SAMRUDDHI CO-OPERATIVE HOUSING SOCIETY LTD. versus MUMBAI MAHALAXMI CONSTRUCTION PVT. LTD. on 11 January 2022

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SUPREME COURT REPORTS

[2022] 2 S.C.R.

ASAMRUDDHI CO-OPERATIVE HOUSING SOCIETY LTD.

v.

MUMBAI MAHALAXMI CONSTRUCTION PVT. LTD.

(Civil Appeal No 4000 of 2019)

BJANUARY 11, 2022

[DR. DHANANJAYA Y. CHANDRACHUD ANDA. S. BOPANNA, JJ.]

Consumer Protection Act, 1986 – ss.2(1)(d), 2(1)(g) and 24A– Maharashtra Ownership Flats (Regulation of the Promotion ofCConstruction, Sale, Management and Transfer) Act, 1963 – ss. 3,6– Respondent made constructions and entered into agreements tosell flats with individual purchasers – Appellant is a co-operativehousing society – Members of the appellant booked the flats in1993 and were granted possession in 1997 – Respondent failed toDtake steps to obtain occupation certificate from municipal authorities– In absence of occupation certificate, individual flat owners werenot eligible for electricity and water connections – Temporary waterand electricity connections were granted by the authorities due toefforts of appellant – Members of appellant society had to payproperty tax at a rate 25% higher than the normal rate and waterEcharges 50% higher than the normal charge – Appellant institutedconsumer complaint before State Consumer Disputes RedressalCommission (SCDRC) Mumbai seeking direction to respondent toobtain occupation certificate – SCDRC directed respondent toobtain occupancy certificate within four months; and also directedFrespondent to pay Rs. 1,00,000/- towards reimbursement of extrawater charges paid – Appellant sent legal notice to respondentdemanding payment of outstanding dues – Respondent failed tocomply with the demand – Appellant filed application for executionof the order of SCDRC – Appellant also filed a complaint beforethe NCDRC – NCDRC dismissed the complaint on the ground that itGwas barred by limitation and that it was not maintainable under theConsumer Protection Act, 1986 since it was in the nature of arecovery proceeding and not a consumer dispute – Held: Respondentwas responsible for transferring the title to the flats to the societyalong with the occupancy certificate – Failure of respondent toHobtain the occupation certificate is a deficiency in service for which respondent is liable – Continuous failure to obtain an occupancycertificate is a breach of the obligations imposed on the respondentunder the Maharashtra Ownership Flats Act (MOFA) and amountsto a continuing wrong – Appellants entitled to damages arising outof this continuing wrong – Members of appellant society are wellwithin their rights as ‘consumers’ to pray for compensation as arecompense for the consequent liability (such as payment of highertaxes and water charges by the owners) arising from the lack of anoccupancy certificate – Rejecting the complaint as being barred bylimitation, when the demand for higher taxes is made repeatedlydue to lack of an occupancy certificate, is a narrow view which isnot in consonance with the welfare objective of Consumer ProtectionAct 1986 – Complaint of appellants not barred by limitation – NCDRCto dispose the complaint within three months – Limitation Act, 1963– s.22.

Allowing the appeal, the Court

Conclusion

Allowing the appeal, the Court

HELD: 1.1. Section 24A of the Consumer Protection Act1986 provides for the period of limitation period for lodging acomplaint. A complaint to a consumer forum has to be filed withintwo years of the date on which the cause of action has arisen. Inthe instant case, the appellant has submitted that since the causeof action is founded on a continuing wrong, the complaint is withinlimitation. Section 22 of the Limitation Act 1963 provides for thecomputation of limitation in the case of a continuing breach ofcontract or tort. It provides that in case of a continuing breach ofcontract, a fresh period of limitation begins to run at every momentof time during which the breach continues. A continuing wrongoccurs when a party continuously breaches an obligation imposedby law or agreement. Section 3 of the Maharashtra OwnershipFlats (Regulation of the Promotion of Construction, Sale,Management and Transfer) Act 1963 (MOFA) imposes certaingeneral obligations on a promoter. These obligations inter aliainclude making disclosures on the nature of title to the land,encumbrances on the land, fixtures, fittings and amenities to beprovided, and to not grant possession of a flat until a completioncertificate is given by the local authority. The responsibility toobtain the occupancy certificate from the local authority has also A

