G H M/S TREATY CONSTRUCTION & ANR. versus M/S RUBY TOWER CO-OP. HSG. SOCIETY LTD. on 19 July 2019

SUPREME COURT REPORTS

[2019] 9 S.C.R.

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M/S TREATY CONSTRUCTION & ANR.

v.

M/S RUBY TOWER CO-OP. HSG. SOCIETY LTD.

(Civil Appeal No. 5699 of 2019)

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JULY 19, 2019

[ABHAY MANOHAR SAPRE AND

DINESH MAHESHWARI, JJ.]

Consumer Protection – Deficiency of service – AppellantsCevolved a scheme of constructing a building consisting of flats andshops – Purchasers of those flats and shops formed a co-operativehousing society – In relation to the project in question, dispute arosebetween the members of the respondent-society and appellants-builders – Respondent-society contended that appellants failed tocomplete the interior works and failed to obtain the completionDcertification as also the occupancy certificate – It was also allegedthat appellants borrowed varied sums of money from the respondent-society on pretext of completing the unfinished work – On the otherhand, appellants contended that delay was due to the obstructioncaused and created by the respondent, who had made illegalEconstruction/alterations – State Commission, inter alia, directedappellants to execute Deed of conveyance of the property in questionafter obtaining the completion certificate and occupancy certificateand entitled the respondent for refund of amount of Rs.26,25,000/-, which was given to obtain possession of the flat – Before, NationalCommission, appellants denied the receipt of the loan amount ofFRs.26,25,000/- – The said submission was accepted by the NationalCommission, however, it held that appellants had agreed to pay asum of Rs.25,00,000/- to the respondent-society in the meeting dated17.12.2003, therefore, the appellants were bound by the admissionso made by them and were liable to that extent – National CommissionGalso directed appellants to pay compensation of Rs.3,00,000/- fornot obtaining occupancy certificate and directed appellants to payRs.1000/- per day after 60 days of the order and until obtainingfull occupancy certificate – On appeal, held: Direction by theNational Commission as regards payment of sum of Rs.25,00,000/- H

by the appellants to the respondent requires no interference –Insofar other directions are concerned, there was no record to holdthe appellants liable for compensation – In other words, there wasno material on record to find if respondent-society or its memberssuffered any loss – Therefore, part of order directing appellants topay compensation of Rs.3,00,000/- set aside – Also, MunicipalCorporation had issued notices regarding alterations by themembers of the respondent-society and dispute regarding the samehas not settled as the High Court has directed for inspection of thebuilding and necessary follow up steps – Thus, in the circumstances,part of the impugned order requiring the appellants to pay Rs.1000/- per day after 60 days of the order, also set aside – Appellants andrespondent directed to complete all requisites on their part – Aftercompletion of all the requisites by the parties, the appellants directedto execute the Deed of conveyance in favour of the respondent-society after obtaining necessary occupancy certificate –Maharashtra Ownership Flats (Regulation of Promotion,Construction, Sale, Management and Transfer) Act, 1963 – ss.4and 11.

Partly allowing the appeal, the Court

Conclusion

Partly allowing the appeal, the Court

HELD : 1. Indisputably, in the application dated21.03.2013 as moved before the State Commission, therespondent-society restricted its prayer for money recovery to asum of Rs.25,00,000/- with reference to the minutes of meetingsdated 17.12.2003 and 14.12.2003. It is at once clear that theaforesaid sum of Rs. 25,00,000/- was agreed to be paid by theappellants in full and final settlement of the claim of therespondent-society. The appellants having agreed to make suchpayment, the National Commission has rightly put them to theterms of honouring their unequivocal commitment/promise. Inthe given set of facts and circumstance, this Court is unable toaccept the contention that a particular part of order of the StateCommission having not been challenged by the respondent-society, the National Commission could not have granted therelief otherwise available on the face of record. In an overall viewof the matter, when such a relief emanates from the verycommitment made by the appellants in the meetings aforesaid, AB

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Athe National Commission had been fully justified in granting thesame to the respondent-society. Therefore, there is no reason toconsider any interference in this part of direction by the NationalCommission. [Para 10] [624-G-H; 625-A-B]

2. Even when this Court finds no reason to interfere withBthe above-mentioned parts of the order impugned, it appearsdifficult to approve the directions in the remaining parts thereof,particularly those relating to other pecuniary reliefs. The NationalCommission has saddled the appellants with a liability to paycompensation to the tune of Rs. 3,00,000/- for not obtainingOccupancy Certificate and has issued further directions to theCappellants to obtain such certificate as also to execute therequisite Deed and to pay Rs. 1,000/- per day for every day ofdelay. True it is that Occupancy Certificate was not obtained bythe appellants but then, fact of the matter remains that themembers of respondent-society chose to take over possessionDwithout such certificate; and then, several questions have arisenas regards the alteration allegedly carried out by them for which,the Municipal Corporation has the objections to raise. In anycase, there appears nothing on record to find the basis for holdingthe appellants liable for compensation and then, for assessingthe quantum of compensation, if at all there be any liability of theEappellants. In other words, there is no material on record to findif the respondent-society or its members suffered any loss; and ifso, the extent thereof. Therefore, this part of the order impugned,directing the appellants to pay compensation to the tune of Rs.3,00,000/-, cannot be approved. [Para 11] [625-C-F]F

