More documentation for unregistered firms

The builder claimed that the government's decision to claim land for redevelopment did not allow him to construct flats

In April 2009, Bakhtiar Ahmed Khan booked a one bedroom-hall-kitchen flat in an yet-to-be constructed building by Crystal Construction Corporation at Dharavi. The total cost was fixed at Rs  36.5 lakh.

The builder collected Rs 35.5 lakh by May 8, 2009, and only Rs 1 lakh remained to be paid at the time of possession. 

However, after considerable follow up, the builder issued an allotment letter only in July 3, 2012, admitting the delay and stated that the possession would be given within 18 months after receipt of all the approvals from the authorities. After that, the builder signed the agreement for sale on June 16, 2013, but avoided getting it registered.

Khan wrote to the builder and asked him to either register the agreement or refund the market value of the flat which now exceeded Rs 1 crore. As his letter was ignored, and construction had not even commenced after six years, Khan decided to file a consumer complaint.

Prior to initiating legal action, Khan approached the Registrar of Firms to find out about the name of partners in the firm. To his surprise, there was no such firm in its records.

Khan then filed a complaint against the unregistered firm along its partners, brothers Waseem and Fasiuddin Quereshi. The builders opposed the case. 

Waseem claimed that he was not a partner in the firm and had nothing to do with it. Fasiuddin contended that they could not get permissions since the government suddenly took over the area under the Dharavi Redevelopment Plan. They said that they could not be held liable as a change in government policy had stalled the project. 

The Commission observed that though the agreement for the flat measuring 27.9 sq mtrs (300.3 sq ft) was signed by the builders on August 16, 2013, it wasn’t registered as required under the Maharashtra Ownership Flats Act. Also, the builder neither gave possession nor did they offer to repay by May 21, 2015, as required under the agreement. Khan had booked the house in 2009 was now 71 years old, and it was impossible for him to buy another flat at the agreed price. The Commission, therefore, held that Khan would be entitled to the current market value of the flat.

The Commission observed that while Waseem denied being a partner in the firm, since the firm did not produce any document of its partnership deed, he was also liable, jointly with his brother Fasiuddin, as partners of the firm.

Accordingly, by its order of September 26, 2017 delivered by Usha Thakare for the Bench along with A K Zade, the Maharashtra State Commission concluded there was deficiency in service. It ordered the builders to pay Rs 78.7 lakh towards the market value of the flat, as per the Ready Reckoner for the year 2016-2017. The firm as well as Waseem and Fasiuddin as its partners were held jointly and severally liable to pay this amount within three months along with 9 per cent interest from the date of the order. In case of non-compliance within the stipulated period, interest at 12 per cent would be payable for the period of delay. Additionally Rs 25,000 was awarded as litigation costs.

The author is a consumer activist