Holding

The Supreme Court affirmed the builder's obligation to pay the agreed Rs 25 lakh but dismissed the compensation and daily penalty, directing completion of statutory requisites and execution of the conveyance deed after the Occupancy Certificate is obtained.

Summary

Treaty Construction built a residential‑commercial project whose flats were purchased by members who formed the Ruby Tower Co‑op Housing Society. The society alleged that the builder failed to complete interior works, did not obtain a Completion or Occupancy Certificate, and collected excess possession charges, seeking repayment and compensation. The State Consumer Commission ordered the builder to pay Rs 26.25 lakh, obtain the certificates, execute a deed of conveyance and pay Rs 3 lakh compensation plus a daily penalty of Rs 1,000 for delay. The National Consumer Commission modified the order, confirming a payment of Rs 25 lakh (as agreed in 2003 meetings) but also imposing the compensation and daily penalty. The Supreme Court upheld the Rs 25 lakh payment, set aside the compensation and daily penalty, directed both parties to complete their respective requisites and the builder to execute the deed after obtaining the Occupancy Certificate, and waived costs. The appeal was therefore partly allowed.

Issues considered

The builder's liability to pay Rs 25 lakh as per the 2003 settlement meeting.
Whether the builder is liable to pay Rs 3 lakh compensation for failure to obtain an Occupancy Certificate.
Whether a daily penalty of Rs 1,000 for delay in obtaining the Occupancy Certificate is justified.
Whether the National Consumer Commission had jurisdiction to modify the State Commission's order on pecuniary grounds.
Whether the builder must execute a deed of conveyance within a specified period after obtaining the Occupancy Certificate.

Legislation cited

Maharashtra Ownership Flats (Regulation of Promotion, Construction, Sale, Management and Transfer) Act, 1963s. 11, s. 4

Subjects

Consumer Protection Actdeficiency of serviceoccupancy certificateMOFAco‑operative housing societypecuniary jurisdictioncompensationdaily penaltydeed of conveyance

Judgment

606 [2019]
SUPREME COURT 9 S.C.R. 606
REPORTS [2019] 9 S.C.R.

A M/S TREATY CONSTRUCTION & ANR.
v.
M/S RUBY TOWER CO-OP. HSG. SOCIETY LTD.
(Civil Appeal No. 5699 of 2019)
B JULY 19, 2019
[ABHAY MANOHAR SAPRE AND
DINESH MAHESHWARI, JJ.]
Consumer Protection – Deficiency of service – Appellants
C evolved a scheme of constructing a building consisting of flats and
shops – Purchasers of those flats and shops formed a co-operative
housing society – In relation to the project in question, dispute arose
between the members of the respondent-society and appellants-
builders – Respondent-society contended that appellants failed to
complete the interior works and failed to obtain the completion
D
certification as also the occupancy certificate – It was also alleged
that appellants borrowed varied sums of money from the respondent-
society on pretext of completing the unfinished work – On the other
hand, appellants contended that delay was due to the obstruction
caused and created by the respondent, who had made illegal
E construction/alterations – State Commission, inter alia, directed
appellants to execute Deed of conveyance of the property in question
after obtaining the completion certificate and occupancy certificate
and entitled the respondent for refund of amount of Rs.26,25,000/
-, which was given to obtain possession of the flat – Before, National
Commission, appellants denied the receipt of the loan amount of
F
Rs.26,25,000/- – The said submission was accepted by the National
Commission, however, it held that appellants had agreed to pay a
sum of Rs.25,00,000/- to the respondent-society in the meeting dated
17.12.2003, therefore, the appellants were bound by the admission
so made by them and were liable to that extent – National Commission
G also directed appellants to pay compensation of Rs.3,00,000/- for
not obtaining occupancy certificate and directed appellants to pay
Rs.1000/- per day after 60 days of the order and until obtaining
full occupancy certificate – On appeal, held: Direction by the
National Commission as regards payment of sum of Rs.25,00,000/-
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606
M/S TREATY CONSTRUCTION v. M/S RUBY TOWER CO-OP. 607
HSG. SOCIETY LTD.

by the appellants to the respondent requires no interference – A
Insofar other directions are concerned, there was no record to hold
the appellants liable for compensation – In other words, there was
no material on record to find if respondent-society or its members
suffered any loss – Therefore, part of order directing appellants to
pay compensation of Rs.3,00,000/- set aside – Also, Municipal
B
Corporation had issued notices regarding alterations by the
members of the respondent-society and dispute regarding the same
has not settled as the High Court has directed for inspection of the
building and necessary follow up steps – Thus, in the circumstances,
part of the impugned order requiring the appellants to pay Rs.1000/
- per day after 60 days of the order, also set aside – Appellants and C
respondent directed to complete all requisites on their part – After
completion of all the requisites by the parties, the appellants directed
to execute the Deed of conveyance in favour of the respondent-
society after obtaining necessary occupancy certificate –
Maharashtra Ownership Flats (Regulation of Promotion,
D
Construction, Sale, Management and Transfer) Act, 1963 – ss.4
and 11.
Partly allowing the appeal, the Court
HELD : 1. Indisputably, in the application dated
21.03.2013 as moved before the State Commission, the E
respondent-society restricted its prayer for money recovery to a
sum of Rs.25,00,000/- with reference to the minutes of meetings
dated 17.12.2003 and 14.12.2003. It is at once clear that the
aforesaid sum of Rs. 25,00,000/- was agreed to be paid by the
appellants in full and final settlement of the claim of the
respondent-society. The appellants having agreed to make such F
payment, the National Commission has rightly put them to the
terms of honouring their unequivocal commitment/promise. In
the given set of facts and circumstance, this Court is unable to
accept the contention that a particular part of order of the State
Commission having not been challenged by the respondent- G
society, the National Commission could not have granted the
relief otherwise available on the face of record. In an overall view
of the matter, when such a relief emanates from the very
commitment made by the appellants in the meetings aforesaid,

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608 SUPREME COURT REPORTS [2019] 9 S.C.R.