3. As regards direction to appellants to convey the title ofthe property in question by executing a registered Deed within aperiod of four months after obtaining Occupancy Certificate,though the appellants cannot avoid their legal obligation toexecute the requisite Deed but then, having regard to the factsGand circumstances of the case and more particularly the factsrelating to the issuance of notices by the Municipal Corporation;and the dispute/objection regarding alterations by the membersof the respondent-society having not been settled as yet with theHigh Court having issued directions for inspection of the buildingand for necessary follow-up steps, awarding of Rs. 1,000/- perH

day for every day of delay seems rather unwarranted. In the givensituation, where the Municipal Corporation had been of the viewthat there were visible illegal constructions made by the membersof respondent-society because of which the Certificate cannot beissued; and in view of the orders dated 12.06.2017 and 07.01.2019passed by the High Court in W.P. No. 970 of 2015, the penalty ofRs. 1,000/- per day deserves to be waived at present but with therequirements on the parties to complete the respectiverequisites, while leaving it open for them to take recourse toappropriate remedies, in case of any grievance arising in future.[Para 12] [625-G-H; 626-A-B]

4. In the result:

(i) The impugned order dated 07.03.2018 is not interferedwith, to the extent it relates to the payment of Rs. 25,00,000/- bythe appellants to the respondent-society. The appellants shallmake payment of this amount of Rs. 25,00,000/- within 45 daysfrom today failing which, this amount shall carry interest @ 8%p.a. from today until payment; (ii) The other part of the orderimpugned, saddling the appellants with liability to paycompensation to the tune of Rs. 3,00,000/- is set aside; (iii) Yetanother part of the order impugned, requiring the appellants topay Rs. 1,000/- per day after 60 days of the order and untilobtaining full Occupancy Certificate, is also set aside; (iv) Asregards obtaining of Occupancy Certificate and execution of theDeed of Conveyance by the appellants, it is provided that: (a) theappellants shall complete all the requisites on their part forobtaining Occupancy Certificate within three months from today;and (b) the respondent-society and its members shall also ensurecompliance of the requisites on their part (with reference to theorders passed by the High Court in W.P. No. 970 of 2015) withinthree months from today and for that matter, they may seeknecessary directions from the High Court, if so required. Withintwo months of completion of all the requisites by the parties, theappellants shall execute the Deed of Conveyance in favour of therespondent-society after obtaining the necessary OccupancyCertificate. As regards this part of the matter, it is also left openfor the parties to take recourse to appropriate remedies in AB

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Aaccordance with law, in case of any grievance arising in future;(v) The cost imposed on the appellants is waived and parties areleft to bear their own costs of this litigation. [Para 14] [626-D-H;627-A-B]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5699Bof 2019.

From the Judgment and Order dated 07.03.2018 of the NationalConsumer Disputes Redressal Commission at New Delhi in First AppealNo. 109 of 2015.

Vinay Navare, Ms. Gwen Kartika, Ms. Abha R. Sharma, Advs.Cfor the Appellants.

Sukumar Pattjoshi, Sr. Adv., Nitin S.Tambwekar, Seshatalpa SaiBandaru, Vikas Nautiyal, Advs. for the Respondent.

The Judgment of the Court was delivered by DDINESH MAHESHWARI, J. 1. Leave granted.

2. This appeal by special leave is directed against the judgmentand order dated 07.03.2018, as passed by the National ConsumerDisputes Redressal Commission (‘the National Commission’ hereafter)in First Appeal No. 109 of 2015, whereby the National Commission hasEmodified the order dated 17.12.2014, as passed by the State ConsumerDisputes Redressal Commission, Maharashtra, Mumbai (‘the StateCommission’ hereafter) in Complaint Case No. 120 of 2005; and hasissued directions to the effect that: (i) the appellants shall pay a sum ofRs. 28,00,000/- to the respondent-society (the complainant) within a periodof 45 days, failing which the amount shall carry interest @ 8% per annumFfrom the date of passing of the order till the date of payment; (ii) a sumof Rs. 1,000/- per day shall further be paid by the appellants after 60days from the date of order till the time full Occupancy Certificate isobtained; (iii) the appellants shall convey the title of the property inquestion by executing a registered Deed in terms of the order passed byGthe State Commission within a period of 4 months after obtaining theOccupancy Certificate. The National Commission has also upheld costsof Rs. 50,000/-, payable by the appellant No.1 herein.

3. The background aspects of the matter, so far relevant for thepresent purpose, may be noticed, in brief, as follows:

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3.1. The appellants had evolved the scheme of constructing abuilding consisting of 64 flats and 13 shops on a plot bearing Survey No.22, Hissa No. 7 [C.T.S. Nos. 99, 99 (1 to 16) and 114] at Sahakar Road,Off. S.V.Road, Jogeshwari (West) Mumbai. The persons who agreedto purchase respective flats and shops in the said project eventuallyformed a Co-operative Housing Society, who is the respondent in thisappeal (‘the respondent-society’ hereafter). In relation to the project inquestion, several disputes ensued between the members of respondent-society on one hand and appellants-builders on the other, leading to acomplaint before the State Commission, being Complaint No. 120 of2005 by the respondent-society[1].

