Allotment of flat is illegal in the absence of OC: National Commission

Avadhut Co-operative Housing Society had entrusted the redevelopment of its society property to Kamla Ankur Developers. One of the free sale flats in this project was sold to Chaya Bavadekar. According to the agreement for sale on January 20, 2011, flat number 703 was to be sold to Bavadekar for Rs 1,82,40,000, and possession was to be given by March 31, 2012.

On receipt of the entire amount, the builder asked Bavadekar on January 17, 2013, to take possession of the flat for fit-out. However, since the occupancy certificate (OC) was not obtained from the Mumbai Municipal Corporation, Bavadekar could not occupy the flat. Contending the builder had failed to give legal possession of the flat, Bavadekar filed a complaint before the National Commission, seeking a direction to the builder to obtain the OC and for award of compensation.

The Commission issued a notice to the builder. As the reply was not filed within 30 days, the builder was granted two weeks extension, subject to a cost of Rs 10,000. The builder neither paid the cost nor filed the reply to the complaint. So, the Commission proceeded to adjudicate the complaint on the basis of Bavadekar’s affidavit.

The Commission observed the builder was statutorily obliged to obtain the OC before delivering possession. Under Section 3(2)(i) of the Maharashtra Ownership Flats Act, there is an express prohibition on handing over possession of a flat in the absence of the OC, and a flat purchaser is also forbidden from occupying it. So, handing over possession of the purpose of fit-outs does not make it fit for occupation, defeating the purpose of having bought the flat. The Commission ruled that possession for fit-outs without the OC would constitute a breach of contractual and legal obligations.

As the date of possession mentioned in the agreement was March 31, 2012, the OC ought to have been obtained by that date. The failure to do so constituted a deficiency in service, for which Bavadekar was entitled to a suitable compensation for the period of default.

The Commission observed the monthly rental value for a similar flat was fixed in Bavadekar’ affidavit as Rs 72,000 in 2012, Rs 80,000 in 2013 and Rs 90,000 in 2014. Although there was no proof given to substantiate these rental rates, the Commission observed the figure given appeared to be reasonable, as the rental amount was less than five per cent of the total consideration of the flat. The Commission held the claim for compensation equivalent to the rental value was justified and Bavadekar was entitled to these amounts.

The builder’s advocate told the Commission an application had been made to the BMC for regularising the deviations, which was pending. After regularisation, the OC would be obtained. The Commission observed the flat purchasers are not concerned with any issue between the builder and the Corporation. It is the duty of a builder to obtain the OC at his cost, after clearing and removing all the objections raised by the Corporation.

Accordingly, by its order of June 27, 2016, delivered by V K Jain, the National Commission directed the builder obtain the OC and furnish a copy to Bavadekar. The Commission also ordered the builder to compensate Bavadekar by paying Rs 72,000 per month from April 1, 2012 to December 31, 2012, Rs 80,000 per month from January 1, 2013 to December 31, 2013, and at Rs 90,000 per month from January 1, 2014 till the date the OC is obtained.

Thus, possession for fit-outs is not legal possession; a flat purchaser cannot occupy it; and so the builder is liable to compensate the purchaser till the occupancy certificate is obtained.

Credits Business Standard

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