State Consumer Disputes Redressal Commission
Avijit Singh vs A.V.P. Buildtech Pvt Ltd on 22 March, 2023
Cause Title/Judgement-Entry STATE CONSUMER DISPUTES REDRESSAL COMMISSION, UP C-1 Vikrant Khand 1 (Near Shaheed Path), Gomti Nagar Lucknow-226010 Complaint Case No. CC/512/2017 ( Date of Filing : 15 Dec 2017 ) 1. Avijit Singh S/O Sri R.N. Singh R/O 4/44 Vishal Khand Gomti Nagar Lucknow ...........Complainant(s) Versus 1. A.V.P. Buildtech Pvt Ltd Registered Office at B-47 Sector 51 Noida U.P. Through its Director/M.D. ............Opp.Party(s) BEFORE: HON'BLE MR. Rajendra Singh PRESIDING MEMBER HON'BLE MR. SUSHIL KUMAR JUDICIAL MEMBER PRESENT: Dated : 22 Mar 2023 Final Order / Judgement Reserved State Consumer Disputes Redressal Commission U.P. Lucknow. Complaint No.512 of 2017 1- Avijit Singh, aged about 30 years, s/o R.N. Singh, R/o 4/44, Vishal Khand, gomti Nagar, Lucknow. 2- Smt. Madhu Singh, aged about 57 years, w/o R.N. Singh, R/o 4/44, Vishal Khand, gomti Nagar, Lucknow. ... Complainants. 1- AVP Buildtech (P) Ltd., having its registered office at B-47, Sector, 51, NOIDA (UP) through its Director/Managing Director. 2- AVP Buildtech (P) Ltd., having its site office G-37, Sector, 77, NOIDA (UP) through its Authorized Officer/Director. 3- Vinod Katiya, Promoter, AVP Buildtech (P) Ltd., having its registered office at B-47, Sector, 51, NOIDA (UP) 4- Sanjeev Abrol, Director, AVP Buildtech (P) Ltd., having its registered office at B-47, Sector, 51, NOIDA (UP) 5- Pranila Singh, Director, AVP Buildtech (P) Ltd., having its registered office at B-47, Sector, 51, NOIDA (UP) 6- Nathu Singh, Director, AVP Buildtech (P) Ltd., having its registered office at B-47, Sector, 51, NOIDA (UP) ...Opposite Parties. Present:- 1- Hon'ble Sri Rajendra Singh, Presiding Member. 2- Hon'ble Sri Sushil Kumar, Member. Sri Avinash Singh ,Advocate for the Complainants Sri Ashish Agnihotri, Advocate for theOpposite Partiesno.1 & 2. Date: 12 .04.2023 JUDGMENT
Per Mr. Rajendra Singh, Member: This complaint has been filed under section 17 of the Consumer Protection Act 1986.
The brief facts of the complaint case are that, that the opposite parties are company engaged in the construction/development and allotment of the flats, with all the basic civic amenities . Lucrative advertisement are made by the opposite parties to attract the consumers in the market in order to apply for the booking of the residential flat in their scheme . Opposite parties demonstrated themselves to be pioneered in the construction/development activities in contrast to the similarly placed builder who are working for gain in the market. It is assured by the opposite parties that the project is duly approved by all concerned authorities and all the necessary sanctions are available with them. It is only on the assurance of the timely construction of the flat, the complainant applied for the residential accommodation in the scheme of the opposite parties through application dated 12.10.2010 . It is assured by the opposite parties that they shall construct the apartment till June 2013.
The opposite parties assured the buyers that they already have all the necessary prerequisite permission from the competent authorities to construct the apartment and they are in the legal possession of the land on which the apartments are being constructed. It is also demonstrated by the builder that the scheme is duly approved and sanctioned by the development authority and shall have all the necessary basic civil amenities. It is on the assurances and promises which influenced the mind of the complainantto opt for a residential unit in the project of the opposite parties. In pursuant of the application of the complainant the opposite parties by means of a letter of allotment dated 05.12.2010 allotted flat number A-603 ad measuring 1725 square feet on sixth floor, total cost of the flat as agreed was ₹ 3,000,017/- which is escalation free. The complainant prayed for the impleadment of applicant that is complainant number 2 be also added along him, thus by way of revised allotment letter dated 24.12.2010 co-applicant/complainant no 2 was also added against this flat.
The flat buyer agreement dated24.12.2010 was executed by the opposite parties which was unilaterally drafted by the opposite parties in order to suit their own requirement. No amendment and alteration can be made by the consumer in this agreement which is on standard format, however it is apposite to mention that the agreement duly provides the specifications which shall be provided to the consumer. It is reiterated by the opposite parties in this agreement that the possession of the unit shall be provided till 15 March 2013. The complainants acquired the residential unit as they are in dire need of residential accommodation, in anticipation of the timely possession of the fully furnished flat situated in Durham area with all the basic civil amenities. An amount of Rs.27,77,370/- is deposited with the opposite parties. However the opposite parties did not complete the construction of the allotted flat within agreed period of time and till this date, the project is not developed. The younger son of the complainant no.1 Mr. Avinash Singh Vishen who is pursuing his studies in Symbiosis Law School, Noida is to reside in a rented accommodation causing irreparable loss and injury to the complainants.
The opposite parties are accountable for of unfair trade practice in this complaint case as on the pretext of timely development and construction of the flat monies are collected from the consumers and till this date the units are not completed with agreed specifications and amenities. The complainants were constrained to deposit the instalments to avoid the liability of making the payment of penal interest at a rate of 18% and to save their allotment from cancellation. However the opposite parties did not adhere to their assurance and commitment of the timely completion of the project and development of the scheme.Neither the flats/unit partially constructed are fully finished neither the area of the scheme is developed. Furthermore the units are not in a habitable condition, no basic amenities are provided by the opposite parties in the scheme. The complainants have deposited92.5% of the total consideration till date. The opposite parties committed serious deficiency in service as well as unfair trade practice in this case, in view of the fact that the possession of the fully finished apartment with all the basic civil amenities is not provided within agreed period of time. Further the monies collected by the opposite parties without disclosing the factum of the status of the construction, whereas it is agreed between the parties that the payment of the cost is dependent on the construction of the unit, thus despite receipt of the payment the opposite parties did not construct the unit of the complainants within scheduled period of time causing irreparable loss and injury to them. Various correspondence as well as letters were written by the complainants claiming the possession of the unit but all in vain.
The complainants are being put to extreme physical and mental hardship in view of the fact that the opposite parties did not develop the project till this date. Neither the unit is constructed as per the agreed specification not basic civic amenities were provided. The opposite parties at the time of the deposit of the booking amount assured the complainant that the possession of the fully developed flat shall be delivered with all the civic amenities and with all the specifications till 15 March 2013. It was specifically assured by the opposite parties that the requisite permission from all the concerned authorities to construct the apartment is obtained by them after taking the possession of the land. It is pertinent to mention here that had the opposite parties communicated to the complainants that they shall cause delay in the construction of the entire project and shall inordinately delay the development of the project, the complainant ought not have opted for a residential flat in the project of the opposite parties. It is worth to mention here that the complainants are deprived of their legal right to enjoy the possession of the flat and are being put to extreme mental and physical harassment at the hands of the builder/opposite parties for which they are liable to pay punitive damages to the complainant.
The opposite parties proclaimed the money from the entire allottees of the project without even occupying the area where the flat of the complainants are situated which constitutes serious deficiency in service. Since it is the obligation of the opposite parties as a builder/service provider to demarcate and develop the area/project forthwith. The opposite parties demanded the money in a most illegal and arbitrary manner from the allottees of the project which is in complete contravention of the settled principle of law. It has been established that the opposite parties opted huge sum of money from the entire allottees of the scheme and instead of putting the same for the development of the apartment , misappropriated the same, for which the opposite parties are liable to produce the expenditure and account statement of the entire scheme before this Hon'ble commission. The opposite parties are accountable for unfair trade practice since they have enjoyed and utilized the hard earnedmoney of the complainants without providing the possession of the fully finished flat in developed area. It is submitted here that the opposite parties are also liable to pay the loss of rent to the complainant which is quantified by the complainant said to the tune of Rs.20,000.00 per month with effect from 01.01.2014 till the date handing over physical possession of the unit. Therefore it is most respectfully prayed that this Hon'ble commission may graciously be pleased to:-
1- Direct the opposite parties to deliver the physical possession of the fully finished flat no A-603 situated in AVSOrchard, Noida with all the basic civic amenities and as per the specifications agreed by the opposite parties.