A the National Commission had been fully justified in granting the
same to the respondent-society. Therefore, there is no reason to
consider any interference in this part of direction by the National
Commission. [Para 10] [624-G-H; 625-A-B]
2. Even when this Court finds no reason to interfere with
B the above-mentioned parts of the order impugned, it appears
difficult to approve the directions in the remaining parts thereof,
particularly those relating to other pecuniary reliefs. The National
Commission has saddled the appellants with a liability to pay
compensation to the tune of Rs. 3,00,000/- for not obtaining
Occupancy Certificate and has issued further directions to the
C appellants to obtain such certificate as also to execute the
requisite Deed and to pay Rs. 1,000/- per day for every day of
delay. True it is that Occupancy Certificate was not obtained by
the appellants but then, fact of the matter remains that the
members of respondent-society chose to take over possession
D without such certificate; and then, several questions have arisen
as regards the alteration allegedly carried out by them for which,
the Municipal Corporation has the objections to raise. In any
case, there appears nothing on record to find the basis for holding
the appellants liable for compensation and then, for assessing
the quantum of compensation, if at all there be any liability of the
E appellants. In other words, there is no material on record to find
if the respondent-society or its members suffered any loss; and if
so, the extent thereof. Therefore, this part of the order impugned,
directing the appellants to pay compensation to the tune of Rs.
3,00,000/-, cannot be approved. [Para 11] [625-C-F]
F 3. As regards direction to appellants to convey the title of
the property in question by executing a registered Deed within a
period of four months after obtaining Occupancy Certificate,
though the appellants cannot avoid their legal obligation to
execute the requisite Deed but then, having regard to the facts
G and circumstances of the case and more particularly the facts
relating to the issuance of notices by the Municipal Corporation;
and the dispute/objection regarding alterations by the members
of the respondent-society having not been settled as yet with the
High Court having issued directions for inspection of the building
and for necessary follow-up steps, awarding of Rs. 1,000/- per
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M/S TREATY CONSTRUCTION v. M/S RUBY TOWER CO-OP. 609
HSG. SOCIETY LTD.

day for every day of delay seems rather unwarranted. In the given A
situation, where the Municipal Corporation had been of the view
that there were visible illegal constructions made by the members
of respondent-society because of which the Certificate cannot be
issued; and in view of the orders dated 12.06.2017 and 07.01.2019
passed by the High Court in W.P. No. 970 of 2015, the penalty of
B
Rs. 1,000/- per day deserves to be waived at present but with the
requirements on the parties to complete the respective
requisites, while leaving it open for them to take recourse to
appropriate remedies, in case of any grievance arising in future.
[Para 12] [625-G-H; 626-A-B]
4. In the result: C

(i) The impugned order dated 07.03.2018 is not interfered
with, to the extent it relates to the payment of Rs. 25,00,000/- by
the appellants to the respondent-society. The appellants shall
make payment of this amount of Rs. 25,00,000/- within 45 days
from today failing which, this amount shall carry interest @ 8% D
p.a. from today until payment; (ii) The other part of the order
impugned, saddling the appellants with liability to pay
compensation to the tune of Rs. 3,00,000/- is set aside; (iii) Yet
another part of the order impugned, requiring the appellants to
pay Rs. 1,000/- per day after 60 days of the order and until E
obtaining full Occupancy Certificate, is also set aside; (iv) As
regards obtaining of Occupancy Certificate and execution of the
Deed of Conveyance by the appellants, it is provided that: (a) the
appellants shall complete all the requisites on their part for
obtaining Occupancy Certificate within three months from today;
and (b) the respondent-society and its members shall also ensure F
compliance of the requisites on their part (with reference to the
orders passed by the High Court in W.P. No. 970 of 2015) within
three months from today and for that matter, they may seek
necessary directions from the High Court, if so required. Within
two months of completion of all the requisites by the parties, the G
appellants shall execute the Deed of Conveyance in favour of the
respondent-society after obtaining the necessary Occupancy
Certificate. As regards this part of the matter, it is also left open
for the parties to take recourse to appropriate remedies in

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610 SUPREME COURT REPORTS [2019] 9 S.C.R.

A accordance with law, in case of any grievance arising in future;
(v) The cost imposed on the appellants is waived and parties are
left to bear their own costs of this litigation. [Para 14] [626-D-H;
627-A-B]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5699
B of 2019.
From the Judgment and Order dated 07.03.2018 of the National
Consumer Disputes Redressal Commission at New Delhi in First Appeal
No. 109 of 2015.
Vinay Navare, Ms. Gwen Kartika, Ms. Abha R. Sharma, Advs.
C for the Appellants.
Sukumar Pattjoshi, Sr. Adv., Nitin S.Tambwekar, Seshatalpa Sai
Bandaru, Vikas Nautiyal, Advs. for the Respondent.
The Judgment of the Court was delivered by
D DINESH MAHESHWARI, J. 1. Leave granted.
2. This appeal by special leave is directed against the judgment
and order dated 07.03.2018, as passed by the National Consumer
Disputes Redressal Commission (‘the National Commission’ hereafter)
in First Appeal No. 109 of 2015, whereby the National Commission has
E modified the order dated 17.12.2014, as passed by the State Consumer
Disputes Redressal Commission, Maharashtra, Mumbai (‘the State
Commission’ hereafter) in Complaint Case No. 120 of 2005; and has
issued directions to the effect that: (i) the appellants shall pay a sum of
Rs. 28,00,000/- to the respondent-society (the complainant) within a period
of 45 days, failing which the amount shall carry interest @ 8% per annum
F
from the date of passing of the order till the date of payment; (ii) a sum
of Rs. 1,000/- per day shall further be paid by the appellants after 60
days from the date of order till the time full Occupancy Certificate is
obtained; (iii) the appellants shall convey the title of the property in
question by executing a registered Deed in terms of the order passed by
G the State Commission within a period of 4 months after obtaining the
Occupancy Certificate. The National Commission has also upheld costs
of Rs. 50,000/-, payable by the appellant No.1 herein.
3. The background aspects of the matter, so far relevant for the
present purpose, may be noticed, in brief, as follows:
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M/S TREATY CONSTRUCTION v. M/S RUBY TOWER CO-OP. 611
HSG. SOCIETY LTD. [DINESH MAHESHWARI, J.]

