The supreme court held that the failure of the respondent (Mumbai Mahalaxmi Construction Pvt. Ltd) to obtain the occupation certificate is a deficiency in service for which the respondent is liable. The supreme court relying on Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 held that promoter has an obligation to provide the occupancy certificate to the flat owners and pay for the relevant charges till the certificate has been provided. Where the promoter fails to pay such charges, the promoter is liable even after the transfer of property. The appeal was filed against the order of the NCDRC dismissing the complaint filed by a co-operative housing society for refund of the excess taxes and charges paid the appellant to the municipal authorities, due to the alleged deficiency of service of the respondent on the ground that it was barred by limitation and that it was not maintainable since it was in the nature of a recovery proceeding and not a consumer dispute.

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The members of the appellant booked the flats in 1993 and were granted possession in 1997. The Mumbai Mahalaxmi Construction Pvt. Ltd, the respondent failed to take steps to obtain the occupation certificate from the municipal authorities.  In the absence of the occupation certificate, individual flat owners were not eligible for electricity and water connections. Due to the efforts of the appellant, temporary water and electricity connections were granted by the authorities. However, the members of the appellant had to pay property tax at a rate 25% higher than the normal rate and water charges at a rate which was 50% higher than the normal charge. 

This continuous failure to obtain an occupancy certificate is a breach of the obligations imposed on the respondent under the MOFA and amounts to a continuing wrong. The Hon’ble court held that the appellants are entitled to damages arising out of this continuing wrong and their complaint is not barred by limitation. The failure of the respondent to obtain the occupation certificate is a deficiency in service for which the respondent is liable. Thus, the members of the appellant society are well within their rights as ‘consumers’ to pray for compensation as a recompense for the consequent liability (such as payment of higher taxes and water charges by the owners) arising from the lack of an occupancy certificate.