2- Direct the opposite parties to pay an interest on the amount deposited by the complainant from the respective dates of deposits till the date of delivery of physical possession of the allotted unit.
3- Direct the opposite parties to pay an amount of Rs.20,000.00 per month towards rent with effect from 01.01.2014 till the date of delivery of physical possession of the allotted unit.
4- Direct the opposite parties to pay appropriate compensation and damages which this Hon'ble Commission may deem it just and proper in the facts and circumstances of the case.
5- Direct the opposite parties to pay penalty damages to the complainant which this Hon'ble commission may deem it just and proper in the facts and circumstances of this case.
6- Direct the opposite parties to pay a sum of Rs.1 lakh towards cost of the case.
The opposite parties have submitted their written statement stating that this Hon'ble commission has no jurisdiction to entertain and adjudicate upon the dispute involved in the complaint case and as much as it is not a consumer dispute and does not fall within the ambit of the provisions of Consumer Protection Act 1986. The complaint is barred by limitation and misjoinder of parties. The complainant had booked a flat in the project of answering respondents namely AVS Orchard , sector 77, Noida bearing number A-603 in Tower-A and also paid a sum of Rs.1 lakh on 5.10.2010, Rs.8 lakhs on 02.12.2010, Rs.150,000 on 08.06.2011. It is further submitted that the proportionate service tax is deducted and deposited with respective department and certain date for handing over possession was informed the complainant vide various letters. It is also submitted that the complainants are well informed about possible date of possession because what is stopped due to order of Hon'ble Allahabad High Court. The complainant asked for compensation of Rs.20,000.00 per month which are totally disagree and the answering respondent will also not bear any cost of litigation and the complainant has to bear at their own risk and costs.
The answering respondent is engaged in construction of group housing along with basic amenities to be made and also project is duly approved by the concerned authorities and also hand over the possession according to the date given to RERA, UP .It is further forbidden that force majeure clauses active due to which orders in Noida passed to stop the construction work in Noida and now there is still order of the Hon'ble High Court. The answering opposite parties have all the prerequisite permissions from the competent authorities to construct the apartment and the complainant requested for another name for co-ownership in the allotted flat which was accepted without any extra cost. The answering respondent had executed the sale agreement with complainant, but as said by the complainant that agreement is made to suit our requirement and also changes cannot be made in the agreement to sell, which is totally false and not acceptable. It is further submitted that the agreement is well read understood and agreed by both the parties. The answering respondent had agreed for possession of flat for certain date, but also there is force majeure clause exists now.
It is submitted that the answering respondent had sold the flat to complainant but not fully furnished as quoted in para-under reply. It is further submitted that fully furnished means with wood work in rooms like making of almirahs in the rooms and kitchen which is not agreed as mentioned in this complaint case. It is also submitted that the possession of flat is possible only after stay is vacated from the Hon'ble Allahabad High Court and force majeure clause exists presently on the project. As regards the family members pursuing studies in law school does not have any relevance to the complaint made by their relatives if any to be borne by the complainant. It is submitted that the complainant had made construction linked payment plan, the stage of construction is completed for which the complainant had made the payment. It is submitted that false allegations have been made. The complainant's case is not tenable before this Hon'ble Commission. It is also submitted that false claim is made by the complainant, hence not acceptable and the expenses of the complainant etc to be borne by the complainant at their own risk and costs.
Notices were sent to the opposite parties. Vide order dated 27.04.2018 service of notice on the opposite partyno1 has been deemed sufficient. As per order dated 03.08.2018 , the counsels of the opposite parties Mr. Ashish Agnihotri and Vikas Agarwal were present. Later on opposite partiesno 3,4,5,and 6 were impleaded and noticeswere sent to them by registered post on 03.10.2022 and as per office report dated 28.02.2023 the notices were not returned hence vide order dated 22.02.2023 the service of notices onthe newly added opposite parties no.3,4,5 and 6 were held sufficient. We have heard the learned counsel of the complainant and opposite parties no.1 and 2 and perused the pleadings, evidences and documents on record.
We have seen the application form submitted by Mr.Avijit Singh to M/s AVP Build Tech and also by Mrs. Madhu Singh. We have seen the allotment letter dated 05.12.2010 in which the opposite parties allotted apartment no A-603 ad measuring 1725 square feet in the project AVS Orchard, GH-03C, sector 77, Noida. The opposite party also acknowledged the payment of Rs.8,77,407/-. The cost of the unit has shown as Rs.3,000,017/-. Later on an agreement between the buyer and builder has been executed on 24 October 2010 regarding the said unit. Clause 8(i) of the said builder buyer agreement says, "the possession of the said apartment shall be delivered to the allottee (s) on or before June 2013. However, the time of possession shall be subject to the force majeure condition. (ii) the allottee(s) after taking possession of the said apartment or receiving demand possession, shall have no claim against the company in respect of any item or work in the said apartment, which may be said not have been carried out or completed or for non-compliance of any designs, specification, building material or for any other reason whatsoever".
Thus it is clear that the possession of the flat was to be given on or before June 2013. It means that the ultimate cut of date regarding delivery of possession of the unit is 01.07.2013. The complainant has filed the copy of the payment receipts. The complainant have submitted their evidence which is on record.
Before dealing with the judgment of the Supreme Court it is better to understand the object of The Consumer Protection Act 1986.
"The Consumer Protection Act, came into existence and implemented in 1986, provides Consumer Rights to prevent consumers from fraud or specified unfair practices. It safeguards and encourages and gives an opportunity to consumers to speak against insufficiency and flaws in goods and services. If traders, manufacturers and distributors follow any foul trade, this act protects their rights as a consumer.
This Consumer Protection Act covers entire goods and services of all sectors that are public, private, or cooperative sectors, except those exempted by the central government. The act provides a floor for a consumer where one can file their complaint against the product and the forum takes an action against the concerned supplier and compensation is granted to the consumer for the inconvenience he/she has encountered. The objectives of the consumer petition act may be summarised as -
To Provide better and all round protection to consumer.
To Provide machinery for the speedy redressal of the grievances.
To Create framework for consumers to seek redressal.
To Provide rights to consumers.
To Safeguarde rights of Consumers.
What are the rights of consumers ? Let us know more about the rights of consumer. Listed below are the Rights of the Consumer Right to Safety- Before buying, a consumer can examine on the quality and guarantee of the goods and opt for ISI or AGMARK products.
Right to Choose- Consumer must have the right to choose from a variety and number of goods and in a competitive price Right to be informed- The buyers must be provided with complete information with all the necessary and adequate details of the product, make her/him act wise, and change the buying decision.
Right to Consumer Education- The consumer must be aware of his/her rights and avoid exploitation.
Right to be heard- The consumer will get due attention to express their grievances at a suitable platform.
Right to seek compensation- The consumer has the right to seek or ask for redressal against unfair and inhumane practices or exploitation of the consumer.
We have seen in so many cases that the builder actually torture the allottees without any just cause because they earn interest on the deposited amount of the allottees and also invest the fund to their other projects. This tendency should be checked and to them, it should be made clear that in the event of not handing over the possession of the flat/land to the allottees they must bear the serious consequences in this regard.
The Bombay High Court in a landmark judgment recently told city police that cases where a developer or builder cheats his customers, must be considered as criminal offenses rather than civil suits. The statement by Justice Shahrukh Kathawalla came when he was hearing a case where a housing society has accused the builder of cheating. While slamming senior officers of the Malad police station for failure to file an FIR in the case, the justice said, "I have repeatedly recorded in my orders that the complaints filed by the public alleging that they have been cheated by the developer cannot be termed as disputes of a civil nature. Yet the police officials are not ready to assist the common man when they seek police assistance and instead show them the door by terming their complaints as being civil disputes."