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Abeen imposed under the agreement to sell between the membersof the appellant and the respondent on the latter. [Para 11,12 and15][386-C-E; 389-G-H; 390-A-B]

1.2. Sections 3 and 6 of the MOFA indicate that the promoterhas an obligation to provide the occupancy certificate to the flatBowners. Apart from this, the promoter must make payments ofoutgoings such as ground rent, municipal taxes, water chargesand electricity charges till the time the property is transferred tothe 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]

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1.3. Based on these provisions, it is evident that there wasan obligation on the respondent to provide the occupancycertificate and pay for the relevant charges till the certificate hasbeen provided. The respondent has time and again failed toprovide the occupancy certificate to the appellant society. ForDthis reason, a complaint was instituted in 1998 by the appellantagainst the respondent. The NCDRC on 20 August 2014 directedthe respondent to obtain the certificate within a period of fourmonths. Further, the NCDRC also imposed a penalty for any delayin obtaining the occupancy certificate beyond these 4 months.ESince 2014 till date, the respondent has failed to provide theoccupancy certificate. Owing to the failure of the respondent toobtain the certificate, there has been a direct impact on themembers of the appellant in terms of the payment of higher taxesand water charges to the municipal authority. This continuousfailure to obtain an occupancy certificate is a breach of theFobligations imposed on the respondent under the MOFA andamounts to a continuing wrong. The appellants therefore, areentitled to damages arising out of this continuing wrong and theircomplaint is not barred by limitation. [Para 18][390-H]

2. The continuing wrong in the present case is the failureGto obtain the occupancy certificate. Against this act of therespondent, the appellant society has taken appropriate actionby filing a complaint before the consumer forum. The appellant is H

currently pursuing the execution of the order of the SCDRCarising from that complaint. However, that itself does not precludeit from claiming compensation for the consequences which havearisen out of this continuing wrong. The failure to obtain theoccupancy certificate has resulted in the levy of higher taxes onthe members of the appellant society repeatedly by the municipalauthorities. Despite the order of 20 August 2014, the respondenthas failed to obtain the occupancy certificate. This has resultedin a situation where the appellant, despite having followed thecorrect course of litigation in demanding the furnishing of anoccupancy certificate, will continue to suffer the injury inflictedby the respondent merely due to the delay in the execution ofthe order against the respondent. Rejecting the complaint asbeing barred by limitation, when the demand for higher taxes ismade repeatedly due to the lack of an occupancy certificate, is anarrow view which is not in consonance with the welfare objectiveof the Consumer Protection Act 1986. [Para 19][391-E-H;392-A-B]

3. Section 2(1)(d) of the Consumer Protection Act definesa ‘consumer’ as a person that avails of any service for aconsideration. A ‘deficiency’ is defined under Section 2(1)(g) asthe shortcoming or inadequacy in the quality of service that isrequired to be maintained by law. In the present case, therespondent was responsible for transferring the title to the flatsto the society along with the occupancy certificate. The failure ofthe respondent to obtain the occupation certificate is a deficiencyin service for which the respondent is liable. Thus, the membersof the appellant society are well within their rights as ‘consumers’to pray for compensation as a recompense for the consequentliability (such as payment of higher taxes and water charges bythe owners) arising from the lack of an occupancy certificate.[Paras 21 & 22][392-C-D, F-G]

Wing Commander Arifur Rahman Khan & Others v. DLFSouthern Homes Private Limited & Others (2020) 16SCC 512 : [2020] 9 SCR 136; Pioneer Urban LandInfrastructure Limited v. Govindan Raghavan (2019) 5SCC 725 : [2019] 5 SCR 1169 – relied on.

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ABalakrishna Savalram Pujari Waghmare v. ShreeDhyaneshwar 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. SureshDas (2020) 1 SCC 1 : [2019] 18 SCR 1 and TreatyConstruction v. Ruby Tower Cooperative HousingBSociety Ltd. (2019) 8 SCC 157 : [2019] 9 SCR 606 –referred to.

Case Law Reference

From the Judgment and Order dated 03.12.2018 of the NationalEConsumer Disputes Redressal Commission, New Delhi in ConsumerCase No.1329 of 2016.Sunil Fernandes, Hitesh Rajpurohit, Ms. Nupur Kumar, PrastutDalvi, Darpan Sachdeva, Shubham Sharma, Advs. for the Appellant.

