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Realty firms mull legal action against CCI order

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The real estate industry, already reeling under falling profit, high interest rates and steep input costs, seems to be sticking together, fearing further action from the Competition Commission of India (CCI).

The competition watchdog had recently imposed a penalty of Rs 630 crore on real estate major over “abuse of dominant position” in relation to two high-end housing projects in Gurgaon. Delayed delivery of projects and changes in the building structure were among the charges levelled against the developer. While DLF is contemplating legal action against the order, may come out with similar orders against many other real estate companies.

“It seems all developers are getting together to work out a joint strategy to combat this,” an analyst told Business Standard. Another industry insider said: “If the order has hit one company, it would affect others soon.”

It is also learnt the government is sitting up on this issue, and may take steps soon to regulate the industry. A real estate regulatory bill has been pending with the government for a while. Most industry representatives are opposed to the proposed bill.

Industry stakeholders claimed the agreements between home buyers and developers were not one-sided and there was extremely limited scope of exploitating consumers.

National Real Estate Development Council director general told Business Standard: “The industry is definitely together (on the issue), as the case would have implications on the sector as a whole. Builder-buyer agreements are being used by everyone, be it private players or the government development authorities.”

Developers in Maharashtra, one of the biggest realty markets in India, said since agreements are drafted as in the Maharashtra Ownership of Flats Act, there is very little scope of exploitating buyers.

“Basically, there is a standard agreement described by the Act. Therefore, there cannot be violation which can come under the purview of CCI. It is mandatory to follow the Act,” said Lalit Kumar Jain, national president, Confederation of Real Estate Developers Association of India.

On the CCI penalty on DLF, Jain said: “The CCI verdict conflicts consumer redressal forums. Already, the Consumer Protection Act is there. I don’t know whether it (CCI penalty) is an infringement on the provisions of the Act.”

“The Constitution does not allow ignorance of law. When a consumer signs the law, he should read it. If he does not think it is legal, he should not sign it.”


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