BUILDER MUST PAY ALL TAXES UNTIL ENTIRE PROPERTY IS CONVEYED TO SOCIETY

In a recent case of non-procurement of Occupancy Certificate by the Builder and furnish the same to the Society, the Consumer Forum asked one of the Builders of Mumbai to pay water charges, municipal taxes and other charges as applicable until the time the entire property is conveyed to the housing society.

This was after one of the housing societies in one of the busiest western suburbs, complained about having formed its own housing society, pay excess water charges and property tax, as the Builder did not get an Occupancy Certificate from Civic Authorities. The Forum held the Builder guilty of ‘Deficiency in Service’ for the same.

The bench ruled that since the property has not been conveyed and so it would be the duty of the Build¬er to pay property taxes. The bench referred to Section 6 of the Maharashtra Ownership Flats Act. 1963 (MOFA) which states that the Builder must clear the dues such as municipal taxes, property tax and water charges and any other charges until they transfer the entire property to flat purchasers or the co-operative housing society. The Builder was also charged for not forming a co-operative society as per the provisions under MOFA.

The Forum's order comes after the society approached them in 2004 asking for relief as they were forced to pay excess water bills and property taxes as the Builder had not acquired the Occupancy Certificate.

Calling these the Builder’s statutory duties, the Forum asked them to refund:

1. Rs. 40 lakhs taken for forming the society from 38 members.

2. Rs. 6.05 lakhs paid by members as excess water bills and property taxes.

3. Rs. 3 lakhs for not provid¬ing promised amenities such as a garden, chil¬dren's play equipment and safety equipment in elevators

In its defence, the Builder said the buyers were aware of the lack of Occupancy Certificate and the Builder was unable to get it as the landlord was not willing to part with a portion of the plot. The Forum said the Builder did neither take efforts to resolve the issue with the landlord nor acted in accordance with the provisions of MOFA.

Under the provisions of The Maharashtra Ownership Flats (Regulation of the Promotion, Construction, Sale, Management and Transfer) Act, 1963 (“MOFA”) and Rules made there under, the Developer is required to form a Society within 4 months from the date on which minimum number of persons required to form a society have purchased flats. Further, the Developer is required to convey or cause to convey the land (or Leasehold Right) in favour of the Society along with the building within 4 months from the date of its incorporation.

If the Developer fails to convey the land (and/or transfer the leasehold rights) and building by executing the Deed of Conveyance and/or Deed of Assignment as the case may be and in that event, the society and/or any other body of the purchasers have got the following remedies:-

(a) To approach the Civil Court for obtaining Conveyance;

(b) To approach the “Consumer Forum” for obtaining Conveyance;

(c) To adopt appropriate Criminal/Legal proceedings under the provisions of MOFA to punish the Developer (if found guilty) in accordance with the law and the proceedings can put pressure on the Developer to execute Conveyance in favour of the society.

Comments from Author: Thousands of co-operative housing societies in Mumbai are paying the water charges and other taxes at the commercial rate to BMC as many errant Builders have not conveyed the title of land to these societies in the hope of availing more Floor Space Index (FSI) that may become available in future or the benefits accrued to them in case the housing society is going for redevelopment.

Why the Forum did not rule that the judgment so delivered in this particular case, should also be made applicable to all those delinquent and felonious Builders in Mumbai who have blatantly violated the provisions of MOFA by not conveying the respective properties in favour of housing societies within a stipulated period of 4 months and that all such dishonest Developers must be forced to pay water charges, municipal taxes and other charges as applicable until the time the entire property is conveyed to the housing society???

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