3.1. The appellants had evolved the scheme of constructing a A
building consisting of 64 flats and 13 shops on a plot bearing Survey No.
22, Hissa No. 7 [C.T.S. Nos. 99, 99 (1 to 16) and 114] at Sahakar Road,
Off. S.V.Road, Jogeshwari (West) Mumbai. The persons who agreed
to purchase respective flats and shops in the said project eventually
formed a Co-operative Housing Society, who is the respondent in this
B
appeal (‘the respondent-society’ hereafter). In relation to the project in
question, several disputes ensued between the members of respondent-
society on one hand and appellants-builders on the other, leading to a
complaint before the State Commission, being Complaint No. 120 of
2005 by the respondent-society1.
3.2. The respondent-society submitted before the State C
Commission, inter alia, that several sale deeds were executed between
the period 1994 to 2002 whereby, its members purchased certain
apartment units as also commercial units of varied sizes but, despite
making payment over and above the agreed sale consideration, the
appellants failed to discharge their part of the contract inasmuch as the D
interior works remained incomplete; and the appellants also failed to
obtain the Completion Certification as also the Occupancy Certificate.
It was also alleged that pending completion of the building works, the
appellants borrowed and collected varied sums of money from the
members of the respondent-society, on the pretext that the money would
be used towards finishing the incomplete works; and this aspect was E
recorded in the minutes of the meeting held on 12.07.1998.
3.2.1.It was further alleged that after some time, the respondent-
society demanded reimbursement of the amount given by its members;
and though the appellants agreed to reimburse a lump sum of
Rs. 25,00,000/- on 17.12.2003 but, even after a lapse of about a decade, F
the appellants had failed to reimburse the amount; failed to obtain the
Occupancy Certificate; and also failed to complete the pending works
to the satisfaction of respondent. It was yet further alleged that as an
added burden, upon taking possession of their individual units, the members
of respondent-society had to spend additional sums of money to complete G
the interior works in their respective flats and the building; and had also
to pay excess of taxes under various heads. Thus, according to the
respondent, there was a clear deficiency of services on the part of
1
Apart from the present appellants, several other persons were also joined as opposite
parties in the said complaint case who have since been deleted from the array of parties. H
612 SUPREME COURT REPORTS [2019] 9 S.C.R.

A appellants and there was a clear violation of Sections 4 and 11 of The
Maharashtra Ownership Flats (Regulation of the Promotion,
Construction, Sale, Management and Transfer) Act, 1963. (‘MOFA’).
3.2.2. With the submissions aforesaid, the respondent-society
sought the following reliefs before the State Commission in the complaint:
B “a) To hold and declare the Opposite Parties guilty of
deficiency in service as well as unfair trade practice under
the provision of the said Act.
b) To direct the Opposite Parties to convey the said land/
property in favour of the Complainant’s Society by
C completing all requisites formalities at their own expenses.
c) To direct the Opposite Parties to handover the Completion
Certificate, Occupation Certificate, to the Complainants’
realization of the same.

D d) To refund the amount collected towards temporary loan to
the tune of Rs. 35,16,820/- to the Complainants’ Society along
with the interest @ 21% from the date of payment till the
realization of the same.
e) To refund the amount collected toward possession Charges
to the tune of Rs. 26,25,000/- to the Complainants’ Society
E
along with the interest 21% from the date of payment till the
realization of the same.
f) To direct the opposite parties to reimburse the expenses
incurred by the Complainant’s Society ‘to the tune of Rs.
46,40,000/- towards the completion of interior civil work
F
along with the interest 21% from the date of payment till the
realization of the same.
g) To direct the Opposite Parties to develop the garden on the
plot reserved for the same.
G g) (sic) That the Hon’ble Forum may be pleased to direct the
Opposite Party to pay an amount of Rs. 2,00,000/- towards
compensation mental agony and cost of the above numbered
Complaint and further an amount of Rs. 1,00,000/- towards
incidental expenses incurred by the Complainant.