The homebuyers of PanchsheelHynish in Noida Extension were taken by surprise when the builder asked them to pay an additional amount of Rs. 1,60,000 to initiate proceedings of possession from company's side. The builders' argument is that he has not availed the extra FAR being granted by the Noida Authority in lieu of additional compensation to the farmers. Another additional charge has been asked for the developers' own mistake to increase the size of the each apartment by 10 square feet, though without the buyers' consent.
"We are middle class homebuyers with limited resources but if I deny to pay this unjustified amount I will not get the possession and I may end up spending even more money in litigations. I feel indeed harassed and helpless in such a system where there is no justice against the builders' cheating," says a distressed homebuyer Chanda Sharma (name changed on request).
In Greater Noida Supertech constructed 1009 additional apartments with its project Czar over and above the sanctioned plans for 844 apartments. Worst part is that half of these unauthorised apartments were sold even though the Greater Noida Authority sent the builder show cause notice for the violation of rules. Earlier in a similar incident, Supertech added extra towers to its project Emerald Court in Noida and the court ordered its demolition. The matter is still pending before the Supreme Court.
Similarly, delayed possession and false promises have landed Amrapali Group in serious trouble as homebuyers cry foul, celebrity endorsements backing off and political connections deserting. A defiant Amrapali Group yet tries to blame the market slowdown and other factors but to self.
Amrapali Group CMD Dr. Anil Sharma says, "Sometimes there are so many unforeseen reasons. There are so many force majeure, which are beyond the control of a developer. So, during those periods construction is stopped for two years, three years, four years, five years. Those periods can't be contracted. There are two losses, one is time loss, other is finance loss. We are not burdening that finance loss to our esteemed customers, but time loss we can't make up. Ultimately, time loss has to be extended."
Then there are developers like Jaypee Group and Unitech which openly declare they have no funds to complete the projects. All that they assure to the buyers is that the buyers have no other option but to wait instead of delaying the process further by litigations. Gaursons is also facing the homebuyers' wrath today for delayed possession and unmet promises.
Mind it These are the instances of branded developers who command a premium in the North Indian markets. If one takes into account the lesser-known developers and very many fly-by-night operators then the picture would be even more scary. This raises a fundamental question as to whether the government authorities are blind over the blatant cheating by these developers or there is something more than what meets the eyes.
After all, the developers have not only trapped the homebuyers but also duped the development authorities of Noida, Greater Noida and Yamuna Expressway. In more than 100 real estate projects the developers like ATS, Supertech, Unitech, Orris, Omaxe and Logix have defaulted on payment of land cost to the government in Noida, Greater Noida and Yamuna Expressway areas. The amount is staggering Rs. 10,000 crore.
Even the homebuyers who have succumbed to pay the additional demands after full & final payment to the builders are not safe either. In many of the cases the developers have not deposited the Lease Rent amount collected from the buyers to the authorities. And hence, the registration of the apartment is not possible. The developers, on their part, are asking the homebuyers to take possession by signing an arbitrary undertaking to the developers.
The declaration that the homebuyers are forced to sign is not only arbitrary but also illegal in many cases, as it prima facie absolves the developer against any responsibility and puts the entire blame of unauthorised possession on the buyers.
Cheating, misrepresentation, fraud have become an integral part on behalf of the builders/droppers and the easy victims are the buyer. Consumer Protection Act 1986 have been brought to provide the SPD justice to the consumers against the cheating and fraud of the service providers. They are making is a money by earning interest on the deposits of first by the buyers. The present case is one such example where the buyer is being treated for years and the builder is making money on his deposits.
The aim of any act forms the indispensable element, because it acts as the cord that delivers the real intention of the legislators behind the Act. Whenever there is clash between two legislations, it is the aim of the legislation which makes the judges to derive at the endpoint in deciding which law has the superseding effect. It is through the doctrine of pith and substance that judges are able to derive at the major inclination towards one act over another act. This inclination is decided on the basis of the aim/goal of the act and the facts of that particular case."
Hon'ble Supreme Court in a case has held that if there is no clause regarding delivery of possession in the allotment letter or in the builder buyer agreement, it is reasonable to fix a time limit of three years to deliver the possession of the plot/flat/unit to the consumer.
Hon'ble Supreme Court in civil appeal number (S) 3533-3534 of 2017, M/s Fortune infrastructure (NOW known as M/S Hicon Infrastructure) &Anr.Vs TrevorD'Lima&Ors , Judgment 12.03.2018 has held:
"Moreover, a person cannot be made to wait indefinitely for the possession of the flats allotted to them and they are entitled to seek the refund of the amount paid by them, along with compensation. Although we are aware of the fact that when there was no delivery period stipulated in the agreement, a reasonable time has to be taken into consideration. In the facts and circumstances of this case, a time period of 3 years would have been reasonable for completion of the contract i.e., the possession was required to be given by last quarter of 2014. Further there is no dispute as to the fact that until now there is no redevelopment of the property. Hence, in view of the above discussion, which draw us to an irresistible conclusion that there is deficiency of service on the part of the appellants and accordingly the issue is answered. When once this Court comes to the conclusion that, there is deficiency of services, then the question is what compensation the respondents/complainants is entitled to ?"
Clause 8(i) of the builder buyer agreementsays "the possession of the said apartment shall be delivered to the allottee(s) on or before June 2013. However, the time of possession shall be subject to the force majeure condition."
So in this agreement it has clearly been mentioned that the possession of the unit shall be delivered by June 2013. It means that in all circumstances the possession should have been delivered by June 213. So all the reliefs claimed by the complainant shall come into force from 01.07.2013 . For the reliefs et cetera this date shall be considered as the beginning date.
Now we come to see the status of completion and occupancy certificate. These certificates are necessary regarding completion and delivery of possessionof a proteolytic to the consumer. In this case there is no Completion or Occupancy Certificate. Let us see the importance of these certificates.
COMPLETION / OCCUPANCY CERTIFICATE When buying a home, it is vital to obtain documents, such as the Occupancy Certificate (OC) and Completion Certificate (CC). These are essential documents that allow you to mortgage or sell your home. Hence, homebuyers are advised to take possession of their flat or property only after these documents have been issued.
According to Vikas Bhasin, CMD, Saya Group, "Completion Certificate and Occupancy Certificate are some of the most important documents for a home buyer. Civic authorities can evict the occupants in case of non-availability of the necessary approvals. Before investing in a property, people must be doubly assured that all the certificates and approvals are in place."
Let us dive a little deeper into the details of these documents and their importance before you make a move to buy your dream home.
Owning a home is the culmination of years of savings, research, and paperwork. After patiently waiting for the construction to be complete, you finally register the property and take possession of your flat. But what if your dream home is declared unauthorised, and you are evicted by the authorities? This is not as far-fetched as it sounds. This nightmare could turn into reality without a crucial link in the property sale process - the Occupancy Certificate (OC).
The majority of apartments in different Indian cities have been occupied by owners without any occupancy certificate. This oversight can turn into a costly mistake, jeopardising the legal status of your dream home. The importance of the occupancy certificate cannot be overstated as it seals the legal status of your property and protects your ownership rights.
Decoding legal documents To understand the importance of an occupancy certificate and other legal documents, let's decode the legal jargon and understand their meaning in simple terms. Here's a ready reckoner of the most important legal documents related to your property:
Occupancy Certificate An OC certifies that the construction of the building has complied with the approved plans. It is issued by local municipal authorities or the building proposal department once the building has been completed and is ready to be occupied. Simply put, without an OC, your building has not been awarded a 'pass certificate'.
Completion Certificate A Completion Certificate (CC) is issued only after the construction meets other building standards like distance from the road, the height of the building, and rainwater harvesting system. A CC alone cannot legalise occupation; the OC is a must.
Commencement Certificate If you are buying an under construction property, make sure you check the Commencement Certificate before signing the agreement. Many builders do not wait for a Commencement Certificate. This is illegal and can create serious problems in obtaining an OC at a subsequent stage.
