More realtors to face the music

The Competition Commission of India (CCI) is expected to deliver verdicts on, at least, 10 different cases filed by irate customers against leading real estate developers, including the biggest player DLF Ltd, for alleged anti-competitive and unfair trade practices soon.

While the first verdict, on a complaint filed by the Belaire Owner’s Association, representing the customers of DLF’s high-end residential project Belaire in Gurgaon, saw CCI levying a penalty of Rs 630 crore against the company on August 12, the final ruling on other cases are expected in the coming days.

“There are 10 or 11 related cases that are being looked into by the Commission. The verdicts will follow one after another,” a senior CCI official said. He said the Commission had received complaints from customers of other real estate players, too, but declined to provide details.

Since the Belaire case was heard by the CCI along with another case pertaining to DLF's Park Place project, another residential venture in Gurgaon, industry sources are hoping to get the verdict on Park Place this week . Customers of Park Place had complained that DLF had unilaterally increased the number of residential units in the project from 950 to 1,560 and delayed its completion.

The Commission’s verdicts on other cases are being keenly watched as the CCI order on Belaire case makes explicit references to unfair trade practices that are prevalent in the real estate industry. Launch of projects without complete statutory approvals, lack of transparency in specifying the carpet area and utility area, uncertain date of delivery and absence of consequential remedies to the consumer, etc are some of the key issues pointed out by the CCI in the Belaire verdict.

The Commission had even suggested central and state governments the need for real estate regulators to ensure the amount collected from customers was utilised for the specific project, transparency in information relating to work progress and to end the practice of built-in hidden costs other than the initial set price.

Transparent mechanism to deal with escalation in price and substantive and major changes in the project mid-way were also suggested.

Meanwhile, DLF and Belaire Owner’s Association are both planning to approach the Competition Appellate Tribunal (CAT) soon. While DLF wants to reverse the CCI order, the customers are seeking compensation for the delay in the completion of the project from DLF.

DLF, whose share price touched 52-week low at Rs 173.4 a share on the BSE on Wednesday, is known to have scheduled a meeting of its investors and bankers to explain its position during the week.