3.2. The respondent-society submitted before the StateCommission, inter alia, that several sale deeds were executed betweenthe period 1994 to 2002 whereby, its members purchased certainapartment units as also commercial units of varied sizes but, despitemaking payment over and above the agreed sale consideration, theappellants failed to discharge their part of the contract inasmuch as theinterior works remained incomplete; and the appellants also failed toobtain the Completion Certification as also the Occupancy Certificate.It was also alleged that pending completion of the building works, theappellants borrowed and collected varied sums of money from themembers of the respondent-society, on the pretext that the money wouldbe used towards finishing the incomplete works; and this aspect wasrecorded in the minutes of the meeting held on 12.07.1998.

3.2.1. It was further alleged that after some time, the respondent-society demanded reimbursement of the amount given by its members;and though the appellants agreed to reimburse a lump sum ofRs. 25,00,000/- on 17.12.2003 but, even after a lapse of about a decade,the appellants had failed to reimburse the amount; failed to obtain theOccupancy Certificate; and also failed to complete the pending worksto the satisfaction of respondent. It was yet further alleged that as anadded burden, upon taking possession of their individual units, the membersof respondent-society had to spend additional sums of money to completethe interior works in their respective flats and the building; and had alsoto pay excess of taxes under various heads. Thus, according to therespondent, there was a clear deficiency of services on the part of 1 Apart from the present appellants, several other persons were also joined as oppositeparties in the said complaint case who have since been deleted from the array of parties.

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Aappellants and there was a clear violation of Sections 4 and 11 of TheMaharashtra Ownership Flats (Regulation of the Promotion,Construction, Sale, Management and Transfer) Act, 1963. (‘MOFA’).

3.2.2. With the submissions aforesaid, the respondent-societysought the following reliefs before the State Commission in the complaint:

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“a) To hold and declare the Opposite Parties guilty ofdeficiency in service as well as unfair trade practice underthe provision of the said Act.

b) To direct the Opposite Parties to convey the said land/property in favour of the Complainant’s Society byCcompleting all requisites formalities at their own expenses.

c) To direct the Opposite Parties to handover the CompletionCertificate, Occupation Certificate, to the Complainants’realization of the same.

Dd) To refund the amount collected towards temporary loan tothe tune of Rs. 35,16,820/- to the Complainants’ Society alongwith the interest @ 21% from the date of payment till therealization of the same.

e) To refund the amount collected toward possession Chargesto the tune of Rs. 26,25,000/- to the Complainants’ SocietyEalong with the interest 21% from the date of payment till therealization of the same.

f) To direct the opposite parties to reimburse the expensesincurred by the Complainant’s Society ‘to the tune of Rs.46,40,000/- towards the completion of interior civil workFalong with the interest 21% from the date of payment till therealization of the same.

g) To direct the Opposite Parties to develop the garden on theplot reserved for the same.

Gg) (sic) That the Hon’ble Forum may be pleased to direct theOpposite Party to pay an amount of Rs. 2,00,000/- towardscompensation mental agony and cost of the above numberedComplaint and further an amount of Rs. 1,00,000/- towardsincidental expenses incurred by the Complainant.

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h) For such other and further reliefs as the nature andcircumstances of the case may deem fit and proper.”

3.3. The appellants filed their separate counter versions to thecomplaint aforesaid. Apart from stating that the claim of the respondentwas exaggerated, they also contended that there was a clear admissionof the fact that the appellants had undertaken to reimburse a sum of Rs.25,00,000/- towards full and final settlement of the grievances raised bythe respondent, and the said amount was to be realized by consumingthe unconsumed FSI available on the said plot of land, as per the stipulationsincorporated in the registered agreement for sale, which fact had beenconcealed by respondent. The appellants further submitted that the delaywas not on their part but had been due to the obstruction caused andcreated by the respondent and its members who, after purchasing theirrespective flats, had made illegal constructions/alterations, which hadclearly been brought out in the show-cause notices issued by theMunicipal Corporation. The appellants also denied the contention of therespondent that the members completed their respective interior civilworks.

3.4. During the course of hearing of the matter and pending disposalof the complaint, the respondent-society filed an application dated21.03.2013 before the State Commission with the submissions that theprayer (d) of the complaint was not pressed; the amount claimed inprayer (f) was restricted to Rs. 25,00,000/-; and that although there wasno illegal alteration by the flat purchasers, yet the complainant wasagreeable to remove the same as required by the Municipal Corporation.The respondent-society stated in this application as under:

“1) That the complainant is not pressing the prayer of Rs.35,16820/- [claimed in prayer (d) i.e. temporary loan]alongwith interest 21% interest.

2) That the complainant is restricting the prayer 10(f) toamount of Rs. 25,00,000/- as per the minutes of meeting dtd17/12/03 & 14/12/03 which was signed by both the parties.

