CCI raps DLF, says abused its dominant position

Interim restraining order on two Gurgaon housing projects.

In an interim order today, the Competition Commission of India (CCI) said DLF, the country’s largest property developer, had been abusing its dominant position in the market.

It forbade, for the time being, the company from cancelling any allotment of apartments in the two residential complexes in Gurgaon that were the subject of the petition in question before it. Or, from “creating third party rights” by selling, alienating or transferring the apartments and common area and facilities without CCI’s permission.

The order was passed under Section 33 of the Competition Commission Act, saying the developer put “neither fair nor just” clauses in the Gurgaon apartment agreements. An interim order restraining DLF was required, said CCI, as there was likelihood of the allottees suffering “irreparable and irretrievable damage” otherwise.

DLF is under the scanner for alleged abuse of its dominant position by putting “discriminatory and abusive clauses” in the apartment agreement provided to the allottees of the The Belaire and The Park Place luxury apartments in Gurgaon.

The order noted DLF was collecting money from the allottees much before they were provided the apartment agreements. “It is also noted that the agreements were signed by the allottees much after the initial payments to DLF. At that stage, the allottees were not in a position to exercise independent choice in regard to any of the clauses of the agreement, particularly since failure to sign the agreement could lead to loss of significant amounts from the money already paid by them to DLF,” it said.

The petitioners were pleased. “We are happy that all our points were considered by CCI and they have come out with a detailed order, citing how DLF has been abusing their dominant position,” said M L Lahoty, counsel for the petitioners, the apartment allottees. The latter are now planning to file a caveat (a procedure to ensure they are heard before any order is passed) in the Competition Appellate Tribunal, as they expect DLF to seek a review of CCI’s interim order, Lahoty added.

CCI’s own Directorate General, undertaking an independent investigation in the case, is expected to file a report by October 15.

The petition before CCI, filed by Belaire Owners Association, alleged DLF failed to deliver the residential projects on time and put “discriminatory and abusive clauses” in the apartment agreement provided to the allottees. It also says the builder is abusing its dominant position in the market.

Both projects are expected to have a total of 2,072 flats priced between Rs 1.5 crore and Rs 3 crore each, making the apartments worth Rs 4,500 crore to Rs 5,000 crore in all.