Cost of fine in case of not obtaining OC of a flat?

848 votes

Offering possession of apartments without obtaining requisite Occupancy Certificate have become a trend in India. This practice is more prevalent in Noida and NCR region. Homebuyers are forced to take apartments on “Offer of Fitouts” and refusal to accept such offer often results in hefty fines and other harassment from the builder. Most of the time the Occupancy Certificate is not taken/granted because of gross violation/deviation in approved building plans. Non-payments of land dues and other charges can also attribute to not granting OC by the authorities. You can read more about offer of fitouts letter here: Letter of Fitout, a disaster waiting to happen It is important to note that “Offer of Fitouts” without Occupancy Certificate is completely illegal for the purpose of staying in the apartment. Even if one is to take it for actual fitouts (read woodwork, interiors etc), it’s optional and can’t be forced. Do read: No Occupancy Certificate? Lease Deed has the answer The NCDRC recently penalized developer with hefty fines and directed him to obtain OC at his own cost at earliest instead of offering Fitouts. What does the law say? Maharashtra Ownership Flats Act, 1963 expressly provides that a promoter who constructs a block or building of flats shall not allow any person to enter into possession until an Occupancy Certificate where such certificate is required to be given under any law, is duly given by the local authority and no person shall take possession of a flat until such Occupancy Certificate has been duly given by the local authority. Similar provisions exist in the Apartment Acts of most states including Uttar Pradesh and Haryana. Case Study: One such case is of homebuyers from Mumbai, where builder failed to obtain occupancy certificate from Bombay Municipal Corporation after completing the construction. The OC was held up because the developer made some violations in the building plans and the BMC was not regularizing it. Buyer’s Grievances Homebuyers entered into an agreement with Kamla Ankur Developers for the purchase of flat in Avadhut Cooperative Society in Mumbai. The total sale consideration was agreed at Rs.1,82,40,000/- and the respective rights and obligations of the parties were incorporated in the agreement for sale executed on 20.1.2011. The developer was to complete the apartments in all respects, to the buyer by 31.3.2012. The flat in question was made available to them for the purpose of Fit Outs, on 17.1.2013. However, the requisite Occupancy Certificate/Completion Certificate from the Bombay Municipal Corporation has not been obtained till date by the developer. As a result, the buyers are unable to occupy the said flat. Being aggrieved by the failure of the opposite party to deliver legal possession of the said flat by obtaining the requisite Occupancy Certificate. Right to reply for the builder is closed The developer was served with the notice of admission of this complaint on 27.8.2015. The statutory period of 30 days from the date of service expired on 26.9.2015. Since reply/written version was not filed by the opposite party, this Commission vide order dated 18.11.2015 granted two weeks to it for the aforesaid purpose subject to payment of Rs.10,000/- as cost. However, neither the cost was paid nor the reply/written version was filed in terms of the order dated 18.11.2015. Therefore, vide order dated 13.1.2016, this Commission, relying upon the decision of the Hon’ble Supreme Court in Civil Appeal Nos.10941-10942 of 2013, New India Assurance Co. Ltd. vs. Hilli Multipurpose Cold Storage Pvt. Ltd., dated 04.12.2015, closed the right of the opposite party to file its written version. Sahil Sethi, renowned consumer matter expert says “This was indeed a welcome step that right to reply was closed in just 6 weeks. The developer usually keeps on dragging the matters by not filing written statement to the complaint”. I am delighted the Hon’ble Judge relied on the directions of Supreme Court in this matter. Court’s Observations It is a legal obligation of the developer to obtain the requisite Occupancy Certificate before delivering possession of the flat to the buyer. No flat can be legally offered for being occupied by the purchaser without obtaining the requisite Occupancy Certificate nor can the purchaser legally occupy the flat without such a certificate. In this regard, section 3(2)(i) of the Maharashtra Ownership Flats Act, 1963 expressly provides that a promoter who constructs a block or building of flats shall not allow any person to enter into possession until an Occupancy Certificate where such certificate is required to be given under any law, is duly given by the local authority and no person shall take possession of a flat until such Occupancy Certificate has been duly given by the local authority. Therefore, neither the developer could have allowed the complainants to occupy the flat, subject matter of the agreement between the parties nor can the complainants occupy the said flat without issue of requisite Occupancy Certificate by Bombay Municipal Corporation. Though the opposite party did hand over the flat in question to the complainants for the purpose of fit outs, in the absence of issue of Occupancy Certificate by Bombay Municipal Corporation, the complainants cannot occupy the said flat for the purpose for which they had purchased it from the opposite party. It is thus not only a contractual, but also a legal obligation of the opposite party to obtain the said Certificate. In my opinion, the complainants are not concerned with the aforesaid issue between the opposite party and Bombay Municipal Corporation. It is their legal right to have the requisite Occupancy Certificate before they occupy the flat purchased from the opposite party and it is a contractual as well as legal obligation of the opposite party to obtain the said Occupancy Certificate as its own cost and responsibility by removing all such objections as have been raised by Bombay Municipal Corporation as a pre-requisite condition for the issue of the Occupancy Certificate. The Order [CONSUMER CASE NO. 622 OF 2015] The developer shall obtain the requisite Completion Certificate from the Bombay Municipal Corporation in respect of the flat subject matter of the agreement dated 20.1.2011 at its own cost and responsibility, on or before 31.12.2016] The developer shall pay compensation at Rs.72,000/- per month from 1.4.2012 to 31.12.2012, Rs.80,000/- per month for the period from 1.1.2013 to 31.12.2013 and at Rs.90,000/- w.e.f. 1.1.2014 till the date the Occupancy Certificate is obtained by the developer and a copy of the said Certificate is provided to the buyers. Conclusion The Logical Buyer welcomes the order from the Hon’ble NCDRC. It was a much-needed step. Developers in Noida and other regions of the country have made it a habit to default on the land payments or deviate from the approved plan. When they fail to obtain occupancy certificate, it is often termed as Force Majeure and they run away from their responsibility by saying they have already applied for the same. The penalty meter stops at the offer of fitouts and homebuyers also accept these lame excuses. It is important that they ask for penalty till the time Occupancy Certificate is obtained from concerned authorities.

Advocate Siddhant Sharma LawRato