Testing time for Real Estate Sector, another set back to DLF after Supertech #indianlaws

Testing time for Real Estate Sector, another set back after Supertech Judgement

Present probably is the testing time in the Real Estate Sector. After Supertech judgment from Allahabad High Court, 19th May 2014 was the turn of DLF when Competition Appellate Tribunal affirmed the penalty of Rs. 630 crores imposed by CCI. The matter originated from the allegation of delay in possession and change in original plan so as to increase number of floors. CCI in its original verdict found DLF guilty and liable for abusing its dominant position.

There was change in height of the building. Any construction beyond the sanctioned limit certainly is wholly illegal or unauthorized and such unauthorized construction after the advent of Section 4 of the Competition Act, 2002 amount to the abuse of dominance, as what was being offered to the allottees was a piece of illegal and unauthorized construction, which amounts to imposing unfair conditions against the wishes of the buyers/ allottees. It was further observed that the government authorities ignored and misinterpreted the various provisions, particularly in respect of the requirement of the necessary approvals by the DTCP Haryana while constructing the additional floors.

A firm opinion was accordingly framed that Appellant (DLF) had abused its dominant position and committed breach of section 4(2)(a)(i) and section 4(2)(a)(ii) of the Act and further an observation that DLF cannot be expected to go on in the fashion complained of. An abuse of dominance whether it is on one count or on many remains an abuse and therefore it must be dealt with iron hands. DLF was a market leader and it was stressed by the allottees that the other real estate Company has also adopted almost the same language in the agreements, which is used by DLF with their allottees. If the consumer is exploited by a mighty builder, then such mighty builder cannot claim soft attitude from the State. Accordingly, the order of the penalty as passed by CCI was confirmed.

[M/s. DLF Limited vs. Competition Commission of India & Ors.]
(Competition Appellate Tribunal, 19.05.2014)