3) That the complainant says that there is no illegal alterationmade by the flat purchasers. However, the complainantconsent to remove the same (if any) as required by BMC.”

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A3.4.1. At this juncture, for their relevance, we may also take noteof the minutes of the aforesaid meetings dated 14.12.2003 and 17.12.2003as under:- “Minutes of meeting held with Ruby Tower Members on 14/12/03

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1. It was discussed that BMC expenses upto procuring of Occ.Certificate will be that of the Builders which the Builders haveagreed.

2. Regarding the settlement of accounts for which the Buildershad offered Rs. 15,00,000/- in the last meeting held, themembers offered Rs. 25,00,000/-, subject to the abovecondition as full and final settlement towards all loans,liabilities, etc of the Builder.

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3. It was finalized that another meeting would be held onWednesday i.e. 17/12/03 after Namaz-e-Isha at 9:00 p.m.

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4. It is agreed that henceforth transfer charges of Ruby Towerwill be of the Ruby Tower Soc. (Prop).

5. The meeting held was concluded in a cordial atmosphereand all present Society members have happily agreed to thisproposal.”

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“Date: 17.12.2003

Minutes of the meeting held with members of Ruby Tower

01. As decided on 14.12.03, the meeting for finalizing thesettlement of all pending dues/liabilities of the Builder wasFconducted at 9.30 p.m. at the Builder’s office.

2. The Builders agreed to the demand of Rs. 25,00,000.00raised by the members in the last meeting. However, it wasclarified that the first priority would be that of regularizing‘Ruby Tower’ with respect to BMC.

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3. Regarding payment of the agreed amount of Rs 25,00,000/-, it was proposed by the Builder that he would arrange forthe same within six to nine months, which the members agreed.

4. It was clarified by the present members that their decisionwas binding on all the members and all had authorized the H

members present to finalize the matter in the meeting heldamong themselves on 16.12.03.

5. The meeting concluded in a cordial atmosphere. “

3.5. On consideration of the material on record, the StateCommission observed that the Municipal Corporation had raised thealleged objections by their letter/notice dated 09.07.1993 whereas theflat owners were put in possession somewhere between 1995 to 2002;that the Society was established in the year 2005; and the frantic effortsmade by the owners/members of respondent-society for execution ofthe Deed of Conveyance and for obtaining Occupancy Certificate wasjust and legitimate. The State Commission further observed that therespondent had produced certain sample receipts to show that chargesamounting to Rs. 26,25,000/- were collected for handing over possessionof the flats and such charges were collected beyond the stipulated agreedconsideration. The State Commission, however, found that therewas no documentary evidence to show that the additional amount ofRs. 46,40,000/- was spent to complete the interior civil works.

3.6. In view of its findings, the State Commission partly allowedthe complaint while directing the appellants to execute the Deed ofConveyance of the property in question after obtaining the CompletionCertificate and Occupancy Certificate within 90 days and else, to payRs. 1,000/- per day until the date of compliance. The State Commissionalso observed that the complainants had not pressed for refund of theloan amount of Rs. 35,16,820/- and, therefore, the respondent-societywas held entitled only for the refund of the amount of Rs. 26,25,000/-,which was given to obtain possession of the flat, together with interest@ 9% p.a. from the date of filing of the complaint and payable within 90days, failing which the said amount shall bear an interest @ 12% p.a.

3.7. The State Commission, inter alia, observed and directed asunder:- “[8]. On going through the record and documentary evidencerelied upon by parties, we find that the prayer for refund ofRs. 26,25,000/- which was extended as loan by thecomplainant society members is justified as few sample receiptsshowing the charges collected for handing over the possessionof flats. On carefully going through the terms and conditionsof the registered agreement, it appears that the opponents A

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have collected these charges under the guys (sic) of possessionof the flats beyond the stipulated agreed consideration.Therefore, we find that complainants are entitled to get refundof an amount of Rs. 26,25,000/- since it was illegally collectedby the opponents from the flat buyers of the complainantsociety. Complainants have not pressed refund of Rs.35,16,820/- allegedly extended as temporary loan to theopponents for completion of balance work. Therefore, we donot want to comment further. There is not documentaryevidence to demonstrate that Rs. 46,40,000/- were incurredby the complainant society to complete the interior civil works.Therefore, we are not inclined to consider this monetary claim.The registered agreement does not provide for developmentof garden. Therefore, prayer beyond the stipulations ofagreement cannot be considered as pleaded by the learnedcounsel of the opponents.

[9]. Considering facts and circumstances of the case,opponents have failed to comply their statutory obligationsu/s. 11 of the MOFA Act to execute the deed of conveyanceand obtain Completion Certificate and Occupation Certificate.Therefore, the complainant’s prayer seeking directions to theopponents to fulfill statutory obligations are just and proper.Complainant society has discharged initial burden to provedeficient service rendered by the opponents. Therefore,complaint must succeed for issue of directions to the opponentsto fulfill the statutory obligations and refund of illegallycollected excess amount from the members of the complainantsociety.

ORDER

(1) Complaint is partly allowed.

