Is there a ₹5,000-a-day fine for living without an OC? What the law and courts actually say

Rules as of 13 October 2026.

If someone told you that living in a flat without an Occupancy Certificate (OC) attracts a fine of ₹5,000 for every day, here is what we found: no provision fixes that amount. The real exposure is different and, for most buyers, bigger. Courts treat occupation without an OC as illegal, banks and utility companies are being told to ask for the certificate, and a building can be ordered vacated or demolished.

What the Supreme Court decided on 17 December 2024

The ruling is Rajendra Kumar Barjatya v. U.P. Avas Evam Vikas Parishad, decided by Justices J.B. Pardiwala and R. Mahadevan. Note the facts: it was not a Mumbai case. It concerned commercial shops built without a sanctioned plan on a residential plot in Meerut, Uttar Pradesh. The buyers held registered sale deeds. The Court still confirmed the Allahabad High Court's order: the buyers had to hand over the premises within three months and the authority had to demolish the construction within two weeks after that.

The Court said an illegal building cannot be protected only because years have passed or because a lot of money was spent on it. It imposed no money penalty on the buyers. The only sum mentioned in the final order is a ₹10 lakh deposit the buyers had made, which the Court ordered to be refunded with interest.

The judgment also laid down directions for the whole country. As summarised from the judgment, they include:

• Banks and financial institutions may sanction a loan against a building as security only after verifying its completion or occupation certificate.
• Electricity, water, sewerage and similar services are to be connected only after the certificate is produced.
• No trade or business licence is to be granted for an unauthorised building.
• An officer who wrongly issues a completion certificate faces departmental action.
• Violating the directions can invite contempt proceedings.

The Supreme Court's record of proceedings says the judgment must be sent to every High Court and to every Chief Secretary, who are to issue circulars to local bodies. We have not checked what circulars Maharashtra issued afterwards, so ask your bank and your municipal ward office what they follow today.

The Bombay High Court position

In Sameer Subhash Patil v. State of Maharashtra (Writ Petition 1658 of 2012), a Bombay High Court bench of Justices G.S. Kulkarni and Kamal Khata dealt with a Dadar building where the floors above the ground level were an unfinished skeleton with no OC, yet twelve ground-floor shops were operating. The order is dated July 2025 (copies we saw give both 18 and 25 July). The court called the occupation illegal and said it was being allowed "with open eyes".

It quoted Section 353A(2) of the Mumbai Municipal Corporation Act: "No person shall occupy or permit to be occupied any such building" until the required permission is received. It told the Municipal Commissioner to find the responsible officers, form ward-wise inspection teams, and noted that the Chief Fire Officer could consider sealing under Section 8 of the Maharashtra Fire Prevention and Life Safety Measures Act, 2006.

Press reports on a separate Tardeo high-rise case say the High Court told residents of the top 18 floors (17 to 34) to vacate until an OC is issued. We could not read that order, so treat the details as reported.

So where does ₹5,000 a day come from?

We read the Section 353A(2) text as quoted by the High Court and the Supreme Court's directions, and neither states a daily fine. The nearest ₹5,000 figure we found is in the Maharashtra Regional and Town Planning Act, 1966, Section 52, which punishes unauthorised development or use contrary to the Development Plan. A statute compilation we read lists a fine of ₹2,000 to ₹5,000 on conviction, plus up to ₹200 for each day the offence continues after conviction (up to ₹5,000 and ₹100 a day in the use-contravention limb). That is a ceiling on a court-imposed fine, not an automatic daily charge on a resident, and it is not the OC provision. We could not check it against the Gazette text, so verify before quoting it. One other secondary report mentions a ₹25,000 penalty under Section 353A; we could not confirm that either.

What it actually costs: an illustration

Assume (illustrative) you buy a ₹1.2 crore flat and need an ₹80 lakh home loan at 8.5% for 20 years. The EMI works out to about ₹69,400 a month. If the lender refuses to fund a building without an OC, you need ₹80 lakh from elsewhere. If instead you are living there and the authority orders the building vacated, you may pay the EMI and rent together. At an assumed rent of ₹40,000, that is about ₹1.09 lakh a month, or roughly ₹6.6 lakh over six months, before any legal fees.

Risk	What the sources show
Loan	Supreme Court directs banks to verify OC before lending against a building.
Utilities	Directed to be connected only on production of the certificate.
Resale	Follows from the above: your buyer faces the same loan problem. This is our inference, not a quoted rule.
Vacate or demolition	Meerut shops: vacate in three months, demolish in two weeks after.
Prosecution	Section 353A(2) bars occupation; no fine figure confirmed by us.

The OC amnesty in Mumbai: reported, not a licence to relax

Reports say the BMC General Body approved an "OC Amnesty Scheme" on 18 August 2026, and that a BMC circular and standard procedure followed on 8 September 2026. As reported, it covers residential buildings, schools and hospitals occupied before 17 November 2016, with a carpet area cap of 80 sq m per unit for the fee concession, and applications go through an architect on the AutoDCR portal. Reports also say it does not legalise unauthorised construction, and that a revised BMC proposal to drop the 80 sq m cap is still awaiting the state Urban Development Department. We could not read the state direction or the BMC circular, so we are not describing it as notified. It applies to Mumbai, not the rest of Maharashtra.

Checklist before you pay

• Ask for the OC itself, with the building name, wings and floors it covers. A part-OC may cover only some floors.
• Match the OC to the sanctioned plan: floors, flats and the unit you are buying.
• Ask your bank's legal team in writing whether it will lend, and on what documents.
• If the seller says the OC is "applied for", treat the flat as one without an OC until you hold the paper.
• Have an advocate review the agreement for who bears the cost and risk if the OC is refused.

Mistakes to avoid

• Assuming a registered agreement legalises the building. The Meerut buyers had registered deeds and still lost.
• Relying on a possession letter or society formation as proof of an OC.
• Repeating the ₹5,000-a-day figure without finding the section it comes from.

This article explains the law and does not replace advice from an advocate or chartered accountant.