Competition hearing on DLF case raises hope for consumers

Competition hearing on DLF case raises hope for consumers

New Delhi: The Competition Commission of India (CCI) has asked a unit of the country’s biggest real estate developer DLF Ltd to submit its response in two weeks in a case that could help speed up the redressal of consumer grievances.

The complaint against DLF Home Developers Ltd pertains to delays and the firm increasing the number of units it’s building on the same area.

While an investigation by the director general (DG) of CCI has been on since May, CCI members heard lawyers of both parties on 3 August. This was based on an injunction sought by the petitioners—the owners’ associations—on 29 June.

The petitioners have used the property developer’s top ranking to invoke provisions of the Competition Act in a case that could otherwise have been heard in a consumer court. The matter involves DLF and owners at two of its projects in Gurgaon—Belaire and DLF Park Place.

The Competition Act contains the provision of interim relief in section 33.

“Interim relief can help CCI expedite cases as the party against whom there is a complaint has to comply with interim orders and will therefore have to cooperate with CCI and thus not delay investigation by the DG," said a senior CCI official who did not want to be identified. “Besides, it cannot take vindictive action" against the complainant while the DG’s investigation is on.

He added that the DG’s inquiry into the DLF case may take its own course.

“Although DLF was asking for more time to file its reply, the CCI gave it two weeks time to respond by 17 August. It also fixed 19 August as the next date for hearing," said another senior CCI official who did not want to be identified. This official also added that an interim order may be passed on 19 August.

The owners’ associations of the two projects have cited DLF under section 4 of the Competition Act saying it enjoys a dominant role in the real estate sector in north India and is not abiding by its initial commitments.

“DLF has abused its dominant position and has taken around 2,200 allottees of the two projects for a ride," Supreme Court lawyer M.L. Lahoty who is representing the associations said. “Each of these flats cost between Rs1.5-3.5 crore."

The real estate company said the issue was sub judice and that since time given by the commission was too short, DLF was given more time to be supplied with all the documents pertaining to the case.

“No orders have been passed by CCI directing DLF not to cancel the allotments during this period," said a DLF spokesperson. “However, on a voluntary basis, DLF does not propose to cancel any allotment till 19 August, while maintaining that it is entitled to cancel allotments in accordance with the agreement, if any apartment allottee has committed any breach of the agreement including default in payment of instalments."

DLF’s lawyer told the CCI chairman that “any impression created by anyone that DLF was not cooperating in the investigation was incorrect," the company said. “DLF was fully cooperating in the investigation and had appeared at every hearing before the additional director general (investigation)." The company had also filed its interim replies to the notice for investigation and made its submissions regarding the validity of the proceedings, it said.

These “were initiated contrary to the provisions of the Competition Act," the company said. “DLF contends that untenable allegations have been made before CCI by the aforesaid associations and the proceedings initiated before CCI are not maintainable under the Competition Act."

According to the petitioners’ lawyers, DLF’s actions included raising the number of floors from 19 to 29 in Belaire, which led to the number of apartments increasing to 564 from 384 on the same land area without the consent of the allottees.

“Since this structural change was unilateral and not transparent, the buyer till date is not aware as to the necessity of this change, which while making the DLF richer by hundreds of crores substantially deprived the buyers of innumerable rights, such as, proportionate ownership right on the land, super area and common area facilities, etc.," says the petition filed by the association on 5 May. A copy of this was reviewed by Mint.

Lahoty also said there was a delay in the project which has resulted in financial losses for many.

“The agreements were signed in 2006 with a promise that they will be ready in three years. But till March 2010 (due date for possession) there were no signs of handing over of the flats," he added.

In the case of Park Place, the petitioner claims DLF went in for 1,560 apartments instead of 950 as per its earlier plan on the same 12.67 acre plot without informing the allottees.

“The serious fallout of the delay is that hundreds of allottees who had paid almost 80-85% of the total amount have to bear huge financial losses as on one the hand, their hard-earned money was blocked, on the other hand, they are being made to wait indefinitely for occupation of their respective apartments," said the petition.

Lahoty also said DLF did not take prior permission of the town planner before starting the projects.

“The commission expressed strong resentment that DLF was not cooperating with the investigation being done by the DG," added Lahoty.

Dhanendra Kumar, chairman CCI, refused to comment, saying CCI officials are not supposed to speak about pending matters.

According to Lahoty, the spat between the associations and DLF has resulted in the cancellation of the agreement of some allottees and the forfeiture of their deposits.

“Although there was no order passed by CCI, DLF did agree not to cancel any allottees’ agreement till the next hearing," said the second CCI official. DLF was represented by lawyer Ravinder Narain.