The Competition Commission of India (CCI) has slapped a 630-crore fine on DLF, threatening to turn an isolated dispute between flat buyers and India’s largest builder into a full-blown headache for the industry grappling with soaring interest costs and dwindling buyers.
In a 237-page order, unprecedented in its scope and scale of punishment, the anti-monopoly watchdog accuses the Gurgaon-based firm of unfair practices, abuse of market dominance and “brutal disregard of consumer right”.
DLF, the CCI adds, rode roughshod over buyers’ interests and signed sale agreements that were hopelessly one-sided.
The commission found DLF guilty of beginning work on a residential project, The Belaire, in Gurgaon Phase V, without approvals, increasing the number of floors mid-way through the project, delaying completion, and forfeiting the booking amount of some buyers. The fine, more than half of DLF’s 2010-11 profit, has been calculated on the basis of a percentage of the average of the firm’s last three year sales.
The move is likely to have wider implications for an industry where the practice of one-sided agreements is common and where builders routinely delay or modify projects, increasing the costs for consumers.
Rajeev Talwar, Group Executive Director of DLF, said, “We are reading the order and will examine all our options with our legal experts. We believe we have a strong case.” The company is likely to appeal against the order.
The case relates to a complaint filed by The Belaire Owners’ Association in Gurgaon against DLF in May 2010. The residents had complained of delay in possession and alleged arbitrary changes in the building plan and structure by the builder. The project was started in 2006, and DLF increased the number of floors to 29 from 19, increasing the number of apartments to 564 from 384. DLF promised to complete it in 2009, but more than two years later, buyers are yet to get possession.
Harsh Sehgal, president of the DLF Park Place RWA, which jointly fought the case with the Belaire owners, said DLF sold flats on 10 new floors of the expanded project at a lower price than what the earlier buyers had paid.
