In recent times, the dream of owning a home has often turned into a nightmare for many due to delays in projects and unethical practices by developers. One common tactic employed by developers is offering possession of allotted units without obtaining the necessary Occupancy Certificates ("OC") or Completion Certificates ("CC"), as mandated by the Real Estate (Regulation and Development) Act, 2016 ("RERA Act"). It is also frequently observed that developers instead opt to offer possession of the allotted units under the labels of "Deemed Possession" or "Offer for Fit Out". In such instances, it remains unclear whether the developer actually possesses the required OC/CC and whether they have obtained the necessary No Objection Certificates ("NOCs") as mandated by RERA to offer possession under these categories.
This article delves into the rights of homebuyers trapped in such situations and the legal avenues available to them for redressal.
What are Completion and Occupancy Certificates?
A Completion Certificate is a certificate declaring that the Apartment/Building built by the Developer is completed, ready, and is safe in nature. It is issued by the competent Authority (such as NOIDA, GNIDA, YEIDA, etc.) only upon being satisfied that the prepared Apartment/Building has been constructed after following all the applicable rules and regulations and the Promoter/Builder has fulfilled the promises that were made to the Homebuyers/Allotees at the time of Allotment.[1] In simple terms, one may say that a
On the other hand, an Occupancy Certificate means a confirmation issued by a competent authority that the constructed Apartment/Building is equipped with all the basic civic amenities and infrastructure, such as water, sanitation, and electricity, that are necessary for the occupation of any building.[2] Simply put, your home is deemed ready for living only after the builder secures these crucial certificates. An offer of possession without it is meaningless and illegal.
Understanding the RERA Mandate for valid Offer of Possession
Section 11(4)(b) of the RERA Act obliges the Promoter/Developer to obtain a Completion /Occupancy Certificate, or both, of the Apartment/Building from the competent Authority before handing over it to the Homebuyers/Allottees. This Section is required to be read with Section 4 of the Uttar Pradesh Apartment (Promotion of Construction, Ownership and Maintenance) Act, 2010 ("Apartment Act") wherein the liabilities of a Promoter/Builder have been deliberated in detail. One of the most important aspects is that as per Section 4(1)(f) of the Apartment Act, the Promoter/Developer must present no objection certificate from the Fire Department, external and internal services plan of electricity, sewage, drainage, and water supply system, etc. before the Homebuyers/Allottees as a token of assurance that the proposed Apartment/Building will be free from probable disasters.
The procedure for obtaining a OC/CC differs from State to State. In Uttar Pradesh, it is guided by the provisions given in Section 15-A of the Uttar Pradesh Urban Planning and Development Act, 1973. This Section says that every developer that has completed its project must send a notice of completion, in writing, to the Authority. Thereafter, the Authority will provide the OC/CC within the manner prescribed by the bylaws, applicable at the time of notice, of the Authority. It is further provided that in case where the completion certificate is not granted and this refusal is not communicated to the Promoter/Builder within three months after receipt of the notice of completion, then it will be deemed that the OC/CC has been granted by the Authority.
The Uttar Pradesh Government, in order to increase the ease of doing business in the State, has relaxed this three-month period. It stated that the ‘deemed approval of OC/CC’ would be considered if the Authority fails to communicate the rejection to the Promoter/Builder within just 7 days of the aforesaid notice[3]. However, one needs to note that the Hon’ble Uttar Pradesh Real Estate Regulatory Authority ("UPRERA"), has clarified that this 'deemed approval of Completion/Occupancy Certificate' will be granted only upon the submission of authentic documents, including the (i) Electrical Safety Certificate, (ii) Fire Safety Certificate, (iii) Structural Engineer Certificate, and (iv) Lift Installation/Safety Certificate, alongside the notice of completion, by the Promoter/Builder to the Authority[4].
Your Rights as Homebuyers
As a homebuyer, you can exercise the following rights if the builder offers possession without necessary certifications and compliances:
Reject the offer of possession: You can refuse such an offer of possession outrightly since the builder is violating RERA norms and other statutory compliances. Without an occupancy certificate, you can not legally occupy the property.
Withhold payments: You have the right to withhold outstanding dues that are due at the time of actual possession and other charges like stamp duty, registration charges, maintenance, etc. Promoter/Builder cannot oblige for such payment when the ‘offer of possession’ is itself illegal.
Seek Redressal before RERA and Consumer Foras: You can approach forums like RERA or Consumer Commissions to address grievances and challenge unreasonable charges. There is strength in numbers. You can file a complaint either individually or in a group or through registered associations.
Seek Compensation for Delayed Possession: You have a right to claim compensation for the delay caused by the Promoter/Builder in handing over lawful possession of their allotted flat.