Atul Babasaheb Dakh, Adv. for the Respondent.F

The Judgment of the Court was delivered by DR. DHANANJAYA Y CHANDRACHUD, J.

AFactual Background..................................................3*

BSubmissions of Counsel.............................................6*CAnalysis....................................................................9*DConclusion..............................................................17*

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H* Ed. Note : Pagination is as per the original Judgment.

A Factual Background

1. The appeal arises from a judgment and order of the NationalConsumer Disputes Redressal Commission[1] dated 3 December 2018.The complaint was filed by the appellant for refund of the excess taxesand charges paid the appellant to the municipal authorities, due to thealleged deficiency of service of the respondent. By the impugned order,the NCDRC dismissed the complaint on the ground that it was barredby limitation and that it was not maintainable since it was in the nature ofa recovery proceeding and not a consumer dispute.

2. The appellant is a co-operative housing society. The respondentconstructed Wings ‘A’ and ‘B’ and entered into agreements to sell flatswith individual purchasers in accordance with the MaharashtraOwnership Flats (Regulation of the Promotion of Construction, Sale,Management and Transfer) Act 1963[2]. The members of the appellantbooked the flats in 1993 and were granted possession in 1997. Accordingto the appellant, the respondent failed to take steps to obtain theoccupation certificate from the municipal authorities. In the absence ofthe occupation certificate, individual flat owners were not eligible forelectricity and water connections. Due to the efforts of the appellant,temporary water and electricity connections were granted by theauthorities. However, the members of the appellant had to pay propertytax at a rate 25% higher than the normal rate and water charges at arate which was 50% higher than the normal charge.

3. On 8 July 1998, the appellant instituted a consumer complaintbefore the State Consumer Disputes Redressal Commission Mumbai[3]seeking a direction to the respondent to obtain the occupation certificate.On 7 April 2014, the respondent made an offer of aone-time settlementto the appellant, which the appellant refused by a letter dated 18 April2014 as it was allegedly lower than the amount owed by the respondent.By its judgment and order dated 20 August 2014, the SCDRC directedthe respondent to obtain an occupancy certificate within four months.The SCDRC also directed the respondent to pay, inter alia Rs. 1,00,000/- towards reimbursement of extra water charges paid.

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A4. On 28 December 2015, the appellant sent a legal notice to therespondent demanding the payment of outstanding dues in an amount ofRs. 3,56,42,257/- . The respondent failed to comply with the demand.Thereafter, the appellant filed an application for execution of the orderof the SCDRC dated 20 August 2014. The appellant also filed a complaint[4]before the NCDRC seeking payment of Rs. 2,60,73,475/- as reimbursementBof excess charges and tax paid by the members of the appellant due tothe deficiency in service of the respondent and Rs. 20,00,000/- towardsthe mental agony and inconvenience caused to the members of theappellant.

C5. Before the NCDRC, the appellant claimed that the complaintwas not barred by limitation as the payment of excess water usagecharges and the non-issuance of occupancy certificate is a continuingcause of action. Even otherwise, the cause of action was stated to havearisen on 7 April 2014, when the respondent allegedly acknowledged itsliability and agreed to pay an amount of Rs. 1 crore in settlement. TheDcause of action was also alleged to have arisen on 15 December 2015,when the respondent failed to pay the amount demanded by the appellant.Thus, the complaint was, according to the appellant, filed within theprescribed period of limitation under Section 24A of the ConsumerProtection Act 1986.

E6. By the impugned order, the NCDRC held that the complaintwas barred by limitation as:

(i) The members of the appellant booked the flats in 1993 andobtained possession in 1997, which they have continued toFenjoy since then. The possession was obtained against thelaw as no occupancy certificate had been provided by therespondent-builder;

(ii) The cause of action arose at the time when the appellantmade efforts to obtain individual water and electricityGconnections and the municipal authorities ordered themembers to pay higher charges. The complaint should havebeen filed within two years of the accrual of the cause ofaction; H4 CC No. 1329 of 2016

(iii) Since the cause of action arose on the date when themunicipal authorities demanded payment of higher taxesand charges, the period of limitation also commenced fromthis date and cannot be extended by the communicationbetween parties;

(iv) With respect to the claim that there was a continuing causeof action due to non-availability of the occupancy certificate,no relief was sought by the appellant in their complaintregarding the obtaining of an occupancycertificate. The onlyrelief which was sought is a refund of Rs. 2.60 crores forpayment of higher taxes.

