1. Is the agreement between 1st owner and builder still binding on the builder considering I am 2nd owner?

Yes this agreement is binding on the builder as well as subsequent owners

2. Isnt the builder responsible for maintenance till he has finished and formed society?

He is responsible for maintenance based on the agreement until the Society is formed. He will collect additonal maintenance from the owners to undertake the maintenace after the 3 year period from date of handover is completed.

3. He has started using maintenance money from Day 1. My understanding is that he needs to safegaurd it and handover when society is formed. Is this correct?

No the meny collected is not a deposit. The builder will use the maintenance collected in advance to pay property taxes and maintain the property for the first 3 years. At the time of forming the society the builder will need to handover any left over balances from the maintenace corpus to the society.

4. My flat has been occupied for just 8 months. Does Sept 2012 deadline apply to me? Can this date be extended based on occupation date?

Yes the 3 year period starts from the date of handover to the cutomer by the builder

5. He is threatening to stop water supply. Can he do it?

Under no circumstance can he stop water supply. You can take him to the consumer courts if he does this.

6. What should I do? Pay him or wait till 2012 or beyond?

You need to pay maintenance only from 2012 onwards