From ET Realty
Case Study: Dhruv Constructions had entered into a development agreement with City Life Developers for construction of several residential buildings in a project called “Dhruv Park” at Orlem in Malad. As per the agreement, one of the buildings was Agarwal Trinity Towers, comprising 24 floors. In 2005, agreements were executed with purchasers for sale of flats in this building. Possession was given in March 2008 and a society named Dhurv CHS was formed.
The society was aggrieved that the builder had not drawn a conveyance deed in its favour. There was no water, and the society had to obtain a connection at a higher rate in the absence of an occupancy certificate. Also, property tax had not been cleared and there were leakages in the flats. Other grievances included no recreation ground, clubhouse and swimming pool, as promised; shortage of exterior open space required to be maintained around buildings as per the Development Control Regulations; the parking spaces were sold off illegally and a corpus of Rs 35.2 lakh was not given to the society.
The society issued a legal notice and approached the national commission with a complaint against Dhruv Constructions as well as City Life Developers and their partners.
The builder contested, saying that the complaint was time-barred as it had been more than four years since the possession was given. It said that conveyance deed was pending as it had to be executed in favour of a federation to be formed of all societies after completion of the entire project.
The commission agreed with the submissions of advocate Mohit Bhansali that the cause of action would continue till the execution of the conveyance deed. In this case, there was no water connection, and even the occupancy certificate was still to be obtained. So it held that the complaint was within limitation. The commission rejected the excuses put forth by the builders. It said that no matter what the reason, conveyance would have to be executed in favour of the federation, and if this was not possible, get a separate conveyance for the society within one year. If delayed, the builders were held liable to pay the society a penal compensation of Rs 5,000 per day.
The commission directed the builders to reimburse Rs 5,50,900 incurred to obtain water connection and for borewell. This amount was to be paid along with 12% interest from the date of the complaint. The commission also directed the builder to provide separate tanks, one for borewell water to be used for sanitary purposes, and the other for municipal water for potable purposes. Also, since the society had to pay for water at a higher rate, the builders were asked to bear 50% charges billed by the municipal corporation, right from the inception till such time as the occupancy certificate was obtained.
The builders were also directed to make clubhouse facilities available within 90 days, else pay a further penal compensation of Rs 5,000 till compliance of the direction. They were directed to refund the amount charged for allotment of car parking space along with 12% interest from the date of payment till refund, besides handing over the Rs 35.2 lakh corpus along 12% interest from April 12, 2009, when the default was committed, till realization. Property tax of Rs 27.17 lakh which was paid by the society on behalf of the builders was ordered to be reimbursed along with 12% interest. Maintenance charges which had been collected for the period prior to handing over the possession were also ordered to be refunded. The builders were further asked to reimburse Rs 2 lakh spent by the society for fencing of the duct area. The commission also awarded Rs 3 lakh as litigation costs to be paid within 90 days, else with 12% interest.
Impact: This judgment, delivered on February 1 by Justice J M Malik for the bench along with Dr S M Kantikar, has widened the scope of reliefs which a society can get for various defaults committed by builders.