(2) Opponents, jointly and severally, are directed execute Deedof Conveyance, by obtaining completion certificate andoccupation certificate for transferring rights, interest and titleof building and piece of land bearing Survey No. 22, HissaNo. 7, and bearing C.T.S. Nos. 99, 99(1 to 16) and assessedby Municipal Corporation of Greater Bombay in Ward No.KN 150512-00 No. K-5125 (1-2) 89A, 90, K-5125 (3) 898, K-5126 (1), 88 and K-5126 (3) 8890, in favour of complainantsociety within period of 90 days from date of the this order,failing which opponent shall pay Rs. 1,000/- per day to thecomplainant society from the date of this order till compliance.

(3) Opponents, jointly and severally, are directed to payRs. 26,25,000/- [amount illegally collected for hading overthe possession of the flats] along with interest @ 9% p.a.effective from the date of filing of complaint i.e. 04/10/2005within period of 90 days from the date of this order, failingwhich the rate of interest shall be payable @ 12% p.a. from04/10/2005 till its realization.

(4) Opponents shall bear their own costs and pay costs ofRs. 50,000/- to the complainant society within period of 90days from the date of this order.

(5) Certified copies of this order be furnished to the parties”.

3.8. In appeal against the order of the State Commission beforethe National Commission, the appellants denied the receipt of loan amountof Rs. 26,25,000/- and argued that the deletion of the name of the thenPresident of the respondent-society, who was a signatory to all thereceipts, was not warranted, as his presence would have clarified all theissues which formed the subject-matter of the complaint; and that due tothe failure on the part of the respondent-society to remove the changes/alterations made to the building, the Municipal Corporation refused toissue the Occupancy Certificate. It was also argued that the StateCommission had no pecuniary jurisdiction in relation to the complaint inthis matter.

3.9. The National Commission rejected the contention that theState Commission had no pecuniary jurisdiction for the reason that thesame was not urged before the State Commission and the matter wasdecided on merits. The National Commission examined the record andfound that there was absolutely no evidence on record to show that thealleged money was taken by the appellants for the purpose of completingthe pending works in the building. The National Commission, however,observed that having agreed to pay a sum of Rs. 25,00,000/- to therespondent-society, the appellants were bound by the admission so madeby them and were liable to that extent. As regards the arguments relating A

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Ato Occupancy Certificate, the National Commission was of the viewthat the appellants were negligent and there had been deficiency in serviceinasmuch as the appellants should not have handed over possession ofthe flats without obtaining the Occupancy Certificate. However, for thepurpose of regularizing and legalizing the title of the members ofrespondent-society, it was preferred that a time bound order be madeBand, accordingly, the National Commission upheld the order passed bythe State Commission with certain modifications.

3.10. The National Commission, inter alia, observed, held anddirected as under:- “10. I have carefully considered the arguments of both thelearned counsel and have examined the material on record.Basically I agree with the contention of the learned counselfor the appellant that all the receipts were issued by thePresident of the Society and he has been deleted from thearray of the parties on the request of the complainant andtherefore, there is no proof that the money has been paid tothe appellant. The State Commission has ordered only onpresumption. Thus, the OP/appellant herein cannot be saddledwith the responsibility to refund the amount of Rs. 26,25,000/- to the complainant as loan repayment. However, this is alsotrue that the appellant has admitted that he had agreed in themeeting dated 17.03.2003 to pay Rs. 25 lakhs to thecomplainant for the deficiency in service. Clearly this amounthas not been paid by the OP to the complainant and therefore,the appellant No. 1 is liable to pay Rs. 25 lakhs to thecomplainant as per his own admission in the list of dates filedalong with the present appeal.

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11. So far as the question of obtaining the OccupancyCertificate is concerned, as per the provisions of MOFA thepossession should not have been handed over to the membersof the complainant society without obtaining occupancycertificate and this is a clear unfair trade practice. It is beingargued on behalf of the OP that there are additions andmodifications in the building and therefore, it is difficult toobtain the certificate and the matter is getting delayed. Thisargument is not tenable as the situation has been created by G

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the OPs themselves as they offered possession without theoccupancy certificate. Clearly, not obtaining occupancycertificate is the deficiency on the part of the OP/appellant.

12. Coming to the question of FSI, though there is a provisionin the agreement in condition no. 42 that the allottees/purchasers shall not object to OP utilizing additional FSI,which may be available at the time of agreement or beingmade available even in a future date. However, this provisiongoes against the spirit of MOFA as this Commission in VaibhavDevelopment Corporation and others (supra) has held that itis obligatory upon the builder to obtain a full OccupancyCertificate, without which a Conveyance Deed in favour ofthe complainant society cannot be executed. However, therehas to be a reasonable time for execution of conveyance deedin favour of the Society and this according to the said Rulehas to be within four months if no period of conveying thetitle to the Society is mentioned in the Sale Agreement.

13. As the OP has given possession to the members of theSociety without obtaining Occupancy Certificate, thepossession of allottees has become illegal. As the purchasershave paid full consideration of the flats, they are entitled tohave legal possession and legal right and title. It is also seenfrom the observation of the State Commission that theappellants/opposite parties have not replied to the queriesraised by the Municipal Corporation and therefore, theythemselves were negligent and deficient in taking steps forgetting the Occupancy Certificate. As complaint has been filedby the society, it is essential that the possession of its membersis regularized and title of the members as well as of the Societyis legalized. This can only be legalized if OP obtainsOccupancy Certificate.