7. On the merits of the dispute, the NCDRC observed that thecomplaint was filed for refund of the excess amount paid by the appellantto the authorities. In essence, the complaint was filed for recovery ofthis excess amount from the respondent. The NCDRC held that therespondent was not the service provider of the services for which theproperty tax or water charges were levied. Since these services wereprovided by the municipal authorities, the NCDRC held that the appellantwould not fall under the definition of ‘consumer’ under Section 2(1)(d)of the Consumer Protection Act 1986. Thus, the NCDRC dismissed thecomplaint as being barred by limitation and as being not maintainableunder the Consumer Protection Act 1986.

B Submissions of Counsel

8. Mr Sunil Fernandes, counsel for the appellant, urged thefollowing submissions:

(i) There is a continuing cause of action in the present case asthe respondent has failed to provide the occupancycertificate;

(ii) Due to the failure of the respondent to obtain the occupancycertificate, the members of the appellant have had to pay a25% higher amount on account of the property tax and anadditional 50%towards the water charges;

(iii) Under Section 6 of the MOFA, it is the duty of the builderto provide the occupancy certificate to the society, whichthe respondent has failed to fulfil; A

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A(iv)Prior to the order of the SCDRC, the respondent offered topay an amount of Rs. 1 crore as a one-time settlementamount towards payment of the extra charges or penaltyincurred by the appellant for the increased property tax andwater charges; B(v)The offer of a one-time settlement had no relation to thecomplaint pending before the SCDRC as the relief claimedbefore the SCDRC was for the grant of an occupancycertificate and payment of penalty to the appellant for excesscharges and deficiencies; C(vi)When the residents started residing in the society’s premises,they had to incur increased amount towards the propertytax and water charges. These charges were levied on anannual basis and continue to be raised due to the failure ofthe respondent to obtain an occupancy certificate; D(vii)The conduct of the respondent has been improper. Therespondent has not obtained the occupancy certificate eventwenty four years after giving possession and has notcomplied with the order of the SCDRC dated 20 August2014. Due to the failure of the respondent to comply withthe order of the SCDRC, non-bailable warrants have beenEissued against the respondent; and

(viii) Under the MOFA and the agreement to sell with themembers of the appellant, the respondent has an obligationto obtain the occupancy certificate. Due to the deficiencyin service, the members of the appellant have had to makeFexcess payment. Thus, the appellant is a consumer underthe Consumer Protection Act 1986.

9. Opposing these submissions, Mr Atul Babasaheb Dakh,appearing on behalf of the respondent submitted that:

(i) When the construction of the project was completed in 1997,Gthe respondent applied for an occupancy certificate.However, the respondent did not offer possession to theflat-purchasers;

(ii) The members of the appellant society took possession oftheir flats to refurbish the interiors and to make suitableH

arrangements till the occupancy certificate was issued.Instead, they started occupying the premises and madearrangements for water and electricity by paying additionalcharges;

(iii) The members of the appellant made unauthorizedconstructions due to which there was a delay in obtainingthe occupancy certificate;

(iv) The proposal for one-time settlement in 2014 did not pertainto the additional property tax and water charges;

(v) In the consumer complaint filed by the appellant in 1998,the appellant had raised the issue of excessive water chargesand the SCDRC had directed payment of Rs. 1,00,000/- tothem. On 2 May 2016, the appellant society received anamount of Rs. 11,55,885/- in the proceedings for executionofthe order dated 20 August 2014 of the SCDRC;

(vi) The complaint is barred by limitation as the cause of actionarose in 1997 and the complaint was filed 18 years later;

(vii) The appellant’s failure to incorporate their present grievancesin the prior complaint before the SCDRC indicatesrelinquishment of their grievances;

(viii) Under Section 6 of the MOFA, the builder is entitled to payall outgoing charges till the grant of possession. Themembers of the appellant received possession in 1997 andthere is no claim for an amount due till 1997;

(ix) Section 12 of the MOFA provides that it is the liability ofthe flat purchasers to pay municipal taxes and water andelectricity charges;

(x) The respondent is not a service provider of water supplyand has not received any payment for water and propertytax. Thus, the appellant is not a consumer under theConsumer Protection Act 1986 and the complaint is notmaintainable; and

(xi) There is no privity of contract between the parties forpayment of extra charges in the absence of an occupancycertificate.

