The Competition Commission of India (CCI), the free trade regulator, has imposed a penalty of Rs 630 crore on real estate major DLF for misusing its dominant position in the market by drafting one-sided agreements with flat buyers in Belaire housing complex in Gurgaon. CCI has also asked the real estate company to modify unfair conditions imposed on buyers within three months of the date of receipt of the order. The penalty on DLF is the largest-ever imposed on any company by CCI.
While DLF refused to comment on its future strategy, saying it enjoyed “an upper hand in the case”, the company has the option to appeal against the CCI order in the Competition Appellate Tribunal (CAT). But DLF also faces the prospect of claims for damages from Belaire flat buyers who initiated the proceedings.
According to the flat owners, DLF violated building restriction norms. Although it had approval to build 19 floors, it constructed 29 floors and cut down the super area, common area and other facilities. Flat buyers also said that DLF announced the project and entered into agreements without getting the required clearances from the authorities.
In its order issued on Friday, CCI said the agreement with buyers is not just one-sided but draconian. It has found that the penalty provision in case of delay in project as per buyers’ agreement is discriminatory and favoured the builder. The commission said in case of delays beyond three months, the builder would pay monthly compensation at Rs 5 per square foot. But if there is a delay on part of the buyer, the interest charged is 15% per annum for the first 90 days, before rising to 18% after that.