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M/S TREATY CONSTRUCTION v. M/S RUBY TOWER CO-OP. 613
HSG. SOCIETY LTD. [DINESH MAHESHWARI, J.]

h) For such other and further reliefs as the nature and A
circumstances of the case may deem fit and proper.”
3.3. The appellants filed their separate counter versions to the
complaint aforesaid. Apart from stating that the claim of the respondent
was exaggerated, they also contended that there was a clear admission
of the fact that the appellants had undertaken to reimburse a sum of Rs. B
25,00,000/- towards full and final settlement of the grievances raised by
the respondent, and the said amount was to be realized by consuming
the unconsumed FSI available on the said plot of land, as per the stipulations
incorporated in the registered agreement for sale, which fact had been
concealed by respondent. The appellants further submitted that the delay
was not on their part but had been due to the obstruction caused and C
created by the respondent and its members who, after purchasing their
respective flats, had made illegal constructions/alterations, which had
clearly been brought out in the show-cause notices issued by the
Municipal Corporation. The appellants also denied the contention of the
respondent that the members completed their respective interior civil D
works.
3.4. During the course of hearing of the matter and pending disposal
of the complaint, the respondent-society filed an application dated
21.03.2013 before the State Commission with the submissions that the
prayer (d) of the complaint was not pressed; the amount claimed in E
prayer (f) was restricted to Rs. 25,00,000/-; and that although there was
no illegal alteration by the flat purchasers, yet the complainant was
agreeable to remove the same as required by the Municipal Corporation.
The respondent-society stated in this application as under:
“1) That the complainant is not pressing the prayer of Rs. F
35,16820/- [claimed in prayer (d) i.e. temporary loan]
alongwith interest 21% interest.
2) That the complainant is restricting the prayer 10(f) to
amount of Rs. 25,00,000/- as per the minutes of meeting dtd
17/12/03 & 14/12/03 which was signed by both the parties. G
3) That the complainant says that there is no illegal alteration
made by the flat purchasers. However, the complainant
consent to remove the same (if any) as required by BMC.”

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614 SUPREME COURT REPORTS [2019] 9 S.C.R.

A 3.4.1. At this juncture, for their relevance, we may also take note
of the minutes of the aforesaid meetings dated 14.12.2003 and 17.12.2003
as under:-
“Minutes of meeting held with Ruby Tower Members on 14/
12/03
B 1. It was discussed that BMC expenses upto procuring of Occ.
Certificate will be that of the Builders which the Builders have
agreed.
2. Regarding the settlement of accounts for which the Builders
had offered Rs. 15,00,000/- in the last meeting held, the
C members offered Rs. 25,00,000/-, subject to the above
condition as full and final settlement towards all loans,
liabilities, etc of the Builder.
3. It was finalized that another meeting would be held on
Wednesday i.e. 17/12/03 after Namaz-e-Isha at 9:00 p.m.
D
4. It is agreed that henceforth transfer charges of Ruby Tower
will be of the Ruby Tower Soc. (Prop).
5. The meeting held was concluded in a cordial atmosphere
and all present Society members have happily agreed to this
proposal.”
E
“Date: 17.12.2003
Minutes of the meeting held with members of Ruby Tower
01. As decided on 14.12.03, the meeting for finalizing the
settlement of all pending dues/liabilities of the Builder was
F conducted at 9.30 p.m. at the Builder’s office.
2. The Builders agreed to the demand of Rs. 25,00,000.00
raised by the members in the last meeting. However, it was
clarified that the first priority would be that of regularizing
‘Ruby Tower’ with respect to BMC.
G
3.Regarding payment of the agreed amount of Rs 25,00,000/
-, it was proposed by the Builder that he would arrange for
the same within six to nine months, which the members agreed.
4. It was clarified by the present members that their decision
was binding on all the members and all had authorized the
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M/S TREATY CONSTRUCTION v. M/S RUBY TOWER CO-OP. 615
HSG. SOCIETY LTD. [DINESH MAHESHWARI, J.]

members present to finalize the matter in the meeting held A
among themselves on 16.12.03.
5. The meeting concluded in a cordial atmosphere. “
3.5. On consideration of the material on record, the State
Commission observed that the Municipal Corporation had raised the
alleged objections by their letter/notice dated 09.07.1993 whereas the B
flat owners were put in possession somewhere between 1995 to 2002;
that the Society was established in the year 2005; and the frantic efforts
made by the owners/members of respondent-society for execution of
the Deed of Conveyance and for obtaining Occupancy Certificate was
just and legitimate. The State Commission further observed that the C
respondent had produced certain sample receipts to show that charges
amounting to Rs. 26,25,000/- were collected for handing over possession
of the flats and such charges were collected beyond the stipulated agreed
consideration. The State Commission, however, found that there
was no documentary evidence to show that the additional amount of
Rs. 46,40,000/- was spent to complete the interior civil works. D

3.6. In view of its findings, the State Commission partly allowed
the complaint while directing the appellants to execute the Deed of
Conveyance of the property in question after obtaining the Completion
Certificate and Occupancy Certificate within 90 days and else, to pay
Rs. 1,000/- per day until the date of compliance. The State Commission E
also observed that the complainants had not pressed for refund of the
loan amount of Rs. 35,16,820/- and, therefore, the respondent-society
was held entitled only for the refund of the amount of Rs. 26,25,000/-,
which was given to obtain possession of the flat, together with interest
@ 9% p.a. from the date of filing of the complaint and payable within 90 F
days, failing which the said amount shall bear an interest @ 12% p.a.
3.7. The State Commission, inter alia, observed and directed as
under:-
“[8]. On going through the record and documentary evidence
relied upon by parties, we find that the prayer for refund of G
Rs. 26,25,000/- which was extended as loan by the
complainant society members is justified as few sample receipts
showing the charges collected for handing over the possession
of flats. On carefully going through the terms and conditions
of the registered agreement, it appears that the opponents
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616 SUPREME COURT REPORTS [2019] 9 S.C.R.

