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RWAs seek Belaire Owners' help to take on big realtors

Dilasha Seth  |  New Delhi 

The Gurgaon-based Belaire Owners’ Association is much in demand these days. Ever since the Competition Commission of India (CCI) slapped a penalty of Rs 630 crore on DLF, the country’s largest real estate developer, for “unfair trade practices” and “abuse of market dominance”, several residents welfare associations, from Gurgaon to Greater Noida, have approached the association for advice to resolve their flat-related problems, according to its office bearers. The CCI order was based on a complaint filed by the Belaire Owners’ Association with the competition watchdog.

Qubrex, the real estate consultancy firm that presented an expert report to the CCI on the market share of DLF to establish its dominance in Gurgaon, has also got its hands full, with various buyers seeking its help against developers.

“Various projects of large and well-known developers stretching from Greater Noida to Gurgaon are under the scanner, and we are exploring means and ways to approach the cases,” said Sanjay Sharma, managing director of Qubrex.

According to Sharma, some of these would make for CCI cases, as dominance can be proved across various product categories, as well. For instance, a particular developer may be a dominant player in the affordable housing segment, while another may be so in the high-end category.

What happens to those cases which cannot come under the CCI domain? The argument made by the Commission on common clauses might strengthen their respective cases in consumer courts, pointed out a real estate representative tracking the development.

According to the complaint in the Belaire case, DLF had promised to complete the high-end residential project by 2009. But more than two years later, buyers are yet to get possession. Also, DLF increased the number of floors, increasing the number of apartments to 564 from 384.

DLF is targeting to give possession of flats to buyers by December. But many property dealers in Gurgaon told Business Standard it might take longer for DLF to hand over the flats.

According to the builder-buyer agreement in the Belaire case: “The company reserves the right to correct, modify, amend or change all the annexures attached to this agreement, and also annexures which are indicated to be tentative... as deemed necessary by the company at its sole discretion.”

DLF, in its defence, had told the CCI that the allottees had signed the agreement and the practice adopted by DLF was a general industry practice. However, CCI refuted it by pointing out that in an agreement, both parties should be of equal footing with the same bargaining power. CCI said, “If one party to the agreement has no choice, the other party cannot take advantage only because there is a signed agreement between the parties.”

“It can’t be said all developers have copied the agreement from DLF, but there can be no denying that all agreements are loaded towards the developers,” said R R Singh, director general of the National Real Estate Development Council. According to Singh, there is a need for a standard agreement document.

Sources in DLF said the Belaire Owners’ Association comprised 20-25 persons who defaulted after the first installment in 2007 and had not paid since. A buyer said people stopped payment since DLF had made the payment construction linked, and no construction was happening. Another buyer said many had made 95 per cent of the payment.

DLF is planning to move the Competition Appellate Tribunal. Calling the punishment too harsh, Singh said, “A proper scrutiny is possible only if the case reaches the Supreme Court.”

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First Published: Wed, August 31 2011. 01:31 IST