Why is it unsafe to buy a flat without OC?
In the absence of a valid OC, the local municipal body can initiate serious action against flat owners. In 2014, residents of a well-known building complex in Mumbai's upscale Worli area were hit with a bolt from the blue after their complex was declared unauthorised. At the time of possession, buyers overlooked the issuance of an OC from the builder. It was only after that they were forced to evacuate their flats that the writing on the wall became clear to them.
This is just one instance, and if buyers are not careful about getting the OC, they may face the following repercussions:
• In the absence of a valid OC, your building can be demolished as it can be classified as an unauthorised structure.
• The OC is crucial while applying for a home loan or loan to purchase a resale flat. If you wish to sell or hypothecate the property after a lapse of time, you will not be able to do so without a valid OC.
• The water connection, sanitary connection or electricity supply can be disconnected in the absence of an OC.
How to obtain an OC The OC is obtained from local municipal bodies by submitting an OC application form along with the following documents:
• Commencement Certificate • Completion Certificate • Built and Section plan • NOC for fire and pollution • Area calculation sheet of floor signed by an authorised architect • Photographs of the completed building • Tax assessment with tax paid receipt • Photographs of rain harvesting and solar panels • Copy of the sanctioned plan After submitting the form, authorities inspect the complex and confirm if it has conformed to the approved plan before issuing an OC. Legally and ideally, a builder should submit an application with the municipal commissioner for the OC within 30 days of completion of the property.
How you can apply for an OC As a flat owner, you can also apply for an OC by approaching the local corporation or municipality, and if all approvals are in place, an OC is issued within 30 days of application. You will have to submit the same documents as the builder to procure an OC.
Know your rights If the builder refuses to provide an OC, you should consider exercising your legal rights. You can issue a notice against the builder asking him to apply and hand over the copy of the OC within a month. You can also approach consumer forums and file a writ petition demanding the OC.
Some canny builders simply present the receipt of the OC and dupe gullible customers. But you shouldn't accept anything less than the actual OC as the receipt may be dated.
Landmark legislations like the Real Estate Regulatory Act (RERA) have been passed to regulate the sector, promote transparency and protect consumer rights. However, consumers must be vigilant and understand their rights and responsibilities towards owning a property. Documents like OC are essential and ensure the security of your investment.
Going forward, real estate experts believe that the OC should be made mandatory for the registration of flats and essential services. Until then, buyers must ensure builders get all the necessary approvals before handing over a property.
A Completion Certificate (CC) is an important legal document that certifies that a building is constructed according to the laid down norms and master plan of the city. This document has all the information related to the project, such as the building materials used, building height, and building plan, among other things like provision for green belt.
In a nutshell, this document certifies that the building adheres to all the prevailing rules and has not violated any norms. In fact, this document is to be shown compulsorily to the authorities to obtain electricity and water connection.
Builders are allowed to obtain a provisional Completion Certificate when there are minor works left in the project. Authorities then provide a provisional certificate valid for six months. After the expiry of the six months, the developer is bound to get a final CC.
Who issues a Completion Certificate?
Local authorities issue the Completion Certificate after a thorough inspection of the premises. If the developer violates no rules, authority issues a Completion Certificate.
Why is Completion Certificate important?
Buyers must be aware of the fact that if they are buying or moving into a property that does not have a Completion Certificate, they might be making a risky investment choice. The civic authorities hold the power to slap heavy penalties on the developer, leading to stalling or cancellation of the registered layout of the project. In case the building is already occupied, residents may also have to face eviction in extreme cases.
Difference between Occupancy Certificate and Completion Certificate Occupancy Certificate examines and certifies a property for adherence to bye-laws, civic amenities, electricity, sanitation and other clearances. On the other hand, a Completion Certificate is a document that certifies that a property is fit for possession by the buyers.
Clarifying the difference, Deepak Kapoor, Director, Gulshan Homz, says, "Completion Certificate is just a reaffirmation that the building has been constructed as per the building byelaws and the layout plan has been approved by various concerned authorities. Occupation Certificate signals that there is no violation of building construction norms, and thus, the structure is safe for occupants.
Generally, these documents are not required at the time of registry, and hence, buyers tend to overlook or ignore these. But for their own benefit and peace of mind, it is warranted that buyers of both ready-to-move-in as well as under-construction properties check these documents before taking possession. This would help avoid any unnecessary dispute or confrontation in the future."
Regarding occupancy certificate the Hon'ble Supreme Court has held in the case;
"In the present case, the respondent (builder) 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 occupancy certificate is a deficiency in service for which the respondent is liable," a bench of Justices D.Y. Chandrachud and A.S. Bopanna said.
"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 added.
An occupancy certificate, issued by the local authorities, certifies that a building is fit for occupation and has been constructed as per the approved plan and in compliance with local laws. It is required to apply for water, sanitation and electricity connections.
[Samruddhi Co-operative Housing Society Ltd v. Mumbai Mahalaxmi Construction Pvt. Ltd, 2022 SCC OnLine SC 35, decided on 11.01.2022] We have seen the annexures of the opposite parties. One is of Hon'ble High Court order but the copy is not legible one. It is some civil misc writ petition no.50190 /2014 . The first on the matter was that this writ petition beconnectd with writ petition number 63290 of 2012 on 17th September 2014. When we searched it on the Allahabad High Court website, on 14.12.2018, this writ petition was dismissed as withdrawn. We do not find any stay order in this writ petition. The opposite parties have not filed any order of any superior court showing the stay order on this project. The possession of the unit was to be handed over on or before June 2013. No details of any force majeure has been filed by the opposite party. So in this case it has become clear that the opposite parties failed to construct and deliver the possession of the allotted unit to the complainant within a short time which shows unfair trade practice and deficiency in service on the part of the opposite parties.
Now we come the point regarding award of compensation and damages in different heads to the complainant. Before going for it, we have to see the following judgment of Hon'ble Supreme Court and Hon'ble NCDRC.
In R V Prasannakumaar v. Mantri Castles Pvt Ltd., 2019 SCC On Line SC 224, under the terms of the ABA, possession of the flats was to be handed over to the buyers on 31 January 2014. However, the developer received an occupation certificate only on 10 February 2016 and it was thereafter from May 2016 that the developer started issuing letters offering possession. Based on this, the NCDRC awarded compensation in the form of interest at the rate of 6 per cent per annum. The developer had pleaded that since the agreement provided compensation at the rate of Rs.3 per square foot per month for delayed possession, the purchasers were not entitled to anything in addition. Dealing with the submission, this Court observed:
"9. We are in agreement with the view of the NCDRC that the rate which has been stipulated by the developer, of compensation at the rate of Rs.3 per sq. ft. per month does not provide just or reasonable recompense to a flat buyer who has invested money and has not been handed over possession as on the stipulated date of 31 January 2014. To take a simple illustration, a flat buyer with an agreement of a flat measuring 1000 sq. ft. would receive, under the agreement, not more than Rs. 3000/- per month. This in a city such as Bangalore does not provide just or adequate compensation. The jurisdiction of the NCDRC to award just compensation under the provisions of the Consumer Protection Act, 1986 cannot in the circumstances be constrained by the terms of the agreement. The agreement in its view is one sided and does not provide sufficient recompense to the flat purchasers."
The Court observed that there was a delay of two years and hence the award of interest at the rate of 6 per cent was reasonable and justified.
