Ag­grieved par­ties have one more fo­rum

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Ashok Chawla, chair­per­son, Com­pe­ti­tion Com­mis­sion of In­dia (CCI) is a distin­guished civil ser­vant with 40 years of ex­pe­ri­ence in var­i­ous sec­tors of the econ­omy at fed­eral and state gov­ern­ments in In­dia and at in­ter­na­tional mul­ti­lat­eral agen­cies. As chair­per­son of CCI his role in­volves pro­mot­ing and sus­tain­ing com­pe­ti­tion in In­dian mar­kets by ef­fec­tively en­forc­ing Com­pe­ti­tion Act 2002, which is a key com­po­nent of In­dia’s eco­nomic re­forms. In an in­ter­view with HT Es­tates, he talks about the ef­forts be­ing made by CCI to tackle cases of vi­o­la­tion of law within the real es­tate sec­tor, take up issues of carteli­sa­tion among builders, role of CCI once a real es­tate reg­u­la­tor is in place and why CCI can rightly be called game -changer. Have the num­ber of cases per­tain­ing to the realty sec­tor in­creased over the years? What kind of cases have you seen of late in gen­eral?

After the Com­mis­sion passed an or­der against DLF three to three-and-a-half years ago there have been many cases. (In Au­gust 2011, the reg­u­la­tor had found DLF vi­o­lat­ing fair trade norms and im­posed a fine of ₹ 630 crore fol­low­ing a com­plaint by a Be­laire Own­ers’ As­so­ci­a­tion in Gur­gaon). In fact, a large num­ber of cases (are) from the real es­tate sec­tor. Not only from the NCR re­gion but from var­i­ous parts of the coun­try. The in­for­mants or the com­plainants have gen­er­ally been mak­ing out a case that they have been short­changed by the real es­tate builders and that they have been treated in an un­fair man­ner and this amounts to vi­o­la­tion of the com­pe­ti­tion law by the builders con­cerned. We have looked at many such cases and what we find is that so far as the Com­pe­ti­tion Act

is con­cerned there are two as­pects where we can come in. One is where the builder is dom­i­nant in a cer­tain prod­uct and a cer­tain geo­graphic re­gion which means that he is able to op­er­ate in­de­pen­dently of the com­pe­ti­tion then ev­ery­thing can be put through the fil­ter of whether it is abu­sive or not. And that is what hap­pened in case of DLF. If the builder is not dom­i­nant and ev­ery builder can­not be dom­i­nant – in a geo­graphic re­gion there can at best be only one dom­i­nant player. So for the oth­ers the same yard­stick can­not be ap­plied under the Com­pe­ti­tion Act. We also looked at, based on an in­for­ma­tion that came to us, whether builders as a group are act­ing in con­cert or in a man­ner among them­selves and us­ing any in­dus­try plat­form for the pur­pose. That case went through a long in­ves­ti­ga­tion but there was no ev­i­dence that they are op­er­at­ing in con­cert, the fact that this was aris­ing on ac­count of­carteli­sa­tion was not borne out. (A con­sumer had com­plained of an al­leged col­lu­sion be­tween re­al­tors as­so­ci­ated with the Con­fed­er­a­tion of Real Es­tate De­vel­op­ers’ As­so­ci­a­tion of In­dia but after in­ves­ti­ga­tion CCI let off the builders for lack of enough ev­i­dence of un­fair trade prac­tices and form­ing a car­tel) There­fore, we had to close that mat­ter. In the first case, the DLF case is in ap­peal. The COMPAT, the com­pe­ti­tion ap­pel­late tri­bunal, up­held the or­der so the opposite party is now in the Supreme Court. We will wait and watch for the de­ci­sion of the Supreme Court which will de­ter­mine the fu­ture road map and ju­rispru­dence of th­ese mat­ters. We have taken a dif­fer­ent po­si­tion, at least in the case where the builder is dom­i­nant, so we would be keen to see how the Supreme Court reacts to the mat­ter.

You men­tioned the DLF case, the Credai case. If you were to take into ac­count th­ese cases, do you think CCI has been a game-changer when it comes to han­dling real es­tate cases?