A have collected these charges under the guys (sic) of possession
of the flats beyond the stipulated agreed consideration.
Therefore, we find that complainants are entitled to get refund
of an amount of Rs. 26,25,000/- since it was illegally collected
by the opponents from the flat buyers of the complainant
society. Complainants have not pressed refund of Rs.
B
35,16,820/- allegedly extended as temporary loan to the
opponents for completion of balance work. Therefore, we do
not want to comment further. There is not documentary
evidence to demonstrate that Rs. 46,40,000/- were incurred
by the complainant society to complete the interior civil works.
C Therefore, we are not inclined to consider this monetary claim.
The registered agreement does not provide for development
of garden. Therefore, prayer beyond the stipulations of
agreement cannot be considered as pleaded by the learned
counsel of the opponents.
D [9] . Considering facts and circumstances of the case,
opponents have failed to comply their statutory obligations
u/s. 11 of the MOFA Act to execute the deed of conveyance
and obtain Completion Certificate and Occupation Certificate.
Therefore, the complainant’s prayer seeking directions to the
opponents to fulfill statutory obligations are just and proper.
E Complainant society has discharged initial burden to prove
deficient service rendered by the opponents. Therefore,
complaint must succeed for issue of directions to the opponents
to fulfill the statutory obligations and refund of illegally
collected excess amount from the members of the complainant
F society.
ORDER
(1) Complaint is partly allowed.
(2) Opponents, jointly and severally, are directed execute Deed
G of Conveyance, by obtaining completion certificate and
occupation certificate for transferring rights, interest and title
of building and piece of land bearing Survey No. 22, Hissa
No. 7, and bearing C.T.S. Nos. 99, 99(1 to 16) and assessed
by Municipal Corporation of Greater Bombay in Ward No.
KN 150512-00 No. K-5125 (1-2) 89A, 90, K-5125 (3) 898,
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HSG. SOCIETY LTD. [DINESH MAHESHWARI, J.]

K-5126 (1), 88 and K-5126 (3) 8890, in favour of complainant A
society within period of 90 days from date of the this order,
failing which opponent shall pay Rs. 1,000/- per day to the
complainant society from the date of this order till compliance.
(3) Opponents, jointly and severally, are directed to pay
Rs. 26,25,000/- [amount illegally collected for hading over B
the possession of the flats] along with interest @ 9% p.a.
effective from the date of filing of complaint i.e. 04/10/2005
within period of 90 days from the date of this order, failing
which the rate of interest shall be payable @ 12% p.a. from
04/10/2005 till its realization.
C
(4) Opponents shall bear their own costs and pay costs of
Rs. 50,000/- to the complainant society within period of 90
days from the date of this order.
(5) Certified copies of this order be furnished to the parties”.
3.8. In appeal against the order of the State Commission before D
the National Commission, the appellants denied the receipt of loan amount
of Rs. 26,25,000/- and argued that the deletion of the name of the then
President of the respondent-society, who was a signatory to all the
receipts, was not warranted, as his presence would have clarified all the
issues which formed the subject-matter of the complaint; and that due to E
the failure on the part of the respondent-society to remove the changes/
alterations made to the building, the Municipal Corporation refused to
issue the Occupancy Certificate. It was also argued that the State
Commission had no pecuniary jurisdiction in relation to the complaint in
this matter.
F
3.9. The National Commission rejected the contention that the
State Commission had no pecuniary jurisdiction for the reason that the
same was not urged before the State Commission and the matter was
decided on merits. The National Commission examined the record and
found that there was absolutely no evidence on record to show that the
alleged money was taken by the appellants for the purpose of completing G
the pending works in the building. The National Commission, however,
observed that having agreed to pay a sum of Rs. 25,00,000/- to the
respondent-society, the appellants were bound by the admission so made
by them and were liable to that extent. As regards the arguments relating
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618 SUPREME COURT REPORTS [2019] 9 S.C.R.

A to Occupancy Certificate, the National Commission was of the view
that the appellants were negligent and there had been deficiency in service
inasmuch as the appellants should not have handed over possession of
the flats without obtaining the Occupancy Certificate. However, for the
purpose of regularizing and legalizing the title of the members of
respondent-society, it was preferred that a time bound order be made
B
and, accordingly, the National Commission upheld the order passed by
the State Commission with certain modifications.
3.10. The National Commission, inter alia, observed, held and
directed as under:-
C “10. I have carefully considered the arguments of both the
learned counsel and have examined the material on record.
Basically I agree with the contention of the learned counsel
for the appellant that all the receipts were issued by the
President of the Society and he has been deleted from the
array of the parties on the request of the complainant and
D therefore, there is no proof that the money has been paid to
the appellant. The State Commission has ordered only on
presumption. Thus, the OP/appellant herein cannot be saddled
with the responsibility to refund the amount of Rs. 26,25,000/
- to the complainant as loan repayment. However, this is also
E true that the appellant has admitted that he had agreed in the
meeting dated 17.03.2003 to pay Rs. 25 lakhs to the
complainant for the deficiency in service. Clearly this amount
has not been paid by the OP to the complainant and therefore,
the appellant No. 1 is liable to pay Rs. 25 lakhs to the
complainant as per his own admission in the list of dates filed
F along with the present appeal.
11. So far as the question of obtaining the Occupancy
Certificate is concerned, as per the provisions of MOFA the
possession should not have been handed over to the members
of the complainant society without obtaining occupancy
G certificate and this is a clear unfair trade practice. It is being
argued on behalf of the OP that there are additions and
modifications in the building and therefore, it is difficult to
obtain the certificate and the matter is getting delayed. This
argument is not tenable as the situation has been created by
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the OPs themselves as they offered possession without the A
occupancy certificate. Clearly, not obtaining occupancy
certificate is the deficiency on the part of the OP/appellant.
12. Coming to the question of FSI, though there is a provision
in the agreement in condition no. 42 that the allottees/
purchasers shall not object to OP utilizing additional FSI, B
which may be available at the time of agreement or being
made available even in a future date. However, this provision
goes against the spirit of MOFA as this Commission in Vaibhav
Development Corporation and others (supra) has held that it
is obligatory upon the builder to obtain a full Occupancy
Certificate, without which a Conveyance Deed in favour of C
the complainant society cannot be executed. However, there
has to be a reasonable time for execution of conveyance deed
in favour of the Society and this according to the said Rule
has to be within four months if no period of conveying the
title to the Society is mentioned in the Sale Agreement. D
13. As the OP has given possession to the members of the
Society without obtaining Occupancy Certificate, the
possession of allottees has become illegal. As the purchasers
have paid full consideration of the flats, they are entitled to
have legal possession and legal right and title. It is also seen E
from the observation of the State Commission that the
appellants/opposite parties have not replied to the queries
raised by the Municipal Corporation and therefore, they
themselves were negligent and deficient in taking steps for
getting the Occupancy Certificate. As complaint has been filed
by the society, it is essential that the possession of its members F
is regularized and title of the members as well as of the Society
is legalized. This can only be legalized if OP obtains
Occupancy Certificate.
Therefore, it is necessary to direct the OP to obtain the
Occupancy Certificate in a time bound manner. In this respect, G
the order of the State Commission is perfectly valid so far as
it relates to directing the OP to obtain Occupancy Certificate
within 90 days. Once the Occupancy Certificate is obtained
the title has to be conveyed to the Society within four months.
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620 SUPREME COURT REPORTS [2019] 9 S.C.R.

