Supreme Court: After Taking Possession Flat Owners Do Not Forfeit Right to Claim Facilities as Promised by Builder

Supreme Court: After Taking Possession Flat Owners Do Not Forfeit Right to Claim Facilities as Promised by Builder

The Supreme Court by its division bench comprising of Justices S Ravindra Bhat and Dipankar Datta while expressing their displeasure with respect to the order passed by the National Consumer Disputes Redressal Commission (NCDRC) in the matter of Debashis Sinha and others vs. M/s. RNR Enterprises, observed flat owners do not forfeit his/her right to claim such /amenities as promised in the brochure/advertisement which had been promised by the builder but were not provided resulting in deficiency in services.

The Apex Court was adjudicating an appeal filed by the homebuyers against the NCDRC dismissing their complaints filed against Kolkata-based builder RNR Enterprise. Their complaints ranged from the builder not providing 'completion certificates' and also not fulfilling the promises of common amenities and facilities such as playground, community hall-cum-office room, 33-feet wide concrete road, water supply, landscape gardening, generator, multi-gymnasium, water filtration plant, and gas pipeline. Though the NCDRC found that the builder was guilty of unfair trade practice, it did not grant relief to the buyers by saying that they have not established their claims.

The main issue that came for consideration before the Top Court was whether, upon taking possession, a flat owner forfeits his/her right to claim such services which had been promised but are not provided resulting in deficiency in services is a question that the NCDRC ought to have adverted to.

The Apex Court criticized the order passed by the NCDRC and observed that the NCDRC's reasoning that the flat-buyers cannot complain after knowingly purchased the flats with the deficiencies, "defies logic." The Court noted that in most cases, the jurisdiction of NCDRC is invoked "post-purchase."

The bench opined that if complaints were to be spurned on the specious ground that the consumers knew what they were purchasing, the object and purpose of the enactment would be defeated. Any deficiency detected post-purchase opens up an avenue for the aggrieved consumer to seek relief before the consumer fora. The reasoning of the NCDRC is, thus, indefensible, stated the Court.

The Tribunal remarked, "NCDRC, in our opinion, might have missed to appreciate the present day realities of life. Now-a-days, flat owners seldom purchase flats with liquid cash. Flats are purchased on the basis of finances being advanced by banks and other financial institutions. Once a flat is booked and the prospective flat owner enters into an agreement for loan, instalments fall due to be paid to clear the debt irrespective of whether the flat is ready for being delivered possession. The usual delays that are associated with construction activities result in undue anxiety, stress, and harassment for which many a prospective flat owner, it is common knowledge, even without the project/flat being wholly complete is left with no other option but to take possession."

The Top Court was of the view that, whether, upon taking possession, a flat owner forfeits his/her right to claim such services which had been promised but are not provided resulting in deficiency in services was a question that the NCDRC ought to have adverted to.

The bench emphasized that if at all, the appellants had not forfeited any right by registration of the sale deeds and if indeed the respondents were remiss in providing any of the facilities/amenities as promised in the brochure/advertisement, it was the duty of the NCDRC to set things right

The bench vehemently commented on the perfunctory approach of the NCDRC while dealing with the appellants' contention that it was the duty of the respondents to apply for and obtain the completion certificate from the KMC and that the respondents ought to have been directed to act in accordance with law.

The Court stated that "on a conjoint reading of sections 403, 390, and 394 of the Kolkata Municipal Act (KMC) that it is the obligation of the person intending to erect a building or to execute works to apply for completion certificate in terms of the rules framed thereunder. It is no part of the flat owner's duty to apply for a completion certificate. When the respondents had applied for permission/sanction to erect, the Calcutta Municipal Corporation Buildings Rules, 1990 (hereafter '1990 Rules', for short) were in force. Rule 26 of the 1990 Rules happens to be the relevant rule. In terms of sub-rules (1) to (3) of rule 26 thereof, the obligation as cast was required to be discharged by the respondents. Evidently, the respondents observed the statutory provisions in the breach."

The Court further remarked that the appellants ought not to have taken possession without the completion certificate; however, that was not a valid ground not to direct the respondents to apply for and obtain the completion certificate as required by law. The mere fact that the flat owners were being assessed by the KMC affords no reason to the respondents for breaching section 403(1) read with rule 26 of the 1990 Rules.

The bench noted that once a completion certificate is issued by the KMC upon conducting appropriate inspection and tests of the building that has since been erected, it would stand to reason that the same amounts to a certification that the building does not suffer from any violation of the building plan sanctioned for the purpose under section 390 of the KMC Act or that its constructional quality is not of the desired level for which it is unsafe for human habitation.

In view of the aforesaid observations, the Court remanded the matter to the NCDRC for fresh consideration.