Track2Realty Impact
Realty major DLF has welcomed stay order by the Competition Appellate Tribunal (COMPAT) on the Rs.630-crore penalty imposed on it by the Competition Commission of India (CCI). The stay was granted on Wednesday, November 9.
Track2Realty has been the 1st to question the locus standi of the case which is more about consumer protection, and hence had questioned the jurisdiction of the CCI in this regard.
“DLF is pleased that COMPAT appreciated that the order passed by the CCI imposing penalty and directing modification of the terms of the agreement, is contrary to law and as such admitted the appeal. The order imposing penalty has been stayed and the directions regarding modification of the conditions of the agreement would remain in abeyance,” said Sriram Khattar, Senior Executive Director, DLF Ltd.
The Competition Commission, in mid-August, had imposed the fine on DLF for “grossly abusing its dominant position”, after aggrieved flat owners of Belaire housing complex, Gurgaon, complained about prolonged delays in their project.
A similar complaint was filed by the apartment owners of another DLF project, Park Place. Buyers of these two projects – which together entail over 2,000 flats – had alleged that the builder imposed “one-sided contract clauses” on them. They also objected to DLF unilaterally increasing the number of floors in the project.
But, in October, DLF challenged the penalty imposed on it and moved the competition tribunal to appeal against the order.
In the first hearing of the case on Wednesday, a three-member bench – headed by Dr Justice Arijit Pasayat – stayed the imposition of penalty. The tribunal clarified that in an event where DLF loses the case, it will have to deposit the entire amount along with nine per cent interest. The tribunal has asked the company to give an undertaking to this effect.
The tribunal will hear the final argument in the case in the second week of February.
However, Harsh Sehgal, the President of Park Place Residents’ Welfare Association, still does not believe the stay is a setback and instead says, “No…the sword still hangs over their (DLF’s) head.”
“Anyway, the penalty amount was not coming to us…But, yes, we would have felt better if the tribunal had set a precedence…It could have had a ripple effect on the real estate sector,” Sehgal added.
He said that residents’ association would like removal of clauses that were “loaded” in favour of the builder. For instance, an allottee who failed to pay installments on time were to cough up 15-18 per cent interest, whereas the builder would only have to shell out compensation at the rate of Rs 5 per square foot a month for delay (only about one per cent annually).
The outcome of the case will be closely watched by investors as the penalty has financial implications for the company. It is the highest such penalty imposed by the CCI so far. For 2010-11, DLF’s net profit was pegged at Rs.1,640 crore with consolidated revenue of Rs.10,145 crore.
