Consumer forum fines developer for not executing conveyance deed
Pallabika Ganguly 10 August 2010

Mumbai-based Navbharat Development Corp did not execute a conveyance deed with a society for over 26 years

The Mumbai Suburban District Consumer Disputes Redressal Forum fined a city-based developer Navbharat Development Corporation last month for failing to execute a conveyance deed with a registered co-operative housing society for over 26 years. The forum also directed the developer to bear the burden of the difference of the charges in the stamp-duty, which was increased from 1984 (from 1980-1984, the stamp duty was 1% of the value of the property), obtain the full Occupancy Certificate (OC) and Building Completion Certificate (BCC) within three months.

"It is a benchmark decision by the forum and now developers can no longer ignore conveying the land to the society. If the purchaser is paying all the charges levied by the government and the developer, he/she should legally owe the property completely," said Vinod C Sampat, advocate and proprietor, Vinod C Sampat and Co.

If Navbharat Development Corp fails to comply with the order, it has to pay a fine of Rs500 per day from the date of expiry of the stipulated period (three months) till all the certificates are handed over to the society. The developer is also expected to pay Rs5,000 as penalty besides the above mentioned charges, the forum said in its order.

The case relates to Bandra-based Natalia Co-operative Housing Society Ltd. While selling flats, Navbharat Development Corp collected Rs500 from each purchaser towards performance of agreement, Rs251 towards share money and entrance fee and Rs20,400 towards stamp-duty.

The buyers were given possession of their apartments in 1983 and within a year's time, they formed a co-operative housing society by registering the same with the regional authorities.

Despite the formation of a registered housing society, the developer was not willing to sign a conveyance deed (a document that conveys the title of ownership of a property from the original owner to the ultimate purchaser, in this case to flat owners). After failing to get a positive response from the developer despite repeated requests and reminders, on 15 July 2008 the society filed a case against the developer in the consumer forum.

Earlier in June, another district consumer forum from Mumbai sentenced a developer to two year's jail for not executing the conveyance deed in favour of a society despite directives by the National Consumer Disputes Redressal Commission.

Similarly, many developers do not provide BCC to flat owners. Instead they issue the OC. Therefore, almost 95% of the buildings in Mumbai do not have BCC and conveyance.

According to another developer, there is no specific definition on what constitutes 'completion' of a property. Every state has a different definition of 'completion'.

Industry sources told Moneylife, developers find it easy to procure the OC rather than spend a huge amount to get a BCC from the authorities. The OC is issued when developers receive civic permission for water connections and sewage facilities. Many developers do not even try to procure BCCs, revealed a source.

The authorities issue the OC only when the property is fit for occupancy. Later nobody really bothers about the BCC, he said. The developers can no more escape from completing all the formalities while selling apartments.
 

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