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New Delhi/Bangalore: The Supreme Court on Wednesday ordered DLF Ltd, the country’s largest real estate developer, to pay the 630 crore fine imposed on it by the antitrust regulator for alleged unfair business practices.

DLF said it would comply with the order and pay the fine, pending a final decision by the apex court on an appeal filed by the realtor against the penalty on Wednesday.

“We direct the appellant (DLF) to deposit the amount of 630 crore in this court," a bench comprising justices Ranjana Prakash Desai and N.V. Ramana said in its interim order.

The bench said DLF will have to submit an undertaking to pay 9% interest on the penalty slapped on it by the Competition Commission of India (CCI) in a 12 August 2011 order that was later upheld in May this
year by the Competition Appellate Tribunal (COMPAT).

The court asked the realtor to pay an initial amount of 50 crore and 25 crore in interest within three weeks. The penalty will be deposited with the court in a nationalized bank, according to the order.

The order adds to the pressure on debt-laden DLF, which has been battling a slowdown in the real estate market in the face of an economic downturn. As of June, DLF had debt of around 18,500 crore.

The penalty will likely cause debt to rise when DLF is seeking to pare it, said Adhidev Chattopadhyay, an analyst at HDFC Securities Ltd.

Shares of DLF fell 4.4% to 183.05 on the BSE on a day the benchmark Sensex rose 0.44% to 26,560.15 points.

“The Appeal filed by DLF against the Order of the COMPAT has been admitted today by the Hon’ble Supreme Court of India," DLF said in a statement.

“The Hon’ble Supreme Court directed DLF to deposit 630 crore in an interest-bearing fixed deposit with the Court for the duration of the Appeal proceedings."

“DLF will take all steps to comply with the directions of the Hon’ble Supreme Court and remains confident of the merits of its case," the company added.

DLF was penalized by the competition regulator for allegedly abusing its dominant position by imposing “unfair and discriminatory" terms on its buyers through apartment buyers’ agreements.

CCI said the construction of additional floors without intimating the buyers was abusive of its dominant position and needed to be curbed.

The dispute arose in 2010, when the flat buyers’ associations of three DLF developments in Gurgaon—DLF Park Place, Magnolias and the Belaire—approached the competition regulator alleging delays in the projects and the construction of more floors than had been planned earlier, among others.

“It is an eye-opening directive by the Supreme Court," said M.L. Lahoty, counsel for petitioners. “It is also a lesson to the big real estate companies that they cannot take their allottees or purchasers for granted."

Harsh Sehgal, president of the DLF Park Place Residents Welfare Association, said: “Finally DLF will have to pay up, something they should have done a long time ago. At the end of the day, it’s a good order."

Aman Malik contributed to this story.

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