In Pioneer Urban Land and Infrastructure Limited v. Govindan Raghavan, (2019) 5 SCC 725, there was a delay of almost two years in obtaining an occupancy certificate after the date stipulated in the ABA. As a consequence, there was a failure to provide possession of the flat to the purchaser within a reasonable period. This Court dwelt on the terms of the ABA under which the builder was entitled to charge interest at 18 per cent per annum for the delay in payment of instalments by the purchaser. On the other hand, the failure to provide possession on the part of the developer was subject to a grace period of twelve months followed by a termination notice of ninety days and a further period of ninety days to the developer to effect a refund. Adverting to these clauses, the court noted:
"6.4. A perusal of the apartment buyer's agreement dated 8-5- 2012 reveals stark incongruities between the remedies available to both the parties. For instance, Clause 6.4(ii) of the agreement entitles the appellant builder to charge interest @18% p.a. on account of any delay in payment of instalments from the respondent flat purchaser. Clause 6.4(iii) of the agreement entitles the appellant builder to cancel the allotment and terminate the agreement, if any instalment remains in arrears for more than 30 days. On the other hand, as per Clause 11.5 of the agreement, if the appellant builder fails to deliver possession of the apartment within the stipulated period, the respondent flat purchaser has to wait for a period of 12 months after the end of the grace period, before serving a termination notice of 90 days on the appellant builder, and even thereafter, the appellant builder gets 90 days to refund only the actual instalment paid by the respondent flat purchaser, after adjusting the taxes paid, interest and penalty on delayed payments. In case of any delay thereafter, the appellant builder is liable to pay interest @9% p.a. only. 6.5. Another instance is Clause 23.4 of the agreement which entitles the appellant builder to serve a termination notice upon the respondent flat purchaser for breach of any contractual obligation. If the respondent flat purchaser fails to rectify the default within 30 days of the termination notice, then the agreement automatically stands cancelled, and the appellant builder has the right to forfeit the entire amount of earnest money towards liquidated damages. On the other hand, as per Clause 11.5(v) of the agreement, if the respondent flat purchaser fails to exercise his right of termination within the time limit provided in Clause 11.5, then he shall not be entitled to terminate the agreement thereafter, and shall be bound by the provisions of the agreement."
Justice Indu Malhotra speaking for the Court noted:
"6.8. A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder. The contractual terms of the agreement dated 8-5-2012 are ex facie one-sided, unfair and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2(1)(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the builder." The Court observed that in these circumstances, the flat purchasers could not be compelled to obtain possession which was offered almost two years after the grace period under the agreement had expired. Hence, the NCDRC was held to have correctly awarded interest at the rate of 10 percent per annum.
The decision of this Court in Dhanda Case 2019 SCC On Line SC 689 has been relied upon by learned Senior Counsel appearing on behalf of the developer as elucidating the principle that where a flat buyers agreement stipulates a consequence for delayed possession, exceptional and strong reasons must be established before the forum constituted under the Act of 1986 awards compensation in addition to what has been contractually agreed. In Dhanda's case, the SCDRC issued a direction for handing over physical possession of the residential unit to the complainant and for execution of a sale deed. In addition, compensation was awarded by way of interest at the rate of 12 per cent per annum with effect from twelve months after the stipulated date under the agreement. In an appeal by the developer, the NCDRC directed that the rate of interest for a house building loan for the corresponding period in a scheduled nationalised bank would be appropriate and if a floating rate of interest was prescribed, the higher rate of interest should be taken for the computation. A sum of Rs. 1 lac per annum from the date for handing over possession to the actual date of possession was regarded as appropriate in the facts of the case. In that case under the terms of the buyer's agreements, possession was to be delivered within twenty-four months of the execution of the agreement i.e. 10 February 2013 - failing which the developer was liable to pay compensation at the rate of Rs.10 per square foot per month for the delay. The developer contended that construction activities were delayed as a result of an injunction granted by this Court over a period of eight months and consequently sought an extension of the period for handing over possession by one year. Alternatively, the developer offered to refund the money deposited with interest at 9 per cent per annum. Construction of 258 independent floors was completed while about 1,500 units were nearing completion. In two sets of Civil Appeals which came up before this Court earlier, agreed terms were arrived at providing for the award of interest at 9 per cent per annum from the date of deposit till refund. While considering the order of the NCDRC, this Court observed:
"16. The District Forum under the Consumer Protection Act, 1986 is empowered inter-alia to order the opposite party to pay such amount as may be awarded as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party including to grant punitive damages. But the forums under the Act cannot award interest and/or compensation by applying rule of thumb. The order to grant interest at the maximum of rate of interest charged by nationalised bank for advancing home loan is arbitrary and no nexus with the default committed. The appellant has agreed to deliver constructed flats. For delay in handing over possession, the consumer is entitled to the consequences agreed at the time of executing buyer's agreement. There cannot be multiple heads to grant of damages and interest when the parties have agreed for payment of damages at the rate of Rs. 10/- per sq. ft. per month. Once the parties agreed for a particular consequence of delay in handing over of possession then, there has to be exceptional and strong reasons for the SCDRC/NCDRC to award compensation at more than the agreed rate."
Now the interest may be 6% to 10% in favour of the allottees if they have not been given possession of the flat/plot within promised or within a reasonable time. The complainant has deposited the entire agreed cost of ₹ 2,997,610/- up to 1st June 2014. Now it is the duty and obligation of the opposite party to deliver the possession within stipulated time but they failed to do so.
In the case of Priyanka PRIYANKA MITTAL & ANR. V. PARSVNATH DEVELOPERS LTD. & ANR. (NCDRC).These appeals arise out of single order of State Commission, hence, decided by common order. These appeals have been filed against the order dated 25.2.2015 in Complaint Nos. 18 of 2013- Nalin Bhargava &Anr. Vs. Parsvnath Developers Ltd. &Anr.; 34 of 2013- Jasleen Viswanathan &Anr. Vs. Parsvnath Developers Ltd. &Anr; 58 of 2011- Janmejai Mani Tiwari Vs. Parsvnath Developers Ltd. &Anr; 68 of 2013- Indu Singh Vs. Parsvnath Developers Ltd. &Anr.; 69 of 2013- Poonam Sagar Vs. Parsvnath Developers Ltd. &Anr.; 86 of 2010- Priyanka Mittal &Anr. Vs. Parsvnath Developers Ltd. &Anr.; 101 of 2011- Mohd. Aslam Khan &Anr. Vs. Parsvnath Developers Ltd. &Anr.; 130 of 2012- Dr. Sunil Kr. Singh &Anr. Vs. Parsvnath Developers Ltd. &Anr; 49 of 2012- Neera Mittal &Anr. Vs. Parsvnath Developers Ltd. &Anr; , 74 of 2011- Deepak Bhalla Vs. Parsvnath Developers Ltd. &Anr. ; 87 of 2010- Syed Gufran Ali Alvi&Anr. Vs. Parsvnath Developers Ltd. &Anr.; 96 of 2011- Uppasana Malik Vs. Parsvnath Developers Ltd. &Anr.; 175 of 20130- Umesh Chandra Dixit &Anr. Vs. ParsvnathDevelopers ;byLtd. &Anr.; 97 of 2011- Pravin Kumar Goel &Anr. Vs. Parsvnath Developers Ltd. &Anr. which complaints were partly allowed.
The Hon'ble NCDRC held that:
"Brief facts of the cases are that opposite parties/respondents are engaged in the activity of housing construction and accordingly they have launched a project named as Parsvnath Planet situated in Gomti Nagar, Lucknow. The project was demonstrated to be very lucrative and made attractive to the vendees, in order to procure/collect money from the needy persons demonstrating themselves to be excellence in the field of construction activity as compared to other builders and assured the buyers/complainants that it has been duly approved by the Lucknow Development Authority and necessary permission has also been obtained from them. The emphasis was made by the opposite parties that the possession of the Unit shall be given within a scheduled period of 36+6=42 months stipulated in agreements executed in between the parties for the project launched in the year 2006. The complainants/appellants attracted by the promise and assurance of the opposite parties, somehow managed and arranged the money from their personal sources as well as on loan at attractive rate of interest and the hard earned money was paid by them to the opposite parties in a hope that the possession of the units shall be provided to them in the year 2009 and they can leave peacefully in their own houses, since the complainants are living in rented houses. The complainants visited the construction site of the opposite parties after depositing the entire amount, where it was revealed that the construction activities were on halt and the persons available on the site told the complainants that the apartments are likely to be completed till 2015. Even the partial construction done by the opposite parties was defective and did not match the specifications provided in the agreement. The complainants were shocked on hearing it and observing the site. The complainants immediately contacted the Area Manager, who told the complainants that there is some delay in the construction of the apartment and the apartments shall be ready till June, 2010. The complainants have to repay the amount taken on loan alongwith interest without getting the possession of the allotted units causing irreparable loss and injury to them. The complainants have come to know that the opposite parties have invested the funds earmarked for this project into their other projects in other city due to which they have not been able to complete the project in time. Besides this, it has also come to the light that although the opposite parties had collected huge funds from the buyers but in spite of that the opposite parties have miserably failed to pay the dues of Lucknow Development Authority which forced the Lucknow Development Authority to issue coercive measures against the opposite parties for the recovery of their dues. Alleging deficiency on the part of opposite parties/ respondents, complainants filed separate complaints before State Commission. Aggrieved by the order of Hon'ble State Commission, these appeals preferred before Hon'ble National Consumer Disputes Redressal Commission .