Therefore, it is necessary to direct the OP to obtain theOccupancy Certificate in a time bound manner. In this respect,the order of the State Commission is perfectly valid so far asit relates to directing the OP to obtain Occupancy Certificatewithin 90 days. Once the Occupancy Certificate is obtainedthe title has to be conveyed to the Society within four months.

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From this point of view, the condition No. 42 is against theprovisions of MOFA. Hence, this condition will not be a bindingon the other party. Therefore, the existence of this conditionin the agreement shall only be seen as unfair trade practice.As the OP has not obtained the occupancy certificate andthereby the OP is not able to register the conveyance deed infavour of the complainant Society, the continuing deficiencyon the part of the appellant/OP is evident. Therefore, I do notfind any error in the order of the State Commission in respectof the OP obtaining occupancy certificate and then executingthe conveyance deed in favour of the Society. The penalty ofRs. 1,000/- per day was effective from 17.03.2015, however,looking at the difficulties of the appellant in getting theoccupancy certificate due to some modifications, additionsand alterations in the building, I deem it appropriate to put alump sum compensation of Rs. 3 lakhs to be paid to theComplainant Society by the appellant for not obtainingoccupancy certificate till today. It is further ordered that theorder of the State Commission for paying Rs. 1,000/- per dayshall be applicable now from the expiry of 60 days from thedate of this order. This amount shall be paid regularly at everymonth to the complainant society till the occupancy certificateis obtained and conveyance deed is executed in favour of theSociety.

14. As regard the objection of the appellants regardingpecuniary jurisdiction of the State Commission, it appearsthat this objection has not been taken before the StateCommission specifically. As the matter has now been decidedby the State Commission on merits, the technical objection ofpecuniary jurisdiction cannot be raised at this stage. Thisview gets support from the decision of the Hon’ble SupremeCourt in Harshad Chiman Lal Modi Vs. DLF Universal andAnr., AIR 2005 SC 4446, wherein the Hon’ble Apex Courthas held as follows:- “So far as territorial and pecuniary jurisdictions areconcerned, objection to such jurisdiction has to be takenat the earliest possible opportunity and in any case at orbefore settlement of issues. The law is well settled on the point that if such objection is not taken at the earliest, itcannot be taken at a subsequent stage.”

15. Based on the above discussion, the appellants are directedto pay Rs. 28,00,000/- (rupees twenty eight lakhs only) to therespondent No. 1 Society within a period of 45 days, failingwhich this amount shall carry an interest @ 8% p.a. fromdate of this order till actual payment. Appellants are furtherdirected to pay Rs. 1,000/- (rupees one thousand) per dayafter 60 days from date of this order to the Complainant Societytill obtaining of the full Occupancy certificate. It is furtherdirected that appellants shall convey the title of the propertyas detailed in the order of the State Commission in favour ofthe complainant Society by registered deed within a period offour months after obtaining the Occupancy Certificate. Theimpugned order of the State Commission stands modifiedaccordingly. The cost of Rs. 50,000/- is also upheld. FirstAppeal No. 109 of 2015 stands disposed of accordingly.”

4. Assailing the order aforesaid, learned counsel for the appellantshas argued that as per the admitted position on record, the members ofthe respondent-society had carried out additional constructions/alterationsto the building due to which, the Municipal Corporation was not issuingthe Occupancy Certificate and hence, the National Commission oughtnot to have issued directions for obtaining the Occupancy Certificate.The learned counsel has referred to the reply letter dated 01.10.2002 byone Shri Nazeer H. Kadri in support of the contention that the membersof respondent-society did carry out alterations to their respective flats/shops. The learned counsel has further submitted that the respondent-society violated the terms of undertaking as mentioned in the pursi dated21.03.2013 filed before the State Commission, wherein they hadundertaken to remove the illegal alteration, if so required by the MunicipalCorporation. The learned counsel has further pointed out that removalof additional structures/changes/additions put up by the members ofrespondent-society was the subject-matter of a writ petition, being W.P.No. 970 of 2015, filed before the High Court of Judicature at Bombay,which was disposed of by the order dated 12.06.2017 with directionsthat a designated officer of the concerned ward shall visit the propertyin question so as to ascertain whether there were illegal constructions/unauthorized changes/additions/ alterations; and if such violations were A

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Afound, then to intimate the necessary parties prior to taking of any actionfor demolition or removal[2].

4.1 Learned counsel has also contended that when the StateCommission had rejected the prayer for payment of Rs. 25,00,000/- tothe respondent- society and the same was not the subject-matter ofBappeal, the National Commission has gravely erred in awarding thisamount to the respondent. Learned counsel has further submitted thateven if handing over possession of flats to the members of the respondent-society in the absence of the Occupancy Certificate was beingquestioned, fact of the matter remains that illegal/unauthorizedconstruction/alterations were carried out by the members of respondent-Csociety; and in these circumstances, the responsibility for delay incompletion of all other requirements could not have been fastened onthe appellants.