A From this point of view, the condition No. 42 is against the
provisions of MOFA. Hence, this condition will not be a binding
on the other party. Therefore, the existence of this condition
in the agreement shall only be seen as unfair trade practice.
As the OP has not obtained the occupancy certificate and
thereby the OP is not able to register the conveyance deed in
B
favour of the complainant Society, the continuing deficiency
on the part of the appellant/OP is evident. Therefore, I do not
find any error in the order of the State Commission in respect
of the OP obtaining occupancy certificate and then executing
the conveyance deed in favour of the Society. The penalty of
C Rs. 1,000/- per day was effective from 17.03.2015, however,
looking at the difficulties of the appellant in getting the
occupancy certificate due to some modifications, additions
and alterations in the building, I deem it appropriate to put a
lump sum compensation of Rs. 3 lakhs to be paid to the
Complainant Society by the appellant for not obtaining
D
occupancy certificate till today. It is further ordered that the
order of the State Commission for paying Rs. 1,000/- per day
shall be applicable now from the expiry of 60 days from the
date of this order. This amount shall be paid regularly at every
month to the complainant society till the occupancy certificate
E is obtained and conveyance deed is executed in favour of the
Society.
14. As regard the objection of the appellants regarding
pecuniary jurisdiction of the State Commission, it appears
that this objection has not been taken before the State
F Commission specifically. As the matter has now been decided
by the State Commission on merits, the technical objection of
pecuniary jurisdiction cannot be raised at this stage. This
view gets support from the decision of the Hon’ble Supreme
Court in Harshad Chiman Lal Modi Vs. DLF Universal and
Anr., AIR 2005 SC 4446, wherein the Hon’ble Apex Court
G has held as follows:-
“So far as territorial and pecuniary jurisdictions are
concerned, objection to such jurisdiction has to be taken
at the earliest possible opportunity and in any case at or
before settlement of issues. The law is well settled on the
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point that if such objection is not taken at the earliest, it A
cannot be taken at a subsequent stage.”
15. Based on the above discussion, the appellants are directed
to pay Rs. 28,00,000/- (rupees twenty eight lakhs only) to the
respondent No. 1 Society within a period of 45 days, failing
which this amount shall carry an interest @ 8% p.a. from B
date of this order till actual payment. Appellants are further
directed to pay Rs. 1,000/- (rupees one thousand) per day
after 60 days from date of this order to the Complainant Society
till obtaining of the full Occupancy certificate. It is further
directed that appellants shall convey the title of the property
as detailed in the order of the State Commission in favour of C
the complainant Society by registered deed within a period of
four months after obtaining the Occupancy Certificate. The
impugned order of the State Commission stands modified
accordingly. The cost of Rs. 50,000/- is also upheld. First
Appeal No. 109 of 2015 stands disposed of accordingly.” D
4. Assailing the order aforesaid, learned counsel for the appellants
has argued that as per the admitted position on record, the members of
the respondent-society had carried out additional constructions/alterations
to the building due to which, the Municipal Corporation was not issuing
the Occupancy Certificate and hence, the National Commission ought E
not to have issued directions for obtaining the Occupancy Certificate.
The learned counsel has referred to the reply letter dated 01.10.2002 by
one Shri Nazeer H. Kadri in support of the contention that the members
of respondent-society did carry out alterations to their respective flats/
shops. The learned counsel has further submitted that the respondent-
society violated the terms of undertaking as mentioned in the pursi dated F
21.03.2013 filed before the State Commission, wherein they had
undertaken to remove the illegal alteration, if so required by the Municipal
Corporation. The learned counsel has further pointed out that removal
of additional structures/changes/additions put up by the members of
respondent-society was the subject-matter of a writ petition, being W.P. G
No. 970 of 2015, filed before the High Court of Judicature at Bombay,
which was disposed of by the order dated 12.06.2017 with directions
that a designated officer of the concerned ward shall visit the property
in question so as to ascertain whether there were illegal constructions/
unauthorized changes/additions/ alterations; and if such violations were
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622 SUPREME COURT REPORTS [2019] 9 S.C.R.

