MUMBAI: Many builders try to exploit the maximum available FSI, often traversing beyond legally permissible limits or the entitlement under an agreement. A developer can be held liable for such unauthorized or excess use of FSI.
Case Study: Khandelwal Friends Cooperative Housing Society (CHS) had two buildings comprising 20 flats and four garages on 17th Road, Khar, in Mumbai. As the building had become old and dilapidated, the society entered into a development agreement with Orra Realtors Pvt. Ltd. The agreement provided that each existing member of the society would be provided 35% additional carpet area free of cost which would include balconies but excluded the flower beds. Beyond this area, members could purchase additional space at Rs 21,000 per sqft. The developer also agreed to pay to each member a calculated sum of Rs 100 per month per sqft. of the existing carpet area towards compensation for acquiring alternative accommodation while the buildings were being redeveloped.
The projected construction time was 24 months after issuance of the commencement certificate by the municipal corporation. If the project was delayed, and possession along with the occupancy certificate was not given in time, the developer would pay enhanced compensation at Rs.125 per sq ft.
The developer failed to adhere to the time period stipulated in the agreement. He also started coercing members into accepting possession without the occupancy certificate by threatening to discontinue the payment for alternative accommodation. Aggrieved, the society filed a complaint before the National Commission seeking a direction to the builder to procure the occupation certificate, and continue paying compensation or rent for alternative accommodation till such time as legal and valid possession would be given. The society also sought a direction to the builder to bear all the statutory dues and taxes. It also claimed that the developer had used the fungible FSI without paying the municipal corporation for its use. Additionally, compensation for delay and costs of litigation were also claimed.
The developer contested the complaint and challenged its maintainability, contending that the society was not a consumer as the agreement was on a “principal to principal” basis. The National Commission rejected this argument, stating that such a clause would not make any difference as the developer was rendering housing construction service for which the consideration was the permission to use the FSI available as per the development agreement.
The Commission observed that the commencement certificate was obtained on April 9, 2010, but the project was delayed beyond two years, and the occupancy certificate had not been obtained. This was held to be a deficiency in service.
Accordingly, by its order of January 3, delivered by Justice V K Jain, the National Commission directed the developer to obtain the occupancy certificate at its owns cost within six months from the date of the order. The remaining members of the society who had not yet taken possession would be offered possession after the receipt of the occupancy certificate. The Commission held that the members would be entitled to compensation for the delay, computed at Rs.125 per sq ft. of the original carpet area as specified in the development agreement. The developer was also ordered to pay Rs.5 crore to the society for utilizing the fungible FSI, along with 8% interest from June 1, 2015. Additionally, Rs 25,000 was to be given by the builder towards litigation costs.
Conclusion: A society which is shortchanged by a developer can claim suitable compensation.
Author: Jehangir Gai is a consumer activist and has won the Govt. of India’s National Youth Award for Consumer Protection.
Credits ET Realty