Hon'ble NCDRC discussed various case laws and after hearing the parties held, "Learned Counsel for appellants submitted that as complainants have been deprived of possession for a long period beyond agreed period, it amounts to restrictive trade practice under Section 2 (nnn) of Consumer Protection Act and complainants are entitled to get compensation. Section 2 (nnn) runs as under:- means a trade practice which tends to bring about restrictive trade practice manipulation of price or its conditions of delivery or to affect flow of supplies in the market relating to goods or services in such a manner as to impose on the consumers unjustified costs or restrictions and shall include- Delay beyond the period agreed to by a trader in supply of such goods or in providing the services which has led or is likely to lead to rise in the price; Any trade practice which requires a consumer to buy, hire or avail of any goods, or, as the case may be, services as condition precedent to buying, hiring or availing of other goods or services; Perusal of aforesaid provision reveals that when opposite party delays in delivery of goods which leads to rise in the price of goods meaning thereby, more price is charged from complainant, it amounts to restrictive trade practice. In the case in hand, opposite party on account of delayed delivery of possession is not charging higher rate than the agreed rate for delivery of possession of flat, so, it does not fall within the purview of restrictive trade practice under Section 2(nnn) of Consumer Protection Act. Admittedly, agreements were executed in 2006 and as per agreements, possession of flats was to be delivered within 42 months, meaning thereby, possession was to be given in the year 2009-2010 and possession has not been handed over so far though year 2016 has started. No doubt, complainants are entitled to get penalty amount for delayed delivery of possession as per clause 10 ( c) of the agreement but opposite party cannot be permitted to avail benefit of aforesaid clause for indefinite period. This penalty clause should be allowed for the benefit of parties for a limited period and in the cases in hand, I deem it appropriate to extend applicability of aforesaid clause for a period of one year beyond 42 months and after that, complainants are certainly entitled to compensation. Opposite party cannot be allowed to avail huge funds of complainants by paying merely Rs. 5/- per sq. ft. for example, complainants who have purchased flat measuring 164.901 sq. mtr., they have made payment of about Rs. 31.00 to 32 lakhs and in the garb of clause 10 (c), opposite party is paying penalty @ approximately Rs. 9,000/- per month against enjoying funds more than Rs. 30.00 lakhs. As complainants have been deprived to shift to their flats for a long period which would not only have given them satisfaction of living in their own house but also have raised their social status and opposite party has enjoyed funds of complainants for a long period, I deem it appropriate to allow compensation @ Rs. 15,000/- p.m. to the complainants who have applied for flats upto 175 sq. mtr and Rs. 20,000/- per month to complainants who have applied for flats above 175 sq. after 54 months of execution of agreement till delivery of possession.
Against this judgment, parties went to Hon'ble Supreme Court. The judgment of Hon'ble Supreme Court is:-
In Nalin Bhargava vs Parsvnath Developers Ltd. CA 6662/2018 @ SLP(C) 7596/2016 etc and other related civil appeals on 13 July, 2018 , Hon'ble Supreme Court held:-
"Leave granted in all the special leave petitions.CA 6662/2018 @ SLP(C) 7596/2016 etc. It is submitted by Mr. M.L. Lahoty, learned counsel appearing for the appellants in all the appeals that the possession has been handed over and the deficiencies have been removed and, therefore, he has no grievance. However, Mr. Lahoty would insist that there should be imposition of costs as compensation.
Mr. Sachin Datta, learned senior counsel appearing for the developer has raised objections with regard to imposition of costs.
Having heard learned counsel for the parties, we are of the considered opinion that the cause of justice would be best subserved if each of the appellants in the present appeals are given Rs.1,50,000/- (Rupees one lakh fifty thousand only) per flat, towards costs. When we say "cost", we mean costs alone and nothing else."
In the case of Kolkata West International City Pvt. Ltd. Vs. DevasisRudra[Civil Appeal No. 3182 of 2019 @ SLP (C) No(S). 1795 of 2017] judgement delivered on 25.03.2019 , the Hon'ble Supreme Court has held:-
"Interestingly, where the buyer is in default, the agreement stipulates that interest at the rate of 18 per cent from the date of default until the date of payment would be charged for a period of two months, failing which the allotment would be cancelled by deducting 5% of the entire value of the property. The agreement was evidently one sided. For a default on the part of the buyer, interest at the rate of 18% was liable to be charged. However, a default on the part of the developer in handing over possession would make him liable to pay interest only at the savings bank rate prescribed by the SBI. There is merit in the submission which has been urged by the buyer that the agreement was one sided.
In the Case ofWg. Cdr. Arifur Rahman Khan and Aleya Sultana and Ors. Versus DLF Southern Homes Pvt. Ltd (now Known as BEGUR OMR Homes Pvt. Ltd.) and Ors. (Civil Appeal No. 6239 of 2019 With Civil Appeal No. 6303 of 2019); The Hon'ble Supreme Court has held:-
"24. A failure of the developer to comply with the contractual obligation to provide the flat to a flat purchaser within a contractually stipulated period amounts to a deficiency. There is a fault, shortcoming or inadequacy in the nature and manner of performance which has been undertaken to be performed in pursuance of the contract in relation to the service. The expression "service" in Section 2 (1) (o) means a service of any description which is made available to potential users including the provision of facilities in connection with (among other things) housing construction. Under Section 14(1)(e), the jurisdiction of the consumer forum extends to directing the opposite party inter alia to remove the deficiency in the service in question. Intrinsic to the jurisdiction which has been conferred to direct the removal of a deficiency in service is the provision of compensation as a measure of restitution to a flat buyer for the delay which has been occasioned by the developer beyond the period within which possession was to be handed over to the purchaser. Flat purchasers suffer agony and harassment, as a result of the default of the developer. Flat purchasers make legitimate assessments in regard to the future course of their lives based on the flat which has been purchased being available for use and occupation. These legitimate expectations are belied when the developer as in the present case is guilty of a delay of years in the fulfillment of a contractual obligation. To uphold the contention of the developer that the flat buyer is constrained by the terms of the agreed rate irrespective of the nature or extent of delay would result in a miscarriage of justice. Undoubtedly, as this court held in Dhanda, courts ordinarily would hold parties down to a contractual bargain. Equally the court cannot be oblivious to the one-sided nature of ABAs which are drafted by and to protect the interest of the developer. Parliament consciously designed remedies in the CP Act 1986 to protect consumers. Where, as in the present case, there has been a gross delay in the handing over of possession beyond the contractually stipulated debt, we are clearly of the view that the jurisdiction of the consumer forum to award just and reasonable compensation as an incident of its power to direct the removal of a deficiency in service is not constrained by the terms of a rate which is prescribed in an unfair bargain."
These builders are just earning money from the consumers to whom they issued allotment letters and got a huge amount. They keep this amount for a long time and earn interest on it. Property dealing is that part of business where they never pay a penny to the consumers on their amounts deposited for a long-term or if they pay, they pay a meagre interest of about 5% or so but they charge 18 to 24% or more if the consumers default in depositing any instalment. It reminds us the story of "The Merchant of Venice" The Merchant of Venice is the story of a Jewish money lender Shylock who demands that an antisemitic Christian offer "a pound of flesh" as collateral against a loan. These acts of builders also remind us the age of Sahukari during ancient India and also during British Raj. Whether these builders have power to frame their own law? They put their terms and conditions in such a way that the sufferer will always be the consumer. The Consumer Protection Act 1986 has been enacted for the benefits of consumers, so the courts dealing with Consumer Protection Act 1986 should come forward for their rescue. The courts are not governed by the builders but they are governed by the law, Custom and Usages. Now in the background of all the facts and also the facts of the present case, we will also discuss something more.