A found, then to intimate the necessary parties prior to taking of any action
for demolition or removal2.
4.1 Learned counsel has also contended that when the State
Commission had rejected the prayer for payment of Rs. 25,00,000/- to
the respondent- society and the same was not the subject-matter of
B appeal, the National Commission has gravely erred in awarding this
amount to the respondent. Learned counsel has further submitted that
even if handing over possession of flats to the members of the respondent-
society in the absence of the Occupancy Certificate was being
questioned, fact of the matter remains that illegal/unauthorized
construction/alterations were carried out by the members of respondent-
C society; and in these circumstances, the responsibility for delay in
completion of all other requirements could not have been fastened on
the appellants.
5. Per contra, learned counsel for the respondent-society has
supported the order passed by the National Commission as regards holding
D the appellants responsible for the deficiency in services as also for the
delay in obtaining the Occupancy Certificate. The learned counsel would
submit that the appellants handed over the flats/commercial units not
only without Occupancy Certificate but also without providing basic
facilities such as water, electrical meter etc.; and in any case, non-
E compliance with the conditions to obtain Occupancy Certificate speaks
volumes about the deficiency of services on the part of the appellants.
According to the learned counsel, the building is in the same condition as
it was on the day of handing over possession to the members of
respondent-society; in other words, the members of respondent-society
have not carried out any alterations/constructions in the said premises.
F While further refuting the contention of appellants that the Occupancy
Certificate was not issued for unauthorized construction or alteration by
the members of respondent-society, the learned counsel has contended,
with reference to the correspondence with the Municipal Corporation,
that Occupancy Certificate was not issued for want of compliance by
G the appellants of various requisites and the attempt to shift the burden in
that regard on the members of the respondent-society was entirely

2
The learned counsel for the appellants has further pointed out that the Municipal
Corporation has initiated necessary proceeding, as noticed by the High Court in its
order dated 07.01.2019 in Notice of Motion No. 221 of 2018 moved in W.P. No. 970 of
H 2015.
M/S TREATY CONSTRUCTION v. M/S RUBY TOWER CO-OP. 623
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unjustified. According to the learned counsel, the appellants had attempted A
to amend the plan of the building which was resisted by respondent; and
there exists a dispute between the parties in relation to a portion of a
property demarcated for Recreational Ground inasmuch as the said portion
is being used by one garage owner as a parking space at the behest of
the appellants, which has resulted in harassment of the members of
B
respondent-society.
6. Having heard learned counsel for the parties and having perused
the material placed on record, we are satisfied that in the given set of
facts and circumstances, directions by the National Commission as
regards payment of a sum of Rs. 25,00,000/ by the appellants to the
respondent-society calls for no interference but then, other parts of the C
order impugned call for suitable modification.
7. The contention on the part of appellants as regards pecuniary
jurisdiction has only been noted to be rejected. The National Commission
has observed, and rightly so, that such a plea was not specifically raised
before the State Commission at the earliest opportunity; and the State D
Commission having already decided the matter on merits, such a technical
objection as regards pecuniary jurisdiction could not have been
countenanced before the National Commission. We find no error in the
National Commission rejecting this plea as being wholly untenable at the
given stage. E
8. As regards merits of the case, to put it in a nutshell, the
respondent-society, while filing their complaint, sought for reimbursement
of the amount of: (i) Rs. 35,16,820/- that was borrowed by appellants;
(ii) Rs. 26,25,000/- collected towards possession charges; and (iii) Rs.
46,40,000/- towards the amount spent by the members for completing F
the interior works in their respective units. By way of the application
dated 21.03.20133 the respondent-society did not press on prayer (d)
concerning the said amount of Rs. 35,16,820/- towards temporary loan
and at the same time, restricted their claim in prayer (f) to the extent of
Rs. 25,00,000/- with reference to the minutes of the meetings dated
17.12.2003 and 14.12.20034. The State Commission, while issuing G
directions for executing the Deed of Conveyance by obtaining Completion
Certificate and Occupation Certificate, also directed the appellants to
pay Rs. 26,25,000/- with interest, being the amount illegally collected
3
Reproduced hereinbefore in paragraph 3.4.
4
Reproduced hereinbefore in paragraph 3.4.1. H
624 SUPREME COURT REPORTS [2019] 9 S.C.R.

