The realty developer allegedly abused its dominant position by putting discriminatory and abusive clauses in rent agreements
In a trend-setting move, Competition Commission of India (CCI) has initiated proceedings on a complaint against DLF, the country's largest real estate developer, for alleged abuse of its dominant position by putting discriminatory and abusive clauses in the rent agreement provided to the allottees of the apartments.
The petitioners alleged that DLF, which failed to allot apartments to the customers of its two luxury projects — The Belaire and Park Plaza — in Gurgaon, had resorted to cancelling some of the allotments and charged hefty penalties on the basis of agreements which they consider as “prejudiced”.
In its first hearing on Tuesday (August 3), CCI took an oral undertaking from DLF that the company would not take any coercive action till the case is resolved.
Sector analysts see this as a trend-setting case as the practice of asking customers to sign on the dotted lines without giving them an opportunity to negotiate the terms of agreement with the real estate developer is a common norm in the industry.
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A DLF executive said the company had not violated the terms of the agreement with its customers and would support CCI in the proceedings of the case.
“We are in the process of responding to the complaint and believe the case will be resolved amicably,” he said.
The CCI officials said they would not comment on ongoing cases.
The petition before CCI, filed by Belaire Owner’s Association against DLF Limited, Department of Town & Country Planning, Haryana and Haryana Urban Development Authority (HUDA), states DLF has failed to deliver the residential project on time and put discriminatory and abusive clauses in the rent agreement provided to the allottees of the apartments. It also says the builder is abusing its dominant position in the market.
Both the projects are expected to have 2,200 flats priced between Rs 1.5 crore to Rs 3 crore, making the apartments worth Rs 4,500 to Rs 5,000 crore.
The project, which started in August 2006, was expected to be completed by three years but the country’s largest developer has now extended the deadline to April 2011, which prompted some of its irate customers to stop paying the instalments.
“I have invested Rs 1 crore for an apartment and later stopped paying money as there was no construction going on and DLF kept sending me notices that if I don’t pay I will have to forfeit the money as interest kept on rising. In March this year, they deducted Rs 46 lakh and returned the rest and cancelled my allotment,” said Amit Jain, one of the allottees of The Belaire.
According to the Belaire Owner’s Association, DLF has till now sent 34 cancellation letters to the allottees for default of payment.
While the DLF agreement entitles the buyers to seek a penalty of Rs 10 per sq ft every month for the delayed period, it allegedly has tougher norms for its customers.
The petitioners’ counsel M L Lahoty said DLF collected advances for bookings (in September 2006) much before they had any approved building plan. The actual agreement was also given to customers months after the company collected initial payments, he said.
“By the time DLF gave the agreement letters to its customers, it had collected 27 per cent of the total money from the buyers,” Lahoty said.
Meanwhile, Corporate Affairs Minister Salman Khurshid today informed Lok Sabha that CCI has received complaints of “abuse of dominance” against DLF New Gurgaon Homes Developers, DLF Home Developers Ltd, DLF Ltd and DLF New Gurgaon.
He also said the Serious Fraud Investigation Office under the ministry has filed a case against Manmandir Estate Development Pvt Ltd for violation of various sections of the Companies Act, 1956.