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AC Analysis

10. The crux of the appeal revolves around the maintainability ofthe complaint and whether it is barred by limitation. The NCDRC heldthat the cause of action arose when the municipal authorities asked theappellant to pay higher charges in the first instance and thus, a complaintBshould have been filed within two years of the accrual of the cause ofaction. The appellant however, has argued that the cause of action is ofa continuing nature, since members of the appellant havecontinued payinghigher charges as the respondent failed to provide the occupancycertificate.

C11. Section 24A of the Consumer Protection Act 1986 providesfor the period of limitation period for lodging a complaint. A complaint toa consumer forum has to be filed within two years of the date on whichthe cause of action has arisen. In the instant case, the appellant hassubmitted that since the cause of action is founded on a continuing wrong,the complaint is within limitation.D

12. Section 22 of the Limitation Act 1963[5] provides for thecomputation of limitation in the case of a continuing breach of contractor tort. It provides that in case of a continuing breach of contract, afresh period of limitation begins to run at every moment of time duringwhich the breach continues. This Court in Balakrishna Savalram PujariEWaghmare v. Shree Dhyaneshwar Maharaj Sansthan[6]elaboratedon when a continuous cause of action arises. Speaking for the three-judge Bench, Justice PB Gajendragadkar (as the learned Chief Justicethen was) observed that“31. […] Does the conduct of the trustees amount to a continuingFwrong under Section 23? That is the question which this contentionraises for our decision. In other words, did the cause of actionarise de die in diem as claimed by the appellants? In dealing withthis argument it is necessary to bear in mind that Section 23 refersnot to a continuing right but to a continuing wrong. It is the veryGessence of a continuing wrong that it is an act which createsa continuing source of injury and renders the doer of the 5 “22. Continuing breaches and torts.—In the case of a continuing breach of contractor in the case of a continuing tort, a fresh period of limitation begins to run at everymoment of the time during which the breach or the tort, as the case may be, continues.”H6 AIR 1959 SC 798

act responsible and liable for the continuance of the saidinjury. If the wrongful act causes an injury which is complete,there is no continuing wrong even though the damageresulting from the act may continue. If, however, a wrongfulact is of such a character that the injury caused by it itselfcontinues, then the act constitutes a continuing wrong. Inthis connection it is necessary to draw a distinction betweenthe injury caused by the wrongful act and what may bedescribed as the effect of the said injury. It is only in regardto acts which can be properly characterised as continuingwrongs that Section 23 can be invoked.”

The Court held that the act of the trustees to deny the rights ofGuravs as hereditary worshippers and dispossessing them through adecree of the court was not a continuing wrong. Although the continueddispossession caused damage to the appellants, the injury to their rightswas complete when they were evicted.

13. In CWT v. Suresh Seth[7], a two-judge Bench of this Courtdealt with the question of whether a default in filing a return under theWealth Tax Act amounted to a continuing wrong. Justice ESVenkataramiah (as the learned Chief Justice then was) observed that:

“11. […] The distinctive nature of a continuing wrong isthat the law that is violated makes the wrongdoercontinuously liable for penalty. A wrong or default whichis complete but whose effect may continue to be felt evenafter its completion is, however, not a continuing wrongor default. It is reasonable to take the view that the court shouldnot be eager to hold that an act or omission is a continuing wrongor default unless there are words in the statute concerned whichmake out that such was the intention of the legislature. In theinstant case whenever the question of levying penalty ariseswhat has to be first considered is whether the assessee hasfailed without reasonable cause of file the return as required bylaw and if it is held that he has failed to do so then penalty has tobe levied in accordance with the measure provided in the Act.When the default is the filing of delayed return the penalty may A

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be correlated to the time-lag between the last day for filing itwithout penalty and the day on which it is filed and the quantumof tax or wealth involved in the case for purposes of determiningthe quantum of penalty but the default however is only one whichtakes place on the expiry of the last day for filing the returnwithout penalty and not a continuing one. The default in questiondoes not, however, give rise to a fresh cause of action everyday. Explaining the expression “a continuing cause of action”Lord Lindley in Hole v. Chard Union [(1894) 1 Ch D 293 : 63LJ Ch 469 : 70 LT 52] observed:

“What is a continuing cause of action? Speaking accurately, thereis no such thing; but what is called a continuing cause of action isa cause of action which arises from the repetition of acts oromissions of the same kind as that for which the action wasbrought.”

