CCI modifies apartment buyers agreement in DLF case

Competition Commission of India (CCI) today said it has modified the agreement between DLF group and apartment buyers in its two projects, wherein the realty major was found to have abused its dominant position.

The apartment buyer agreement has been modified after a direction from the Competition Appellate Tribunal (COMPAT), where DLF had challenged a penalty of Rs 630 crore imposed on it by CCI.

CCI said in a statement that "the apartment buyers agreement has been amended such that the abusive and unfair conditions present in the original one-sided agreement have been removed".

The agreement between DLF and apartment allottees has been modified through a supplementary order passed by CCI, it said.    

The COMPAT had asked CCI in March, 2012 to pass an order specifying the extent and manner in which terms and conditions of the Apartment Buyer's Agreement need to be modified.   

CCI said the the terms of the Agreement has been modified in a manner "which it considers fair and reasonable and takes into account the interest of both parties".

The CCI had passed its original order on August 12, 2011 wherein it had held that DLF Ltd was a dominant enterprise and violated the provisions of the Competition Act "by entering into an agreement with apartment allottees that was one sided, abusive and unfair to the allottees".  

Recently, CCI Chairman Ashok Chawla had said the modified agreement in the DLF case could work as a model framework for commercial agreements between real estate developers and property buyers and could serve as a benchmark for the industry.

"Whether a real estate company is dominant or not, DLF was found to be dominant because it was big, most of them follow the same format pattern that flows from big players in the market," Chawla had told PTI in an interview here.

The CCI had passed its order against DLF following its inquiries into complaints filed by flat buyer associations of two DLF projects in Gurgaon, DLF Park Palace and The Belaire, alleging delays in the project and increase in the number of floors than planned earlier, among other things.

In its latest supplementary order, CCI said it has also considered the relevant provisions of the laws applicable to the development of group housing projects in Haryana, particularly the mandatory requirements which must be followed by every developer/builder, but which were not followed by DLF Ltd in this case.

Asked whether he expects the modified pact being prepared by CCI to serve as a benchmark for the entire real estate industry, Chawla had earlier that it should certainly "serve as a general model of framework".    

"I think once that happens, that (the modified pact) meets judicial test, that I believe should take care of the most of the commercial aspects between the buyer and the seller," Chawla said.

Meanwhile, legal experts are of the opinion that the COMPAT also needs to decide on various issues like jurisdiction, relevant market, dominance and abuse of dominance, besides any modifications in the model agreement.    

It has been said that the CCI's definition of relevant market has been inconsistent in different cases, although the regulator has been flooded with cases against various builders post DLF case.