The bottom line is that you should not surrender meekly to intimidation or false promises. As a homebuyer, you have been wronged but the law is on your side. Stand up for your rights boldly.
Judicial Precedents for protection of the rights of the Homebuyers
The Hon’ble Supreme Court in the landmark case titled Samruddhi Co-operative Housing Society Ltd v. Mumbai Mahalaxmi Construction Pvt. Ltd. [5] has held that a developer can not offer possession to the Homebuyers/Allottees without obtaining a proper Completion Certificate or Occupancy Certificate from the Competent Authority. The Hon’ble Court, in Paragraph 15 of its judgment, has categorically observed that “A continuing wrong occurs when a party continuously breaches an obligation imposed by law or agreement. Section 3 of the 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.” In addition to this, the Hon’ble Court has also upheld the rights of Homebuyers/Allottees to claim compensation from Promoter/Builder by making a plea before the consumer forum.
Apart from this, in some other pertinent verdicts namely Wing Commander Arifur Rahman Khan & Others v. DLF Southern Homes Private Limited & Others [6] and Pioneer Urban Land Infrastructure Limited v. Govindan Raghavan [7], the Hon’ble Apex Court has reprimanded the Promoter/Builder and remarked that the latter has committed a deficiency in service when it fails to obtain an occupancy certificate or abide by its contractual obligations towards the Homebuyers/Allottees.
Following this, the Hon’ble National Consumer Disputes Redressal Commission ("NCDRC"), has also stepped in for the protection of Homebuyers/Allottees and held that the Promoter/Builder cannot force the former to pay maintenance charge on their allotted flat when no Occupancy Certificate for the Apartment/Building has been obtained from the competent Authority. The NCDRC has held this in the case of Gurumurthy Thisgarajan and Anita Rao and Ors. v. VDB. Whitefield Development Pvt. Ltd. [8] by following its own precedent of Kamal Kishor and Ors. v. M/s. Supertech Limited [9]. In the case of Kamal Kishore, the NCDRC in paragraph 8 of its decision, specifically stated that “Offering possession without obtaining the occupancy certificate is meaningless since the allottee is not permitted in law to occupy the house which does not have the requisite occupancy certificate. Therefore, the maintenance charges, in my opinion, would be payable only from the date on which the possession is offered to the complainants, after obtaining the requisite occupancy certificate ……”
The Hon’ble UPRERA has also come to the rescue of Homebuyers/Allottees & has protected them from the unlawful demands of their Promoter/Builder. This was done vide an order dated 07.02.2024 passed in Ankit Jain and Anr. v. Hebe Infrastructure Private Limited (Mahagun Group) wherein it was observed that the Promoter/Builder cannot arbitrarily levy holding charge, or any other charge/interest/penalty, from the Homebuyers/Allottees when the ‘Offer of Possession’ is provided without obtaining a valid Occupancy Certificate issued by the competent Authority.[10]
Thus, a valid Completion/Occupancy Certificate is a mandatory requirement before giving an ‘Offer of Possession’ to the Homebuyers/Allottees. In the absence of this, an offer for possession is illegal and invalid in nature and hence, no holding charge, or any other charge/interest/penalty, can be demanded based on the same.
Conclusion
At last, it could be sufficiently said that the Homebuyers/Allottees do not need to pay unreasonable holding charges, or any other charge/interest/penalty imposed by the developer, when a valid Completion/Occupancy Certificate or mandatory NOCs are disclosed to them. They are well within their rights to refuse such invalid offer of possession and can claim a lawful possession, along with compensation (such as delay penalty, etc.), from the Developer. We at S&D Legal Associates provide necessary and robust legal assistance in case a developer/builder is attempting to offer possession without acquiring mandatory occupancy certificates/NOCs from local authorities or is forcing you to pay unlawful demands in the pretext of the same.
[1] Section 2(q), The Real Estate (Regulation and Development) Act, 2016.
[2] Section 2(zf), The Real Estate (Regulation and Development) Act, 2016.
[3] G.O. No. 1241/8/3/17/34 vividh/2008, dated 31.10.2017.
[4] Letter No. 8208/UPRERA/20th meeting/ka.aa./2019-20, dated 16.09.2019.
[5] 2022 SCC OnLine SC 35.
[6] (2020) 16 SCC 512.
[7] (2019) 5 SCC 725.
[8] Consumer Complaint No. 763 of 2020.
[9] Consumer complaint no. 1009 of 2016.
[10] NCR144/03/107082/2023; Complaint was filed and argued by Adv. Devesh Saxena, S&D Legal Associates. The same order was passed in 5 other accompanying complaints against the same developer, i.e., Hebe Infrastructure Private Limited (Mahagun Group). READ ORDER HERE:
Credit for Article Research: Adv. Utkarsh Shubham, Associate, S&D Legal Associates.