The Court further provided illustrations of continuous wrongs:

“17. The true principle appears to be that where the wrongcomplained of is the omission to perform a positive duty requiringa person to do a certain act the test to determine whether such awrong is a continuing one is whether the duty in question is onewhich requires him to continue to do that act. Breach of a covenantto keep the premises in good repair, breach of a continuingguarantee, obstruction to a right of way, obstruction to the right ofa person to the unobstructed flow of water, refusal by a man tomaintain his wife and children whom he is bound to maintain underlaw and the carrying on of mining operations or the running of afactory without complying with the measures intended for thesafety and well-being of workmen may be illustrations of continuingbreaches or wrongs giving rise to civil or criminal liability, as thecase may be, de die in diem.”

14. In M. Siddiq v. Suresh Das[8],a Constitution Bench of thisCourt (of which one of us (Justice DY Chandrachud) was a part)examined the precedents with regards to a continuing wrong. The Courtobserved that:

H8 (2020) 1 SCC 1

“343. The submission of Nirmohi Akhara is based on the principleof continuing wrong as a defence to a plea of limitation. Inassessing the submission, a distinction must be madebetween the source of a legal injury and the effect of theinjury. The source of a legal injury is founded in a breach ofan obligation. A continuing wrong arises where there is anobligation imposed by law, agreement or otherwise tocontinue to act or to desist from acting in a particular manner.The breach of such an obligation extends beyond a singlecompleted act or omission. The breach is of a continuingnature, giving rise to a legal injury which assumes thenature of a continuing wrong. For a continuing wrong toarise, there must in the first place be a wrong which isactionable because in the absence of a wrong, there can beno continuing wrong. It is when there is a wrong that afurther line of enquiry of whether there is a continuing wrongwould arise. Without a wrong there cannot be a continuing wrong.A wrong postulates a breach of an obligation imposed on anindividual, whether positive or negative, to act or desist from actingin a particular manner. The obligation on one individual finds acorresponding reflection of a right which inheres in another. Acontinuing wrong postulates a breach of a continuing duty or abreach of an obligation which is of a continuing nature. […]

Hence, in evaluating whether there is a continuing wrong withinthe meaning of Section 23, the mere fact that the effect of theinjury caused has continued, is not sufficient to constitute it as acontinuing wrong. For instance, when the wrong is completeas a result of the act or omission which is complained of, nocontinuing wrong arises even though the effect or damagethat is sustained may enure in the future. What makes awrong, a wrong of a continuing nature is the breach of aduty which has not ceased but which continues to subsist.The breach of such a duty creates a continuing wrong andhence a defence to a plea of limitation.”

15. A continuing wrong occurs when a party continuously breachesan obligation imposed by law or agreement. Section 3 of the MOFAimposes certain general obligations on a promoter. These obligations A

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Ainter 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 givenby the local authority. The responsibility to obtain the occupancycertificate from the local authority has also been imposed under theagreement to sell between the members of the appellant and theBrespondent on the latter.

16. Section 6 of the MOFA make the promoter responsible forpayments of outgoings till the property is transferred. Section 6 reads asfollows:

C“A promoter shall, while he is in possession and where he collectsfrom persons who have taken over flats or are to take over flatssums for the payment of outgoings even thereafter, pay all outgoings(including ground rent, municipal or other local taxes, on incometaxes, water charges, electricity charges, revenue assessment,interest on any mortgage or other encumbrances, if any), until heDtransfers the property to the persons taking over the flats, or tothe organisation of any such persons,[where any promoter failsto pay all or any of the outgoings collected by him from thepersons who have taken over flats or are to take over flats,before transferring the property to the persons taking overEthe flats or to the organisation of any such persons, thepromoter shall continue to be liable, even after the transferof the property, to pay such outgoings and penal charges (ifany) to the authority or person to whom they are payableand to be responsible for any legal proceedings which maybe taken therefor by such authority or persons.]”F

17. Sections 3 and 6 of the MOFA indicate that the promoter hasan obligation to provide the occupancy certificate to the flat owners.Apart from this, the promoter must make payments of outgoings such asGground rent, municipal taxes, water charges and electricity charges tillthe time the property is transferred to the flat-owners. Where the promoterfails to pay such charges, the promoter is liable even after the transferof property .

