MahaREAT – Obtaining Certificate Under Section 270A Of Mumbai Municipal Corporation Act, 1888 Mandatory For Occupation

While upholding the order of the Maharashtra Real Estate Regulatory Authority (Authority) directing M/s. L&T Parel Projects LLP (builder) to provide a refund, the Maharashtra Real Estate Appellate Tribunal (Tribunal), comprising Justice Shriram R. Jagtap (Judicial Member) and Shrikant M. Deshpande (Technical Member), held that the certificate under Section 270A of the Mumbai Municipal Corporation Act, 1888 is mandatory.

Section 270A stipulates that no one can occupy or use any newly constructed or reconstructed premises without a certificate from the Commissioner. Also, the certificate must confirm that a supply of pure water is available either within or near the premises.

Background Facts

Homebuyer (Respondent) and his wife jointly purchased two flats in the builder's (Respondent) project named "Crescent Bay" situated at Parel, Mumbai. Two separate agreement for sale was executed by builder with homebuyers on 14.12.2015.

As per the agreement for sale the builder was supposed to handover the possession of the flat on or before 30.09.2017. Further, clause 15.1 of the agreement for sale allowed the builder a reasonable grace period of six months beyond the stipulated date, and additional extensions in case of delays due to force majeure events.

Builder completed the construction and obtained a part Occupation Certificate on March 15, 2018. However, builder failed to deliver possession of the flats by the stipulated date. As a result, the homebuyer filed complaint before the authority seeking refund and compensation.

The Authority, through its order dated December 6, 2018, directed the builder to refund the amount paid by the homebuyers along with interest and to pay ₹2,00,000 as liquidated damages. Aggrieved by this order, the builder filed an appeal before the tribunal seeking to set aside the Authority's decision.

Observation and Direction by Tribunal

The Tribunal observed that as per clause 15.1, the builder is entitled for six-month grace period, making the final due date March 31, 2018. However, any delay beyond this must be due to force majeure events. Therefore, the builder was expected to hand over possession by March 31, 2018.

The Tribunal rejected the builder's contention that the certificate under Section 270A of the Mumbai Municipal Corporation (MMC) Act, 1888, which stipulates that premises should not be occupied without the commissioner's certificate regarding adequate water supply is not mandatory.

The Tribunal referred to Section 2(zf) of the Real Estate (Regulation & Development) Act, 2016, which defines "Occupancy Certificate" as follows:

"Occupancy Certificate means the Occupancy Certificate or such other certificate by whatever name called, issued by the competent authority permitting the occupation of any building, as provided under local laws, which has provisions for civic infrastructure such as water, sanitation, and electricity."

Tribunal held that the provision of water is a crucial requirement for obtaining an Occupation Certificate. Although the builder applied for a water connection on 26.03.2018 and received confirmation on 14.08.2018, the provision of water by tankers does not fulfil the statutory requirement.

Therefore, Tribunal found that the builder delayed handing over possession of the flat and upheld the authority's decision to provide a refund with interest to the homebuyers.

Further, Tribunal concluded that the authority's order requiring the builder to pay Rs. 2,00,000 as pre-estimated liquidated damages under Clause 15.3 was unjustified. As a result, the Tribunal set aside the damages.

Case – M/s. L&T Parel Projects LLP Versus Shamsunder Jairamdas Bajaj

Citation – Appeal No. AT00600000010992/19 in Complaint No. CC006000000056005

Date of order – 24.10.2024

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