As far as interest is concerned the following judgement of the Hon'ble Supreme Court is worth mentioning:
In the Supreme Court of India Name of the Case Ghaziabad Development Authority v. Balbir Singh Citation (2004) 4 SCC 65 Year of the Case 2004 Petitioner Ghaziabad Development Authority Respondent Balbir Singh Bench/Judges Justice H. K. Sema Justice S.N. Variava Acts Involved Consumer Protection Act, 1986 Important Sections Section 14 of the Consumer Protection Act, 1986 Section 22 of the Consumer Protection Act, 1986 The case of Ghaziabad Development Authority v Balbir Singh is a landmark decision that laid down certain judicial standards regarding the grounds on which compensation may be awarded, particularly, in matters of allotment of flats/plots by land development authorities. Compensation under consumer protection laws is required to recompense for loss or injury suffered by consumers, and therefore, the quantum of compensation to be awarded would necessarily have to be determined based on the facts and circumstances of each case. This decision set an established precedent on the issue of compensation to be awarded in consumer disputes, and its principles have been relied upon in numerous subsequent cases.
Introduction The consumer protection laws establish a redressal mechanism whereby consumers can claim monetary reliefs for defective goods, deficiency in service, and unfair trade practices. Sections 14 and 22 of the Consumer Protection Act, 1986 empower the District, State, and National Consumer Disputes Redressal Commission to "to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party". Such monetary reliefs i.e., compensation awarded would have to be based on the facts and circumstances of each case, since the loss and injury suffered would vary. Given the absence of a straight-jacket formula for the determination of the amount of compensation to be awarded in each case, it follows that there can be no uniformity in the award of compensation.
It is for the Consumer Forum to grant compensation to the extent it finds it reasonable, fair, and proper in the facts and circumstances of a given case according to the established judicial standards where the claimant can establish his charge.[1] These 'established judicial standards' have been laid down in a plethora of cases. The case of Ghaziabad Development Authority v Balbir Singh[2] is a landmark decision that discussed the grounds on which compensation may be awarded, particularly, in matters of allotment of flats/plots by land development authorities. It set an established precedent on the issue of compensation to be awarded in consumer disputes, and its principles have been relied upon in numerous subsequent cases.
Background and Facts of the Case The present case of Ghaziabad Development Authority v Balbir Singh arose out of an appeal directed against the judgment and award passed by the National Consumer Disputes Redressal Commission (NCDRC) awarding an interest @ 18% per annum. The Commission was considering a bunch of matters, the lead being the case of Haryana Urban Development Authority vs. Darsh Kumar, where it held that in cases of deficiency of service by development authorities, the rate of interest awarded must be 18% per annum. Following this, the Commission disposed of subsequent matters by its preceding award. Numerous appeals were filed before the Supreme Court against the decision of the Commission in various cases, primarily against its award of 18% interest.
Since the Supreme Court was considering a wide number of matters relating to allotment of land by development authorities, the facts of each case vary. In some cases, the scheme had gotten canceled after the payment of monies and allotment of flats/plots. Delivery of possession of the flats was therefore refused to the allottees. In some cases, either possession was offered at an increased rate at a much later date possession or was offered but not taken by the party. Possession was not delivered in some cases despite payment of monies and no refusal to deliver possession. In some cases, the construction was of sub-standard quality or it was incomplete, or the authority demanded extra amounts from the party which was paid only by some. In some cases, allotments were made and possession offered of flats/land which was encumbered or occupied by some other party The appeal in the Supreme Court was filed due to the Commission granting interest at the rate of 18% per annum irrespective of the type of case or amount of delay and without even going into the facts of the case. Complainants had asked for the refund of amounts wrongly collected and in other cases, asked for a refund of the amounts paid.
Issues Involved Whether the grant of interest at the rate of 18% per annum by the National Consumer Disputes Redressal Commission in all cases is justifiable?
Related Provisions Section 14 of the Consumer Protection Act, 1986 Section 22 of the Consumer Protection Act, 1986 Related Cases The Supreme Court relied upon the case of Lucknow Development Authority v. M. K. Gupta[3] which firstly widened the scope of "service" defined under Section 2(1)(o) of the Consumer Protection Act, 1986 to include the housing construction or building activities carried on by private or statutory bodies.
The Court relied upon the English case Geddis v. Proprietors of Bann Reservoir[4] which gave a wide connotation to the word compensation, holding that "Compensation has not been defined in the Act. According to the dictionary, it means, 'compensating or being compensated; thing given as recompense;'. In a legal sense, it may constitute actual loss or expected loss and may extend to physical mental or even emotional suffering, insult or injury or loss."
Judgment The Supreme Court, at the outset, reiterated the position taken in the case of Lucknow Development Authority v. M.K. Gupta, and held that "the Consumer Protection Act has a wide reach and the Commission has jurisdiction even in cases of service rendered by statutory and public authorities". It further held that the power of the NCDRC extends to awarding compensation to consumers for misfeasance in the public office i.e. an act which is oppressive or capricious or arbitrary or negligent provided loss or injury is suffered by a citizen. Therefore, it upheld the appeals filed before it to the extent that it confirmed the jurisdiction of the NCDRC to award compensation in cases of service rendered by statutory & public authorities (the land development authorities in the present case).
As to the issue of whether the grant of interest at the rate of 18% per annum by the NCDRC in all cases is justifiable, the Supreme Court held in the negative. It stated that "the power to and duty to award compensation does not mean that irrespective of facts of the case compensation can be awarded in all matters at a uniform rate of 18% per annum." It held it to be unsustainable. The Court further stated that the "Award of compensation must be under different separate heads and must vary from case to case depending on the facts of each case." The purpose of awarding compensation is to recompense for a loss or injury suffered and such compensation would therefore be proportional to the amount of loss and injury.
While considering the compensation to be awarded to the consumers in cases of deficiency of service by Development Authorities, the Court laid down a range of principles for the determination of the amount of compensation, summarised below:
To award compensation, the Forum or the Commission must determine that service has been deficient and/or misfeasance in public office which has resulted in loss or injury. While no hard and fast rule can be laid down, the Court gave a few instances where the award of compensation would be justifiable, including where possession is not handed over within the intimated period even though allotment is made and the price is paid. In such cases, the loss could be determined based on loss of rent which could have been earned if possession was given. Compensation could also be the scheme has been canceled without any justifiable cause, after the allotment.
Compensation cannot be uniform and to illustrate this, the Court lays down the principle to be followed for the determination of compensation in two cases- - (a) where the delivery of possession is being directed, and (b) where only the monies are directed to be returned or refunded by the Court. In case (a), the compensation for harassment will necessarily have to be less since in a way the aggrieved party is being compensated by an increase in the value of the property he is getting. In case (b) however, the party is suffering a greater loss since he has been deprived of the flat/plot, and his expectation of delivery of possession. He would also be denied the benefit of an increase in the value of land and the compensation thereof. Therefore, the compensation to be awarded in such cases would have to be higher than in case (a).
The Court held that "such compensation has to be worked out after looking into the facts of each case and after determining what is the amount of harassment/loss which has been caused to the consumer."
Compensation would include compensation for physical, mental, or even emotional suffering, insult, or injury or loss.
Awarding of Compensation in the Event of Deficiency in Service Rendered The consumer protection laws have a wide reach and the consumers are entitled to receive compensation for deficiency in services rendered by statutory and public authorities. The Consumer Commissions have been vested with the jurisdiction to award the value of goods or services and compensation. On being satisfied that a complainant is entitled to compensation for loss or injury or harassment or mental agony or oppression, it must direct the authority to pay compensation. A wide discretion has been given to determine the quantum of compensation for any loss or damage suffered by a consumer, to redress any injustice. However, it is a well-established principle that the computation of compensation has to be fair, reasonable, and must reconcile with the loss or injury suffered. The Consumer Forum is cast with the duty to take into account all relevant factors for arriving at the compensation to be paid.