A towards possession charges. The State Commission, however, held that
there was no documentary evidence to establish that the amount of Rs.
46,40,000/- was incurred by the members of the respondent-society to
complete the interior civil works. On the other hand, the National
Commission agreed with the submissions of the appellants that the
directions regarding refund of Rs. 26,25,000/- could not have been issued
B
when there was no cogent proof and when the President of the society,
who had issued the receipt in question, was deleted from the array of
the parties on the request of the complainant. However, the National
Commission ordered payment of Rs. 25,00,000/- by the appellants as
agreed by them in the meeting dated 17.12.2003.
C 9. When the prayers made in the complaint are read along with
the contents of the application dated 21.03.2013 as also with the findings
of the State Commission and the National Commission, it may appear at
the first blush that the amount claimed towards temporary loan in prayer
(d) was given up by the respondent-society whereas no proof was found
D in relation to amounts claimed in prayers (e) and (f) towards possession
charges and interior civil works respectively. However, fact of the matter
remains that there had been long drawn disputes between the parties on
several issues, including those regarding monetary claims made by the
respondent-society and its members; and meetings were held for resolution
of such disputes. The prayers (d) to (f) for money recovery in the
E complaint and the submissions made in the application dated 21.03.2013
are required to be viewed in the context of such claims and the resolutions
adopted in the meetings. In our view, it would be wholly inappropriate
and unjustified to consider the prayers as made in the complaint and as
modified in the application de hors the context and disjointed from the
F decisions taken in the meetings aforesaid.
10. Indisputably, in the application dated 21.03.2013 as moved
before the State Commission, the respondent-society restricted its prayer
for money recovery to a sum of Rs. 25,00,000/- with reference to the
aforesaid minutes dated 17.12.2003 and 14.12.2003. It is at once clear
G that the aforesaid sum of Rs. 25,00,000/- was agreed to be paid by the
appellants in full and final settlement of the claim of the respondent-
society. The appellants having agreed to make such payment, in our
view, the National Commission has rightly put them to the terms of
honouring their unequivocal commitment/promise. In the given set of
facts and circumstance, we are unable to accept the contention that a
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M/S TREATY CONSTRUCTION v. M/S RUBY TOWER CO-OP. 625
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particular part of order of the State Commission having not been A
challenged by the respondent-society, the National Commission could
not have granted the relief otherwise available on the face of record. In
an overall view of the matter, when such a relief emanates from the
very commitment made by the appellants in the meetings aforesaid, the
National Commission had been fully justified in granting the same to the
B
respondent-society. Therefore, we find no reason to consider any
interference in this part of direction by the National Commission (as
contained in paragraph 10 of the order impugned).
11. Even when we find no reason to interfere with the above-
mentioned parts of the order impugned, it appears difficult to approve
the directions in the remaining parts thereof, particularly those relating C
to other pecuniary reliefs. The National Commission has saddled the
appellants with a liability to pay compensation to the tune of Rs. 3,00,000/
- for not obtaining Occupancy Certificate and has issued further directions
to the appellants to obtain such certificate as also to execute the requisite
Deed and to pay Rs. 1,000/- per day for every day of delay. True it is D
that Occupancy Certificate was not obtained by the appellants but then,
fact of the matter remains that the members of respondent-society chose
to take over possession without such certificate; and then, several
questions have arisen as regards the alteration allegedly carried out by
them for which, the Municipal Corporation has the objections to raise. In
any case, there appears nothing on record to find the basis for holding E
the appellants liable for compensation and then, for assessing the quantum
of compensation, if at all there be any liability of the appellants. In other
words, there is no material on record to find if the respondent-society or
its members suffered any loss; and if so, the extent thereof. Therefore,
this part of the order impugned, directing the appellants to pay F
compensation to the tune of Rs. 3,00,000/-, cannot be approved.
12. As regards direction to appellants to convey the title of the
property in question by executing a registered Deed within a period of
four months after obtaining Occupancy Certificate, in our view, though
the appellants cannot avoid their legal obligation to execute the requisite G
Deed but then, having regard to the facts and circumstances of the case
and more particularly the facts relating to the issuance of notices by the
Municipal Corporation; and the dispute/objection regarding alterations
by the members of the respondent-society having not been settled as yet
with the High Court having issued directions for inspection of the building
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626 SUPREME COURT REPORTS [2019] 9 S.C.R.

A and for necessary follow-up steps, awarding of Rs. 1,000/- per day for
every day of delay seems rather unwarranted. In the given situation,
where the Municipal Corporation had been of the view that there were
visible illegal constructions made by the members of respondent-society
because of which the Certificate cannot be issued; and in view of the
orders dated 12.06.2017 and 07.01.2019 passed by the High Court in
B
W.P. No. 970 of 2015, the penalty of Rs. 1,000/- per day deserves to be
waived at present but with the requirements on the parties to complete
the respective requisites, while leaving it open for them to take recourse
to appropriate remedies, in case of any grievance arising in future.
13. Having regard to the fact and circumstances of this case and
C looking to the nature of dispute, we find no justification for saddling the
appellants with cost of Rs. 50,000/- either. The cost deserves to be made
easy in this case.
14. In the result:
D (i) The impugned order dated 07.03.2018 is not interfered with, to
the extent it relates to the payment of Rs. 25,00,000/- by the appellants
to the respondent-society. The appellants shall make payment of this
amount of Rs. 25,00,000/- within 45 days from today failing which, this
amount shall carry interest @ 8% p.a. from today until payment.

E (ii) The other part of the order impugned, saddling the appellants
with liability to pay compensation to the tune of Rs. 3,00,000/- is set
aside.
(iii) Yet another part of the order impugned, requiring the appellants
to pay Rs. 1,000/- per day after 60 days of the order and until obtaining
F full Occupancy Certificate, is also set aside.
(iv) As regards obtaining of Occupancy Certificate and execution
of the Deed of Conveyance by the appellants, it is provided that: (a) the
appellants shall complete all the requisites on their part for obtaining
Occupancy Certificate within three months from today; and (b) the
respondent-society and its members shall also ensure compliance of the
G
requisites on their part (with reference to the orders passed by the High
Court in W.P. No. 970 of 2015) within three months from today and for
that matter, they may seek necessary directions from the High Court, if
so required. Within two months of completion of all the requisites by the
parties, the appellants shall execute the Deed of Conveyance in favour
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of the respondent-society after obtaining the necessary Occupancy A
Certificate. As regards this part of the matter, it is also left open for the
parties to take recourse to appropriate remedies in accordance with law,
in case of any grievance arising in future.
(v) The cost imposed on the appellants is waived and parties are
left to bear their own costs of this litigation. B
15. This appeal is partly allowed and the impugned order dated
07.03.2018 as passed by the National Commission stands modified to
the extent and in the manner indicated above.

Ankit Gyan Appeal partly allowed. C

D

E

F

G

H