Consumer Protection Act, 1986 – ss.2(1)(d), 2(1)(g) and 24A – Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 – ss. 3,6 – Respondent made constructions and entered into agreements to sell flats with individual purchasers – Appellant is a co-operative housing society – Members of the appellant booked the flats in 1993 and were granted possession in 1997 – Respondent failed to take steps to obtain occupation certificate from municipal authorities – In absence of occupation certificate, individual flat owners were not eligible for electricity and water connections – Temporary water and electricity connections were granted by the authorities due to efforts of appellant – Members of appellant society had to pay property tax at a rate 25% higher than the normal rate and water charges 50% higher than the normal charge – Appellant instituted consumer complaint before State Consumer Disputes Redressal Commission (SCDRC) Mumbai seeking direction to respondent to obtain occupation certificate – SCDRC directed respondent to obtain occupancy certificate within four months; and also directed respondent to pay Rs. 1,00,000/- towards reimbursement of extra water charges paid – Appellant sent legal notice to respondent demanding payment of outstanding dues – Respondent failed to comply with the demand – Appellant filed application for execution of the order of SCDRC – Appellant also filed a complaint before the NCDRC – NCDRC dismissed the complaint on the ground that it was barred by limitation and that it was not maintainable under the Consumer Protection Act, 1986 since it was in the nature of a recovery proceeding and not a consumer dispute – Held: Respondent was responsible for transferring the title to the flats to the society along with the occupancy certificate – Failure of respondent to obtain the occupation certificate is a deficiency in service for which respondent is liable – Continuous failure to obtain an occupancy certificate is a breach of the obligations imposed on the respondent under the Maharashtra Ownership Flats Act (MOFA) and amounts to a continuing wrong – Appellants entitled to damages arising out of this continuing wrong – Members of appellant society are well within their rights as ‘consumers’ to pray for compensation as a recompense for the consequent liability (such as payment of higher taxes and water charges by the owners) arising from the lack of an occupancy certificate – Rejecting the complaint as being barred by limitation, when the demand for higher taxes is made repeatedly due to lack of an occupancy certificate, is a narrow view which is not in consonance with the welfare objective of Consumer Protection Act 1986 – Complaint of appellants not barred by limitation – NCDRC to dispose the complaint within three months – Limitation Act, 1963 – s.22.
Allowing the appeal, the Court
HELD: 1.1. Section 24A of the Consumer Protection Act 1986 provides for the period of limitation period for lodging a complaint. A complaint to a consumer forum has to be filed within two years of the date on which the cause of action has arisen. In the instant case, the appellant has submitted that since the cause of action is founded on a continuing wrong, the complaint is within limitation. Section 22 of the Limitation Act 1963 provides for the computation of limitation in the case of a continuing breach of contract or tort. It provides that in case of a continuing breach of contract, a fresh period of limitation begins to run at every moment of time during which the breach continues. A continuing wrong occurs when a party continuously breaches an obligation imposed by law or agreement. Section 3 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 (MOFA) imposes certain general obligations on a promoter. These obligations inter alia include making disclosures on the nature of title to the land, encumbrances on the land, fixtures, fittings and amenities to be provided, and to not grant possession of a flat until a completion certificate is given by the local authority. The responsibility to obtain the occupancy certificate from the local authority has also been imposed under the agreement to sell between the members of the appellant and the respondent on the latter. [Para 11,12 and 15][386-C-E; 389-G-H; 390-A-B]
1.2. Sections 3 and 6 of the MOFA indicate that the promoter has an obligation to provide the occupancy certificate to the flat owners. Apart from this, the promoter must make payments of outgoings such as ground rent, municipal taxes, water charges and electricity charges till the time the property is transferred to the flat-owners. Where the promoter fails to pay such charges, the promoter is liable even after the transfer of property. [Para 17][390-F-H]
1.3. Based on these provisions, it is evident that there was an obligation on the respondent to provide the occupancy certificate and pay for the relevant charges till the certificate has been provided. The respondent has time and again failed to provide the occupancy certificate to the appellant society. For this reason, a complaint was instituted in 1998 by the appellant against the respondent. The NCDRC on 20 August 2014 directed the respondent to obtain the certificate within a period of four months. Further, the NCDRC also imposed a penalty for any delay in obtaining the occupancy certificate beyond these 4 months. Since 2014 till date, the respondent has failed to provide the occupancy certificate. Owing to the failure of the respondent to obtain the certificate, there has been a direct impact on the members of the appellant in terms of the payment of higher taxes and water charges to the municipal authority. This continuous failure to obtain an occupancy certificate is a breach of the obligations imposed on the respondent under the MOFA and amounts to a continuing wrong. The appellants therefore, are entitled to damages arising out of this continuing wrong and their complaint is not barred by limitation. [Para 18][390-H]
2. The continuing wrong in the present case is the failure to obtain the occupancy certificate. Against this act of the respondent, the appellant society has taken appropriate action by filing a complaint before the consumer forum. The appellant is currently pursuing the execution of the order of the SCDRC arising from that complaint. However, that itself does not preclude it from claiming compensation for the consequences which have arisen out of this continuing wrong. The failure to obtain the occupancy certificate has resulted in the levy of higher taxes on the members of the appellant society repeatedly by the municipal authorities. Despite the order of 20 August 2014, the respondent has failed to obtain the occupancy certificate. This has resulted in a situation where the appellant, despite having followed the correct course of litigation in demanding the furnishing of an occupancy certificate, will continue to suffer the injury inflicted by the respondent merely due to the delay in the execution of the order against the respondent. Rejecting the complaint as being barred by limitation, when the demand for higher taxes is made repeatedly due to the lack of an occupancy certificate, is a narrow view which is not in consonance with the welfare objective of the Consumer Protection Act 1986. [Para 19][391-E-H; 392-A-B]
3. Section 2(1)(d) of the Consumer Protection Act defines a ‘consumer’ as a person that avails of any service for a consideration. A ‘deficiency’ is defined under Section 2(1)(g) as the shortcoming or inadequacy in the quality of service that is required to be maintained by law. In the present case, the respondent was responsible for transferring the title to the flats to the society along with the occupancy certificate. The failure of the respondent to obtain the occupation certificate is a deficiency in service for which the respondent is liable. Thus, the members of the appellant society are well within their rights as ‘consumers’ to pray for compensation as a recompense for the consequent liability (such as payment of higher taxes and water charges by the owners) arising from the lack of an occupancy certificate. [Paras 21 & 22][392-C-D, F-G]
Wing Commander Arifur Rahman Khan & Others v. DLF Southern Homes Private Limited & Others (2020) 16 SCC 512 : [2020] 9 SCR 136; Pioneer Urban Land Infrastructure Limited v. Govindan Raghavan (2019) 5 SCC 725 : [2019] 5 SCR 1169 – relied on.
Balakrishna Savalram Pujari Waghmare v. Shree
Dhyaneshwar Maharaj Sansthan AIR 1959 SC 798 : [1959] 2 Suppl. SCR 476; CWT v. Suresh Seth (1981)
2 SCC 790 : [1981] 3 SCR 419; M. Siddiq v. Suresh Das (2020) 1 SCC 1 : [2019] 18 SCR 1 and Treaty Construction v. Ruby Tower Cooperative Housing Society Ltd. (2019) 8 SCC 157 : [2019] 9 SCR 606 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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