Real estate developer can't offer flat without completion & valid firefighting clearance certificates, said the Supreme Court bench. It underscored the absence of these certificates, amounting to deficiency in service under the Consumer Protection Act.
Dealing with appeals arising out of a direction by the National Consumer Disputes Redressal Commission to refund the flat amount, the bench said the appellant’s key contention regarding the absence of the completion certificate and firefighting clearance certificate merits serious consideration.
"The appellant consistently raised this issue, asserting that a valid offer of possession cannot be made without these documents," the bench noted. Section 4(5) of the UP Apartment (Promotion of Construc- tion, Ownership & Maintenance) Act, 2010 and Section 19(10) of the RERA Act, 2016 mandate that a developer must obtain these certificates before offering possession, it said.
"Despite the appellant's repeat- ed requests, ADA failed to produce these certificates, rendering its offer of possession incomplete and legally invalid," the bench said.
The court opined that the ap- pellant has rightly cited relevant precedents to bolster this argument, particularly in Debashish Sinha Vs R N R Enterprise (2023) that possession offered without the requisite completion certificate is illegal, and a purchaser cannot be compelled to take possession in such circumstances.
Absence of these certificates was also found to constitute a deficiency in service, it pointed out.
"In the pres- ent case, the ADA's failure to provide the required certificates justifies the appellant’s refusal to take possession. This strengthens the appellant’s claim for additional compensation to compensate for the delay caused by ADA’s breach of its statutory obligations," the bench said.
In the case, the bench found that both parties have exhibited lapses in their respective obligations. Instead, the appellant persistently sought a waiver of the penal interest on the delayed payment, eventually settling the amount only on June 04, 2019, a significant delay that cannot be overlooked and that too without the interest component which had further accrued over a period of about five years, the bench said.
"On the other hand, the ADA, despite making an offer of possession in 2014, did not fulfil its statutory obligations by providing the requisite completion certificate and firefighting clearance certificate, both of which are essential for a valid and lawful offer of possession. The absence of these documents, which were also not furnished before the NCDRC, unquestionably vitiates the offer of possession made by the ADA," the bench said.
“Therefore, apart from the re- fund of the entire amount deposit- ed by the appellant at the rate of 9% interest per annum from July 11, 2020 till the date of refund, the court directs the ADA to pay an additional amount of Rs 15 lakh to the appellant and also return the nonjudicial stamp worth Rs 3,99,100 back to the appellant, within three months.”
In the case, the bench said, it refrained from imposing any exemplary costs on either party, recognizing that both have contributed to the situation at hand. It also noted that the ADA, being a civic body tasked with serving the public and operating on a non-profit basis, should not be unduly penalized in a manner that could impede its functioning.
THE IMPLICATIONS
The crucial ruling by the Supreme Court that real estate developers cannot offer flats to buyers without securing a valid completion certificate and a firefighting clearance certificate, will go a long way in protecting homebuyers’ rights and safety compliances by the developers.
The ruling serves as a warning of legal consequences in case of non-compliance and developers found violating these rules by offering possession without the required certificates. This hopefully will bring more awareness and adherence to safety standards and due process. For the beneficiaries of the ruling i.e. the homebuyers, it means assurance of getting buildings that are constructed according to approved plans and as per local government regulations.
The Supreme Court decision will lead to greater scrutiny of real estate projects, more accountability from developers and enhanced regulatory compliance in the real estate sector. It sets a strong precedent for protecting consumer rights and ensuring safer living environments. In conclusion, this latest intervention by the apex court in the dealings of real estate is a crucial step in improving trust and transparency in the Indian real estate sector.
The Supreme Court decision will lead to greater scrutiny of real estate projects, more accountability from developers and enhanced regulatory compliance in the real estate sector.
The court has emphasized that selling flats before obtaining the necessary clearances violates the rights of buyers and their safety. The ruling will further persuade the developers to offer properties for possession only after fulfilling statutory requirements.
