CCI accuses DLF of imposing unfair conditions on Magnolia flat owners in Gurgaon

Anti-monopoly watchdog CCI has again accused India's largest real estate firm DLF of abusing its dominant market position and imposing unfair conditions on home buyers, this time in its high-end residential project Magnolia in Gurgaon.

The Magnolia Flat Owners' Association had filed a complaint against DLF Universal, Haryana Urban Development Authority and the Director Town and Country Planning, Haryana, with the Competition Commission of India (CCI).

In his report, the director general of CCI found that DLF issued allotment letters, and apartment buyers' agreements were signed even before it got approvals from the town planner. The builder also revised the building plans and applied for increasing the height of the towers after collecting 90% of the money from the buyers, and two months after the original date of delivery promised by the company.

The report also pointed out that there has been an inordinate delay in handing over possession of the project and that due to the change in the number of floors, there has been a change in the floor area ratio and density per acre for the project. A DLF spokesperson said: "This order is on the same lines as the earlier CCI order. No new penalty has been imposed on DLF. Our legal experts are studying the order and we will take requisite legal action. We continue to believe that we have a strong case."

Drish Paul, the president of the Magnolia Flat Owners' Association, said their legal counsel is studying the CCI order after which they will decide whether to become party to other such cases against DLF. "Many people are living on rent, waiting for apartments to be handed over. We would eventually like to get compensated for the loss due to the delay in completion of the project," he said.

In August 2011, in a similar order, CCI had slapped a fine of 630 crore on DLF for unfair practices, abuse of market dominance and disregard for consumer rights in its Belaire residential project in Gurgaon. It had also said that DLF had signed agreements with buyers that were completely one-sided.

Later, CCI had found DLF guilty of abusing its position at one more project, the Park Place in Gurgaon, and has asked the company to cease and desist from imposing unfair conditions on buyers. The order had also directed DLF to suitably modify the unfair conditions imposed on existing buyers within three months.

DLF challenged the CCI order that had imposed a fine of 630 crore on the company and registered an appeal with the Competition Appellate Tribunal (Compat) in October 2011. The tribunal, in its hearing in November 2011, gave temporary relief to DLF by staying the penalty imposed on it by CCI but directed DLF to give an undertaking that it would deposit the entire penalty amount with 9% interest if it finally loses the case.

In the current order relating to Magnolia, the commission has found DLF to be in contravention of section 4 (2) (a) (i) of the Act, which says that there will be abuse of dominant position if an enterprise or a group, directly or indirectly, imposes unfair or discriminatory condition in purchase or sale of goods or service; or price in purchase or sale (including predatory price) of goods or service.

Source: http://articles.economictimes.indiatimes.com/2012-03-12/news/31153134_1_conditions-on-home-buyers-buyers-within-three-months-belaire