We are a game-changer in the sense that the ag­grieved par­ties got one more fo­rum to seek jus­tice and prob­a­bly they were happy with the course of ac­tion and steps we took proac­tively in per­haps much less time than what con­sumer courts take. So the con­sumers are cer­tainly happy. There is a much larger is­sue which the gov­ern­ment is for­tu­nately pur­su­ing - that this sec­tor is in cry­ing need of ro­bust, more ef­fec­tive reg­u­la­tions and for par­ties to knock at the door of any court or a body like the Com­pe­ti­tion Com­mis­sion is not very easy. It is a com­pli­cated process, they have to wait long. So, if many of th­ese issues that crop up, we have seen th­ese mat­ters when they come to us, if they are nipped in the bud at the ex-ante stage (when they are sym­met­ri­cally in­formed) in terms of ef­fec­tive en­force­ment of the pol­icy and the fear in the minds of the builders and the in­ter­me­di­aries that if they don’t fol­low the act and the reg­u­la­tions which it pre­scribes then penalty can swiftly visit them. That would be very es­sen­tial for the sec- tor. That will be the ul­ti­mate game-changer.

Once the reg­u­la­tor comes in, will CCI con­tinue to play its present role and, will the window con­tinue to be open to con­sumers?

Yes, it will be­cause the reg­u­la­tor will look at issues of com­pli­ance and if they don’t get them­selves reg­is­tered, the builders and the in­ter­me­di­aries don’t be­have in a cer­tain man­ner in com­mer­cial trans­ac­tions etc, in terms of tak­ing ad­vances, de­posits etc, what they will put out and what per­mis­sions they will have etc. So, those things the reg­u­la­tor will look at. If the par­ties are ag­grieved as con­sumers and there are purely con­trac­tual mat­ters, they will con­tinue to have the fo­rum of the con­sumer court avail­able to them. If there are com­pe­ti­tion issues or issues of be­hav­iour, post the ap­provals be­cause the com­pe­ti­tion act es­sen­tialy looks at be­hav­iour or if the be­hav­iour is ap­pro­pri­ate or not - that op­tion or that window will con­tinue to be avail­able to the con­sumers.

De­spite a spate in CCI or­ders, con­sumers are still to see re­sults on the ground, agree­ments still re­main sim­i­lar in most cases. Has some­thing been done about that?

We looked at the agree­ment in the DLF case also and sug­gested a model kind of agree­ment but that is frozen be­cause the whole is­sue is in ap­peal. Once that gets set­tled and if the de­ci­sion of the Com­mis­sion is up­held and the agree­ment ac­quires le­gal sanc­tity then that will make a lot of change for cus­tomers deal­ing with DLF and pre­sum­ably if one big builder and leader in the in­dus­try in some part of the coun­try mod­i­fies the agree­ment or adopts a dif­fer­ent agree­ment oth­ers will fol­low suit. But let me also say that while that is­sue re­mains to be de­cided other builders on their own have started mak­ing some changes in the terms and con­di­tions, tak­ing cog­ni­sance of the fact that there are ac­tive com­plainants and cus­tomers who are go­ing to the Com­pe­ti­tion Com­mis­sion or the con­sumer fo­rum. Now that the con­sumer fo­rum has also passed some very ro­bust or­ders after large mat­ters came be­fore it, we were pleas­antly sur­prised to find that those or­ders were passed in a very short pe­riod of time and was not a lengthy process. As a re­sult I think that the com­mu­nity of builders gen­er­ally re­alises that things can­not go in a man­ner and they have started mak­ing changes and ad­just­ments in the com­mer­cial terms of the agree­ment in terms of what they will pay if there is a de­lay. And if there is a de­lay in pay­ment from the side of the buyer, how much each will be pe­nalised, and gen­er­ally to make the terms of the com­mer­cial con­tract more bal­anced and mod­er­ate.

Has con­sumer aware­ness also in­creased now that we are wit­ness­ing a lot of con­sumer ac­tivism?

I feel it has cer­tainly in­creased. It has also in­creased be­cause there are a large num­ber of pro­fes­sional mid­dle-class buy­ers who are putting their money into homes that they are ac­quir­ing for the first time, a lot of that money is not just hard-earned money but money they have bor­rowed from banks. So, there is a keen ap­pre­ci­a­tion of the fact that they must get ap­pro­pri­ate con­trac­tual con­di­tions they can ab­sorb and which they can ac­cept.

Ashok Chawla, chair­per­son, Com­pe­ti­tion Com­mis­sion of In­dia (CCI)


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