The Supreme Court has determined that a real estate developer’s offer to transfer possession of a flat without the requisite completion and firefighting clearance certificates is legally invalid. This landmark decision underscores that the absence of these certificates constitutes a deficiency in service under the Consumer Protection Act.
The court addressed a case involving the Agra Development Authority (ADA) and a homebuyer, Dharmendra Sharma, who was offered a flat in 2014. Despite several appeals, ADA failed to provide the necessary completion and firefighting clearance certificates, which are mandated under Section 4(5) of the UP Apartment (Promotion of Construction, Ownership & Maintenance) Act, 2010, and Section 19(10) of the RERA Act, 2016.
A bench of Justices noted that ADA’s failure to deliver these essential documents rendered the possession offer incomplete and legally unsound. The court highlighted that Sharma’s consistent objections regarding the missing certificates were valid, as legal precedents, including the ruling in Vs R N R Enterprise (2023), have affirmed that possession cannot be compelled in the absence of a completion certificate. The court has directed ADA to compensate Sharma with ₹15 lakh for the delay and additional inconvenience caused due to the breach of statutory obligations. Furthermore, ADA is required to refund the entire amount deposited by Sharma, with 9% annual interest from July 11, 2020, until the date of refund. Additionally, the non-judicial stamp worth ₹3,99,100 must be returned to Sharma within three months.
The ruling also considered the lapse of obligations on both sides. While Sharma delayed the payment of an additional ₹3,43,178 demanded by ADA and sought a waiver of penal interest, ADA’s failure to fulfil statutory requirements was a significant factor. The court refrained from imposing exemplary costs on either party, recognising the non-profit nature of ADA and its role in public service. In sum, the Supreme Court’s decision reinforces the necessity for developers to comply with regulatory requirements before offering possession of residential properties, ensuring that homebuyers are not disadvantaged by incomplete legal documentation.
