions of the Builder The builder argued that the compensation granted by the State Commission was not requested by the complainants and couldn't be granted after possession was offered and accepted. The builder stated that a Buyer's Agreement was signed detailing the payment plan, discounts, and possession terms. Despite reminders, the complainants failed to pay the final dues, leading to the cancellation of the allotment. The builder contended that the State Commission exceeded its jurisdiction and misinterpreted the contract terms. They insisted that the relief sought should be within the contract's scope and objected to the awarded interest and compensation. The builder emphasized that possession had been handed over, thus rendering further compensation unjustifiable. They also challenged the State Commission's assessment of possession and amenities provision. Observations by the National Commission The Commission observed that the builder failed to establish through documentary evidence that the complainants were engaged in the business of purchasing and selling flats, as required to prove they were not 'consumers.' The territorial jurisdiction was admitted based on the builder's branch office being in Chandigarh, as held in the Sonic Surgical Vs. National Insurance Co. Ltd. case. The Commission highlighted that the offer of possession by the builder was based on a Partial Completion Certificate issued by the competent authority, with towers being re-numbered and the certificate subject to obtaining various approvals. The promised amenities mentioned in the agreement have not yet been completed. The Commission emphasized the Supreme Court's decision in Samruddhi Cooperative Housing Society Vs Mumbai Mahalaxmi Construction Pvt. Ltd., which held that the failure to obtain an occupancy certificate constituted a deficiency in service, making the builder liable. The Commission observed that in the present case, the builder was required to hand over possession and convey legal title based on an Occupancy Certificate. However, the possession offered was based on a partial occupation certificate subject to obtaining statutory clearances, making the offer legally incomplete. Therefore, the award of compensation could not be faulted. The Commission noted that although the complainant accepted possession during the pendency of litigation, the builder was liable to compensate until that date and not the stated date of possession offer, as the complainant could not relate the offer to the actual flat due to the re-numbering. The Commission highlighted that the State Commission had awarded compensation under multiple heads contrary to the law laid down by the Supreme Court, which needed modification. The National Commission partly allowed the appeal and directed the builder to compensate the complainant at a rate of Rs 5 per square foot per month based on the super area from the promised possession date until when possession was handed over, along with 6% per annum interest on the deposited amount during this period. The builder was also directed to pay the complainant a litigation cost of Rs. 50,000. The Commission set aside all other compensations rewarded by the State Commission. Case Title: Sushma Buildtech Ltd. Vs. Aniraj Sharma & Anr Case Number: F.A. No. 197/2022Click Here To Read/Download Order

Failure To Obtain Occupancy Certificate Constitutes A Deficiency: NCDRC Holds Sushma Buildtech Liable For Deficiency In Service

Ayushi Rani

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