Builder's failure to get occupation certificate deficiency in service: SC

Failure of a builder to obtain occupation certificate is a deficiency in service under Consumer Protection Act 1986, the Supreme Court has said.

A bench of Justices D Y Chandrachud and A S Bopanna held that the builder would be liable to refund money if the homebuyers were forced to pay higher taxes and water charges due to lack of an occupancy certificate.

The apex court was hearing an appeal against an order of the National Consumer Disputes Redressal Commission which dismissed a complaint by a cooperative housing society seeking refund of the excess taxes and charges paid to the municipal authorities due to alleged deficiency of the builder.

The NCDRC had 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.

According to the petitioner society, the builder 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, it said.

Due to the efforts of the society, 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 per cent higher than the normal rate and water charges at a rate which was per cent higher than the normal charge.

The top court set aside the NCDRC's order which had turned down society's plea against the builder and held they should approach against the authorities which are charging higher taxes.

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 bench said in a recent order.