5. Per contra, learned counsel for the respondent-society hassupported the order passed by the National Commission as regards holdingDthe appellants responsible for the deficiency in services as also for thedelay in obtaining the Occupancy Certificate. The learned counsel wouldsubmit that the appellants handed over the flats/commercial units notonly without Occupancy Certificate but also without providing basicfacilities such as water, electrical meter etc.; and in any case, non-Ecompliance with the conditions to obtain Occupancy Certificate speaksvolumes about the deficiency of services on the part of the appellants.According to the learned counsel, the building is in the same condition asit was on the day of handing over possession to the members ofrespondent-society; in other words, the members of respondent-societyhave not carried out any alterations/constructions in the said premises.FWhile further refuting the contention of appellants that the OccupancyCertificate was not issued for unauthorized construction or alteration bythe members of respondent-society, the learned counsel has contended,with reference to the correspondence with the Municipal Corporation,that Occupancy Certificate was not issued for want of compliance byGthe appellants of various requisites and the attempt to shift the burden inthat regard on the members of the respondent-society was entirely 2 The learned counsel for the appellants has further pointed out that the MunicipalCorporation has initiated necessary proceeding, as noticed by the High Court in itsorder dated 07.01.2019 in Notice of Motion No. 221 of 2018 moved in W.P. No. 970 ofH2015.

unjustified. According to the learned counsel, the appellants had attemptedto amend the plan of the building which was resisted by respondent; andthere exists a dispute between the parties in relation to a portion of aproperty demarcated for Recreational Ground inasmuch as the said portionis being used by one garage owner as a parking space at the behest ofthe appellants, which has resulted in harassment of the members ofrespondent-society.

6. Having heard learned counsel for the parties and having perusedthe material placed on record, we are satisfied that in the given set offacts and circumstances, directions by the National Commission asregards payment of a sum of Rs. 25,00,000/ by the appellants to therespondent-society calls for no interference but then, other parts of theorder impugned call for suitable modification.

7. The contention on the part of appellants as regards pecuniaryjurisdiction has only been noted to be rejected. The National Commissionhas observed, and rightly so, that such a plea was not specifically raisedbefore the State Commission at the earliest opportunity; and the StateCommission having already decided the matter on merits, such a technicalobjection as regards pecuniary jurisdiction could not have beencountenanced before the National Commission. We find no error in theNational Commission rejecting this plea as being wholly untenable at thegiven stage.

8. As regards merits of the case, to put it in a nutshell, therespondent-society, while filing their complaint, sought for reimbursementof the amount of: (i) Rs. 35,16,820/- that was borrowed by appellants;(ii) Rs. 26,25,000/- collected towards possession charges; and (iii) Rs.46,40,000/- towards the amount spent by the members for completingthe interior works in their respective units. By way of the applicationdated 21.03.2013[3] the respondent-society did not press on prayer (d)concerning the said amount of Rs. 35,16,820/- towards temporary loanand at the same time, restricted their claim in prayer (f) to the extent ofRs. 25,00,000/- with reference to the minutes of the meetings dated17.12.2003 and 14.12.2003[4]. The State Commission, while issuingdirections for executing the Deed of Conveyance by obtaining CompletionCertificate and Occupation Certificate, also directed the appellants topay Rs. 26,25,000/- with interest, being the amount illegally collected 3 Reproduced hereinbefore in paragraph 3.4.

4 Reproduced hereinbefore in paragraph 3.4.1.

AB

C

D

E

FG

H

Atowards possession charges. The State Commission, however, held thatthere was no documentary evidence to establish that the amount of Rs.46,40,000/- was incurred by the members of the respondent-society tocomplete the interior civil works. On the other hand, the NationalCommission agreed with the submissions of the appellants that thedirections regarding refund of Rs. 26,25,000/- could not have been issuedBwhen there was no cogent proof and when the President of the society,who had issued the receipt in question, was deleted from the array ofthe parties on the request of the complainant. However, the NationalCommission ordered payment of Rs. 25,00,000/- by the appellants asagreed by them in the meeting dated 17.12.2003.C

9. When the prayers made in the complaint are read along withthe contents of the application dated 21.03.2013 as also with the findingsof the State Commission and the National Commission, it may appear atthe first blush that the amount claimed towards temporary loan in prayer(d) was given up by the respondent-society whereas no proof was foundDin relation to amounts claimed in prayers (e) and (f) towards possessioncharges and interior civil works respectively. However, fact of the matterremains that there had been long drawn disputes between the parties onseveral issues, including those regarding monetary claims made by therespondent-society and its members; and meetings were held for resolutionof such disputes. The prayers (d) to (f) for money recovery in theEcomplaint and the submissions made in the application dated 21.03.2013are required to be viewed in the context of such claims and the resolutionsadopted in the meetings. In our view, it would be wholly inappropriateand unjustified to consider the prayers as made in the complaint and asmodified in the application de hors the context and disjointed from theFdecisions taken in the meetings aforesaid.

