Reliable Legal Information.

Builder Handed Over Flats Without Occupancy Certificate, Chandigarh Consumer Commission Orders 9% Interest, Refund, and Service Lift Installation

Chandigarh, India – The State Consumer Disputes Redressal Commission in Chandigarh has delivered a significant ruling in favor of homebuyers, holding that a builder offering possession of an apartment without a valid Occupancy Certificate (OC) and Completion Certificate (CC) amounts to an illegal act, deficiency in service, and an unfair trade practice. The Commission, comprising Presiding Member Mrs. Padma Pandey and Member Mr. Preetinder Singh, directed the builder to pay 9% annual interest as compensation for the delay, refund all illegally collected maintenance charges, and install a mandatory service lift.

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Overview of the Case

The Commission disposed of a batch of three similar complaints filed by homebuyers, including Kunal Sharma & another, against CREDO Asstes Private Limited and M/s Singla Builders and Promoters Pvt. Ltd. The complainants had booked apartments in the "City of Dreams-1" project in Sector 116, Mohali. They argued that despite an agreement to deliver possession by December 2021 with all necessary clearances, the builder offered possession in May 2022 without obtaining the mandatory OC and CC.

The homebuyers raised several grievances, including the illegal collection of maintenance charges, failure to provide a designated car parking space, lack of a service lift for medical emergencies in a 13-storey building, and non-issuance of GST invoices.

Arguments from Both Sides

Complainants' Arguments: - The primary contention was that offering possession without an OC and CC is unlawful under Section 11(4) of the Real Estate (Regulation and Development) Act, 2016 (RERA), and Clause 7.2 of their Agreement for Sale. - They argued that maintenance charges cannot be levied before the project is legally certified as complete and habitable. - The absence of a service lift large enough to carry a stretcher violated the Punjab Municipal Building Bye-Laws 2018 and the National Building Code of India. - They also alleged that the builder collected GST but failed to provide invoices, preventing them from claiming tax benefits.

Builder's (Opposite Parties) Arguments: - The builder contested the Commission's territorial jurisdiction. - They argued that since the homebuyers had taken possession and executed sale deeds, the consumer relationship had ceased to exist. - It was claimed that the project was occupied by many satisfied residents and that any disputes should be settled through an Adjudicating Officer as per the agreement. - They asserted that all necessary facilities were being provided and denied any deficiency in service.

Commission’s Legal Analysis and Findings

The Commission systematically dismantled the builder's preliminary objections. -

On Jurisdiction: The court affirmed its territorial jurisdiction, noting that the builder's registered and corporate office was in Chandigarh, which is a valid ground under Section 47(4) of the Consumer Protection Act, 2019. -

On Consumer Status: Citing the Supreme Court in Debashis Sinha & Others Vs. M/s R.N.R. Enterprise , the Commission held that homebuyers forced to take possession due to circumstances do not forfeit their right to claim promised amenities and can raise disputes post-purchase. -

On the Illegality of Possession: The bench found conclusive evidence that the builder offered possession without the OC/CC. Records showed that a No Objection Certificate (NOC) from the Indian Air Force was only obtained in October 2023, well after possession was offered in May 2022. The judgment emphasized that this was a direct violation of the law and the sale agreement.

In a pivotal excerpt, the Commission stated: "Failure on the part of the builder to obtain and provide the Completion Certificate and Occupation Certificate prior to handing over possession constitutes a violation of both the contract between the builder and the consumer and of consumer protection laws... In the absence of these certificates, it cannot be presumed that the project has been completed or near completion."

• On Maintenance Charges: Relying on precedents from the National Commission, the court ruled that levying maintenance charges before obtaining the OC is improper. It noted, "it would be considered as paper possession only. So, the question of charging maintenance charges is in our opinion not proper and therefore should not have been collected."

• On Service Lift: The Commission found the demand for a service lift to be "well founded." It observed that amendments to the Punjab Municipal Building Bye-Laws in 2019 made such a lift mandatory and that the builder, in an effort to cut costs, violated these norms.

Final Verdict and Directions

The State Commission partly allowed the complaints and issued a comprehensive set of directives to the builder, to be complied with within 45 days:

1. Deliver Legal Possession: Hand over actual physical possession only after obtaining the OC and CC.
2. Pay Delay Compensation: Pay compensation via interest at 9% per annum on the entire amount deposited by the homebuyers, calculated from the promised possession date until the date of the order (28/02/2025), and continue paying it monthly until legal possession is delivered.
3. Refund Maintenance Charges: Refund any maintenance charges collected and cease levying them until the OC is obtained.
4. Pay Compensation and Costs: Pay a lump sum of ₹75,000 for mental agony and unfair trade practice, plus ₹35,000 for litigation costs.
5. Provide Service Lift: Install and operationalize a service lift compliant with building bye-laws, with the initial installation cost borne by the builder.
6. Issue GST Invoices: Provide the complainants with proper GST invoices for the tax collected.

This judgment reinforces the critical importance of statutory approvals in real estate transactions and empowers consumers to hold builders accountable for delivering legally habitable homes.