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Samruddhi Co-operative Housing Society Ltd. vs. Mumbai Mahalaxmi Construction Pvt. Ltd.

Civil Appeal · 2022 INSC 33Decided 11 Jan 2022
Civil Appeal No. 4000 of 2019
Dr. Dhananjaya Y. Chandrachud · A.S. Bopanna

Background

The appellant, a co-operative housing society, had its members book flats in a project in 1993 and take possession in 1997, but the builder-respondent never obtained the mandatory occupation certificate from the municipal authorities. Because of this, flat owners could not get regular electricity and water connections and had to make do with temporary connections, for which they were charged property tax 25% higher and water charges 50% higher than the normal rates. The National Consumer Disputes Redressal Commission (NCDRC) dismissed the society's complaint seeking a refund of these excess charges, holding it was barred by limitation and was really a recovery claim rather than a genuine consumer dispute.

Decision Breakdown

The Supreme Court held that treating the complaint as time-barred was too narrow a view, since the builder's continuing failure to obtain the occupation certificate kept causing repeated, ongoing harm (higher taxes charged again and again), so the cause of action was a continuing wrong rather than a one-time event. On the merits, the Court held that failing to obtain an occupation certificate or to honour a builder's contractual obligations amounts to a "deficiency in service" under the Consumer Protection Act, following its own precedents in Wing Commander Arifur Rahman Khan and Pioneer Urban Land, and that the society's members qualified as "consumers" entitled to claim compensation for the resulting extra financial burden. The Court therefore allowed the appeal, held the complaint maintainable, and directed the NCDRC to decide the merits of the compensation claim within three months.

Lesson Learnt

A builder's failure to obtain an occupation certificate is not a mere technical lapse. It is a recognised "deficiency in service" under consumer law, and homebuyers who keep suffering extra costs (like inflated taxes) because of it can pursue a consumer complaint even years later, since each fresh demand for higher charges renews their right to complain.

Official source (sci.gov.in)View Judgment (PDF)

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