10. Indisputably, in the application dated 21.03.2013 as movedbefore the State Commission, the respondent-society restricted its prayerfor money recovery to a sum of Rs. 25,00,000/- with reference to theaforesaid minutes dated 17.12.2003 and 14.12.2003. It is at once clearGthat the aforesaid sum of Rs. 25,00,000/- was agreed to be paid by theappellants in full and final settlement of the claim of the respondent-society. The appellants having agreed to make such payment, in ourview, the National Commission has rightly put them to the terms ofhonouring their unequivocal commitment/promise. In the given set offacts and circumstance, we are unable to accept the contention that aH

particular part of order of the State Commission having not beenchallenged by the respondent-society, the National Commission couldnot have granted the relief otherwise available on the face of record. Inan overall view of the matter, when such a relief emanates from thevery commitment made by the appellants in the meetings aforesaid, theNational Commission had been fully justified in granting the same to therespondent-society. Therefore, we find no reason to consider anyinterference in this part of direction by the National Commission (ascontained in paragraph 10 of the order impugned).

11. Even when we find no reason to interfere with the above-mentioned parts of the order impugned, it appears difficult to approvethe directions in the remaining parts thereof, particularly those relatingto other pecuniary reliefs. The National Commission has saddled theappellants with a liability to pay compensation to the tune of Rs. 3,00,000/- for not obtaining Occupancy Certificate and has issued further directionsto the appellants to obtain such certificate as also to execute the requisiteDeed and to pay Rs. 1,000/- per day for every day of delay. True it isthat Occupancy Certificate was not obtained by the appellants but then,fact of the matter remains that the members of respondent-society choseto take over possession without such certificate; and then, severalquestions have arisen as regards the alteration allegedly carried out bythem for which, the Municipal Corporation has the objections to raise. In any case, there appears nothing on record to find the basis for holdingthe appellants liable for compensation and then, for assessing the quantumof compensation, if at all there be any liability of the appellants. In otherwords, there is no material on record to find if the respondent-society orits members suffered any loss; and if so, the extent thereof. Therefore,this part of the order impugned, directing the appellants to paycompensation to the tune of Rs. 3,00,000/-, cannot be approved.

12. As regards direction to appellants to convey the title of theproperty in question by executing a registered Deed within a period offour months after obtaining Occupancy Certificate, in our view, thoughthe appellants cannot avoid their legal obligation to execute the requisiteDeed but then, having regard to the facts and circumstances of the caseand more particularly the facts relating to the issuance of notices by theMunicipal Corporation; and the dispute/objection regarding alterationsby the members of the respondent-society having not been settled as yetwith the High Court having issued directions for inspection of the building AB

CD

E

F

G

H

Aand for necessary follow-up steps, awarding of Rs. 1,000/- per day forevery day of delay seems rather unwarranted. In the given situation,where the Municipal Corporation had been of the view that there werevisible illegal constructions made by the members of respondent-societybecause of which the Certificate cannot be issued; and in view of theorders dated 12.06.2017 and 07.01.2019 passed by the High Court inBW.P. No. 970 of 2015, the penalty of Rs. 1,000/- per day deserves to bewaived at present but with the requirements on the parties to completethe respective requisites, while leaving it open for them to take recourseto appropriate remedies, in case of any grievance arising in future.

13. Having regard to the fact and circumstances of this case andClooking to the nature of dispute, we find no justification for saddling theappellants with cost of Rs. 50,000/- either. The cost deserves to be madeeasy in this case.

14. In the result:

D(i) The impugned order dated 07.03.2018 is not interfered with, tothe extent it relates to the payment of Rs. 25,00,000/- by the appellantsto the respondent-society. The appellants shall make payment of thisamount of Rs. 25,00,000/- within 45 days from today failing which, thisamount shall carry interest @ 8% p.a. from today until payment.

E(ii) The other part of the order impugned, saddling the appellantswith liability to pay compensation to the tune of Rs. 3,00,000/- is setaside.

(iii) Yet another part of the order impugned, requiring the appellantsto pay Rs. 1,000/- per day after 60 days of the order and until obtainingfull Occupancy Certificate, is also set aside.F

(iv) As regards obtaining of Occupancy Certificate and executionof the Deed of Conveyance by the appellants, it is provided that: (a) theappellants shall complete all the requisites on their part for obtainingOccupancy Certificate within three months from today; and (b) therespondent-society and its members shall also ensure compliance of theGrequisites on their part (with reference to the orders passed by the HighCourt in W.P. No. 970 of 2015) within three months from today and forthat matter, they may seek necessary directions from the High Court, ifso required. Within two months of completion of all the requisites by theparties, the appellants shall execute the Deed of Conveyance in favourH

of the respondent-society after obtaining the necessary OccupancyCertificate. As regards this part of the matter, it is also left open for theparties to take recourse to appropriate remedies in accordance with law,in case of any grievance arising in future.

(v) The cost imposed on the appellants is waived and parties areleft to bear their own costs of this litigation.

15. This appeal is partly allowed and the impugned order dated07.03.2018 as passed by the National Commission stands modified tothe extent and in the manner indicated above.

Ankit Gyan

Appeal partly allowed.

A

B

C

D