Offering possession of a home without an Occupancy Certificate is an 'unfair trade practice' and 'deficiency in service': Punjab State Consumer Commission - 2025-09-05

Developer Ordered to Refund ₹56 Lakh with Interest for Offering Home Without Occupancy Certificate

Chandigarh: The Punjab State Consumer Disputes Redressal Commission has ruled that offering possession of a residential unit without a valid Occupancy Certificate constitutes a "deficiency in service" and an "unfair trade practice." The Commission, presided over by Justice Daya Chaudhary and Ms. Simarjot Kaur, ordered TDI Infracorp (India) Pvt. Ltd. to refund the entire amount of ₹56.61 lakh to homebuyers, along with interest and compensation, for failing to deliver a completed flat nearly a decade after booking.

Case Background

The complaint was filed by Mrs. Veena Vig and her son, Hitesh Vig, who booked an independent floor with TDI Infracorp in Sonepat in 2013. A Buyer's Agreement was signed, stipulating a possession timeline of 30 months, which expired in March 2016. Over the years, the complainants paid a total of ₹56,61,790/-, a significant portion of which was financed through a bank loan.

Despite the promised deadline passing years ago, possession was not handed over. In February 2022, the developer sent a letter claiming the unit was ready but admitted they had not yet received the mandatory Occupancy Certificate. Upon visiting the site, the complainants found the construction to be incomplete, prompting them to file a complaint seeking a full refund with interest and compensation for the mental and financial hardship endured.

Arguments Presented

The complainants, represented by Advocate Vipul Dharmani, argued that the developer's failure to deliver the flat within the agreed timeframe, despite receiving over 90% of the payment, was a clear case of deficiency in service. They contended that the offer of possession was merely a "paper transaction" as the unit was uninhabitable and lacked the legally required Occupancy Certificate.

TDI Infracorp countered by claiming the delay was due to adverse circumstances, including the COVID-19 pandemic. They argued that the complainants themselves had delayed payments and that the complaint was barred by limitation. The developer also stated that they had offered possession after applying for the Occupancy Certificate and that the construction was complete.

Commission's Findings and Legal Principles

The Commission systematically dismissed the developer's preliminary objections.

* On Jurisdiction and Limitation: It affirmed its jurisdiction as the complainants reside in Punjab and the value of the service exceeded ₹50 lakh. Citing established legal precedent, the Commission held that failure to deliver possession constitutes a "continuous cause of action," and thus, the complaint was not time-barred.

* On Merits of the Case: The judgment heavily emphasized the legal necessity of an Occupancy Certificate. The Commission observed, "The offer of possession made by the OPs was just a paper transaction and nothing more than that." It cited rulings from the Supreme Court and the National Commission, including Wg. Cdr. Arifur Rahman Khan v. DLF Southern Homes Ltd. , which establish that failure to obtain an Occupancy Certificate is a clear deficiency in service.

Key Judicial Observation: "The legal possession cannot be delivered in the absence of Completion Certificate issued by the Competent Authority... The said offer of possession was meaningless being unlawful as the requisite completion certificate had not been obtained by that date."

The Commission also rejected the developer's argument regarding the complainants' delayed payments, noting the one-sided nature of the Buyer's Agreement. It referenced the Supreme Court's decision in Kolkata West International City Pvt. Ltd. v. Devasis Rudra , which discourages enforcing agreements where developers impose hefty penalties on buyers for delays while offering minimal compensation for their own defaults.

Final Verdict and Implications

Finding TDI Infracorp guilty of deficiency in service and unfair trade practice, the Commission allowed the complaint and issued the following directives:

1. Refund the entire amount of ₹56,61,790/- with simple interest at 9% per annum from the respective dates of deposit until realization.

2. The outstanding loan amount must first be paid directly to UCO Bank as per the tripartite agreement, with the remainder being paid to the complainants.

3. Pay ₹1,00,000/- as compensation for mental agony and harassment.

4. Pay ₹50,000/- towards litigation costs .

The developer was directed to comply with the order within two months, failing which the amount would attract an enhanced interest rate of 12% per annum. This judgment reaffirms the right of homebuyers to a complete and legally habitable home and holds developers accountable for obtaining all statutory approvals before offering possession.