MHADA & BMC Failed To Take Action Against Developer, Nexus Apparent: Bombay HC In Plea Against Non Issuance Of Occupation Certificate

While hearing a plea against non issuance of Occupation Certificate (OC) by the Maharashtra Housing & Area Development Board (MHADA) and Municipal Corporation of Greater Bombay (BMC) for certain property, the Bombay High Court said that the authorities' conduct in failing to take necessary actions against the developer pointed to a nexus between them.

A division bench of Justice M.S. Sonak and Justice Kamal Khata said, “The nexus between MHADA, BMC, and the Developer is apparent. There is no explanation for why, to date, the MHADA has not obtained the surrender of valuable property or compensation from the developer. The MHADA is not some private entity that can waive such conditions at its whims or fancies or foist such conditions indirectly on the tenants or occupants by pressuring them to pressure the developer. The developer has not even bothered to appear because it has nothing to lose and has already gained everything, thanks to the dereliction and unreasonable approach of the MHADA and BMC in this matter.”

Noting that the authorities chose to evade their responsibilities by 'passing the buck', the Court directed the CEO of MHADA to inquire into the case and take appropriate action against the concerned officials responsible for enforcing compliance.

Further, on BMC's failure to provide necessary water and sewage facilities, the Court remarked “The BMC cannot act like a private party, focusing solely on revenue collection and forgetting the public or service element that should inform its actions.”

The facts leading to the case are that the petitioners were tenants of shops in a property located in Mumbai. A developer (respondent no.3) purchased the said property consisting of shops and residential accommodations from the owners in 1986. When the front wings of the shops were constructed, the petitioners-tenants were asked to take possession of the shops by the developer-respondent, which they did. They were assured of an Occupation Certificate (OC) by the developer once the rear wing was completed.

As the developer failed to secure the OC, BMC did not provide water and sewerage facilities to the petitioners but charged them 150% of the normal property tax. The BMC informed the petitioners that the OC was withheld because MHADA (respondent no. 2) had not granted a final No Objection Certificate (NOC) to the developer.

The petitioners thereafter moved the high court seeking directions to the BMC and MHADA to issue an Occupation Certificate (OC) for their property. They further sought waiver of additional municipal taxes. The petitioners contended that the unreasonable approach of MHADA and BMC points towards a nexus between the authorities and the developer.

The High Court observed that instead of going against the developer and builder, the BMC and MHADA unnecessarily pressured the petitioners-tenants to pay for water supply and sewerage facilities that was not even been supplied to them.

It criticised MHADA and BMC for their approach, stating that the authorities acted in a manner that favoured the developer at the expense of the petitioners. It stated that respondent-authorities caused a loss to the public exchequer as well as the petitioners by not going against the developer.

The Court noted that as per the records, the developer had to surrender at least 1324 sq. ft of area or pay the market price in view of such surrender before occupying the rear premises of the property. It stated that MHADA's failure to ensure that the developer surrenders or pays the market price enabled the developer to make commercial profits without paying MHADA its dues.

The Court opined that the BMC should not have issued NOC to the rear portion before the tenants were rehabilitated in the front portion with a final NOC. It also observed that BMC did little to assist the petitioners-tenants in obtaining an OC and granting the necessary water and sewerage facilities.

It remarked “For this default of the developer and the dereliction of duties by the MHADA and the BMC, the petitioners who have committed no defaults regarding surrender or payment of compensation are made to suffer.”

Regarding the petitioner's allegations of nexus between developer and authorities, the Court said that the CEO of MHADA should inquire into this transaction, identify the concerned officers and take strict action against them. It noted that the inaction of the MHADA officials needs to be investigation from all angles. It thus directed the CEO of MHADA to inquire into the case and take appropriate action against those involved.

The Court also directed the MHADA to issue a NOC and the BMC to issue an OC to the petitioners.

It further directed the BMC to reconcile the payments made by the petitioners for the entire period. It stated that the petitioners should be charged the standard rate that would have been applicable if the Occupation Certificate (OC) was granted from the time of their occupation.

Case Title: T.J. Thomas & Ors. vs. Municipal Corporation of Greater Bombay & Ors. (Writ Petition No. 185 Of 2000)

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