18. Based on these provisions, it is evident that there was anobligation on the respondent to provide the occupancy certificate andH

pay for the relevant charges till the certificate has been provided. Therespondent has time and again failed to provide the occupancy certificateto the appellant society. For this reason, a complaint was instituted in1998 by the appellant against the respondent. The NCDRC on 20 August2014 directed the respondent to obtain the certificate within a period offour months. Further, the NCDRC also imposed a penalty for any thedelay in obtaining the occupancy certificate beyond these 4 months.Since 2014 till date, the respondent has failed to provide the occupancycertificate. Owing to the failure of the respondent to obtain the certificate,there has been a direct impact on the members of the appellant in termsof the payment of higher taxes and water charges to the municipalauthority. This continuous failure to obtain an occupancy certificate is abreach of the obligations imposed on the respondent under the MOFAand amounts to a continuing wrong. The appellants therefore, are entitledto damages arising out of this continuing wrong and their complaint isnot barred by limitation.

19. The NCDRC in its impugned order has held that the causeof action arose when the municipal authorities ordered the payment ofhigher taxes in the first instance. Further, the impugned order alsostates that the present complaint is barred by limitation as there is noprayer for supply of occupancy certificate. We are unable to subscribeto the view of the NCDRC on both counts. Undoubtedly, the continuingwrong in the present case is the failure to obtain the occupancycertificate. Against this act of the respondent, the appellant societyhas taken appropriate action by filing a complaint before the consumerforum. The appellant is currently pursuing the execution of the orderof the SCDRC arising from that complaint. However, that itself doesnot preclude it from claiming compensation for the consequences whichhave arisen out of this continuing wrong. The failure to obtain theoccupancy certificate has resulted in the levy of higher taxes on themembers of the appellant society repeatedly by the municipalauthorities. Despite the order of 20 August 2014, the respondent hasfailed to obtain the occupancy certificate. This has resulted in a situationwhere the appellant, despite having followed the correct course oflitigation in demanding the furnishing of an occupancy certificate, willcontinue to suffer the injury inflicted by the respondent merely due tothe delay in the execution of the order against the respondent. Rejectingthe complaint as being barred by limitation, when the demand for higher A

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Ataxes is made repeatedly due to the lack of an occupancy certificate,is a narrow view which is not consonance with the welfare objectiveof the Consumer Protection Act 1986.

20. We shall now briefly advert to the finding of the NCDRC onthe merits of the dispute. The NCDRC has held that the appellant is notBa ‘consumer’ under the provisions of the Consumer Protection Act asthey have claimed the recovery of higher charges paid to the municipalauthorities from the respondent. Extending this further, the NCDRC hasobserved that the respondent is not the service provider for water orelectricity and thus, the complaint is not maintainable.

C21. 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 orinadequacy in the quality of service that is required to be maintained bylaw. In its decisions in Wing Commander Arifur Rahman Khan &Others v. DLF Southern Homes Private Limited & Others[9]andDPioneer Urban Land Infrastructure Limited v. GovindanRaghavan[10], this Court has held that the failure to obtain an occupancycertificate or abide by contractual obligations amounts to a deficiency inservice. In Treaty Construction v. Ruby Tower CooperativeHousing Society Ltd.[11], the Court also considered the question ofEawarding compensation for not obtaining the certificate. In that case,the Court declined to award damages as there was no cogent basis forholding the appellant liable for compensation, and assessing the quantumof compensation or assessing the loss to the members of the respondentsociety.

F22. In the present case, the respondent was responsible fortransferring the title to the flats to the society along with the occupancycertificate. The failure of the respondent to obtain the occupationcertificate 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 theGconsequent liability (such as payment of higher taxes and water chargesby the owners) arising from the lack of an occupancy certificate.

9 (2020) 16 SCC 51210 (2019) 5 SCC 725H11 (2019) 8 SCC 157

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23. For the above reasons, we allow the appeal against the orderof the NCDRC dated 3 December 2018 and hold that the complaint ismaintainable. We direct the NCDRC to decide the merits of the disputehaving regard to the observations contained in the present judgment anddispose the complaint within a period of three months from the date ofBthis judgment.

24. Pending applications, if any, shall stand dismissed.

Bibhuti Bhushan Bose

Appeal allowed.

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