This landmark decision has set a precedent on the matter of compensation to be awarded in matters relating to allotment of land by development authorities and has been relied upon in many subsequent cases of the Supreme Court. In the case of H. P. Housing Board v Varinder Kumar Garg[5] and Haryana Urban Development Authority vs Darsh Kumar[6], the Supreme Court directed the Commission to follow the principles laid down in the case of Ghaziabad Development Authority vs. Balbir Singh in future cases.
Conclusion This landmark decision laid down rudimentary principles and set judicial standards concerning the awarding of compensation and the determination of the quantum of compensation to be awarded. It struck down the mechanical application of a fixed rate of interest at 18% per annum by the National Commission in numerous cases, asserting that there can be no hard and fast rule.
The principles enunciated go a long way in ensuring that consumers are compensated appropriately and proportionally for the loss and injury suffered. This decision has further strengthened the consumer protection laws by bringing clarity to how the consumer is required to award compensation.
References Indian Kanoon https://indiankanoon.org/ Consumer Protection Act, 1986 http://legislative.gov.in/sites/default/files/A1986-68_0.pdf [1] Chief Administrator, H.U.D.A. &Anr. v. Shakuntla Devi, (2017) 2 SCC 301 [2] (2004) 5 SCC 65 [3] (1994) 1 SCC 243 [4] (1878) 3 AC 430 [5] (2005) 9 SCC 430 [6] (2005) 9 SCC 449 In a latest case, on Supreme Court in Petition(s) for Special Leave to Appeal (C) No(s). 24059/2022 (Arising out of impugned final judgment and order dated 19-09-2022 in RP No. 1187/2022 passed by the National Consumers Disputes Redressal Commission, New Delhi) MEERUT DEVELOPMENT AUTHORITY Petitioner(s) VERSUS SURESH CHAND GARG Respondent(s) (FOR ADMISSION and IA No.202401/2022-EXEMPTION FROM FILING O.T. ) Date: 05-01-2023 This petition was called on for hearing today.
Held "We have heard learned counsel for the petitioner and find that the order passed by the Consumer Commission was reasonable and there was no reason of filing appeal/revision against the substantive order passed on the consumer complaint by the District Consumer Commission dated 06.09.2019. Consequently, the present petition is disposed of with a direction, to sum up the litigation which is pending for a long time, that let the order of the District Consumer Commission dated 06.09.2019 shall be complied with and the respondent be refunded the entire deposit with simple interest at the rate of 12% per annum within a further period of 60 days from today, failing which it shall carry interest at the rate of 15% per annum until actual payment."
So the Hon'ble Supreme Court has specifically said that the rate of interest shall be 12% if paid within 60 days from the date of judgment otherwise the rate of interest will be 15% per annum until actual payment. In the present case we have taken the cut of date as 01.07.2015. No we perused the different judgment as mentioned here in above regarding the payment of rent, compensation et cetera, it is clear that the possession has been given to the complainant but in absence of the CC and OC it is not a possession in the of law. Therefore the compensation, damages, interest and other reliefs shall be given to the complainant from cut of date till the date when the copy of Completion Certificate/Occupation Certificate and NOCs from different department be provided to the complainant.
Now it is clear that there is deficiency of service on the part of the opposite party and also they are liable for unfair trade practice. For calculating the compensation/damages we are inclined that after three years the complainants are entitled to get the reliefs from the opposite parties. The cut-off date is 01.07.2013. This is the date from which the amount of compensation/damages and other shall be calculated. Keeping in view all the above mentioned facts, we come to the following conclusions:-
The complainant is entitled to get the possession of the said unit Flat no A-603 on sixth floor of tower-A, area 1725 square feet, in the AVS Orchard, Noida from the opposite parties within 60 days from the date of judgment of this complaint case with copy of Completion Certificate/Occupancy certificate , NOCs of different department otherwise the opposite party shall be liable to pay Rs.100,000/-per month as damages from the date of judgment till the date of giving possession of the said flat with execution of sale deed and with the copies of all the above mentioned certificates.
The complainant is entitled, for interest at a rate of 12% per annum from the respective date of deposits made by them if paid within 60 days from the date of judgment of this complaint case.
The complainant is entitled to get Rs.15,000/- per month towards rental in the light of the judgment of Hon'ble NCDRC as discussed above, from 01.07.2013 with interest at a rate of 12% per annum from the respective months, if paid within 60 days from the date of judgment of this complaint case.
The complainant is entitled to damages Rs.1.5 lakhs in the light of Hon'ble Supreme Court's judgment as discussed above with interest at a rate of 12% from 01.07.2013 if paid within 60 days from the date of judgment of this complaint case.
The complainant is entitled Rs.1 lakh towards cost of the case if paid within 60 days from the date of judgment of this complaint case.
Regarding relief (iv) and (v) of the complaint case, we are of the opinion that complaint is entitled to get ₹ 20 lakhs from the opposite party with interest at a rate of 12% per annum from 01.07.2013 if paid within 60 days from the date of judgment of this complaint case towards mental torture, depression, harassment etc .
All the said amount shall be paid within 60 days from the date of judgment of the complaint case otherwise the rate of interest shall be 15% from 01.07.2013 till the date of delivery of possession of the said flat with all basic amenities are company with copy of Completion Certificate/Occupancy Certificate and NOCs of various departments as discussed above.
So the present complainant is disposed of accordingly.
ORDER 1- The opposite partiesarejointly and severally directed tohand over the possession of the fully finished flat no A-603 situated in AVS Orchard, Noida with all the basic civic amenities and as per the specifications agreed by the opposite partieswith copies of Completion, Occupancy certificates and NOCs of Civil Aviation, Pollution Department, Fire Brigade Department etc., within 60 days from the date of judgment of this complaint case otherwise the opposite party shall be liable to pay ₹1,00,000 /-per month to the complainant from the date of judgment of this complaint case till the date of delivery of possession of the said flat.
2- The opposite partiesarejointly and severally directed to pay interest at a rate of 12% per annum to the complainant from the respective date of deposits made by them if paid within 60 days from the date of judgment of this complaint case.
3- The opposite partiesarejointly and severally directed to pay₹15,000/- per month to the complainant towards rental in the light of the judgment of Hon'ble NCDRC as discussed above, from 01.07.2013 with interest at a rate of 12% per annum from the respective months, if paid within 60 days from the date of judgment of this complaint case.
4- The opposite partiesarejointly and severally directed to pay ₹ 1.5 lakhs to the complainant in the light of Hon'ble Supreme Court's judgment as discussed above with interest at a rate of 12% from 01.07.2013 if paid within 60 days from the date of judgment of this complaint case.
5- The opposite partiesarejointly and severally dated to pay Rs.1 lakh to the complainant towards cost of the case if paid within 60 days from the date of judgment of this complaint case.
6- The opposite partiesarejointly and severally directed to pay Rs.20 lakhs to the complainant with interest at a rate of 12% per annum from 01.07.2013 if paid within 60 days from the date of judgment of this complaint case towards mental torture, depression, harassment etc. All the said decretal amount shall be paid within 60 days from the date of judgment of this complaint case otherwise the rate of interest shall be 15% from 01.07.2013 till the date of giving actual physical possession of the said finished flat with all civic amenities and with all the documents as discussed above.
If it is not paid within 60 days from the date of judgment of this appeal, the complainants shall be entitled to present Execution proceedings before this court at the cost of the opposite parties.
The stenographer is requested to upload this order on the Website of this Commission today itself.
Certified copy of this judgment be provided to the parties as per rules.
(Sushil Kumar) (Rajendra Singh) Member Presiding Member Judgment dated/typed signed by us and pronounced in the open court. Consign to the Record-room. (Sushil Kumar) (Rajendra Singh) Member Presiding Member Dated : 12.4.2013 JafRi, PA I C-2 [HON'BLE MR. Rajendra Singh] PRESIDING MEMBER [HON'BLE MR. SUSHIL KUMAR] JUDICIAL MEMBER