Com­pe­ti­tion Tri­bunal Up­holds .` 630-crore Penalty on DLF

Co plans to chal­lenge or­der in Supreme Court within 60 days; ex­perts feel or­der may have ram­i­fi­ca­tions on the realty in­dus­try

The Economic Times - - Companies - OUR BUREAU

The Com­pe­ti­tion Ap­pel­late Tri­bunal on Mon­day up­held .` 630crore penalty on real es­tate firm DLF for abus­ing its dom­i­nant po­si­tion in Gur­gaon to im­pose onesided terms on buy­ers, a move that will boost hopes of all ag­grieved home­buy­ers across the coun­try. In 2011, the Com­pe­ti­tion Com­mis­sion of In­dia (CCI) had slapped the penalty on the real es­tate ma­jor af­ter com­plaints by flat buyer as­so­ci­a­tions of DLF Park Palace and The Belaire projects in Gur­gaon that the builder had de­layed pos­ses­sion of apart­ments, changed its orig­i­nal plan to ac­com­mo­date more floors and that the apart­ment buyer’s agree­ment was one-sided. Ex­perts said Mon­day’s or­der of the Com­pe­ti­tion Ap­pel­late Tri­bunal, or COM­PAT, may have ram­i­fi­ca­tions on the real es­tate in­dus­try as many de­vel­op­ers have been in­dulging in sim­i­lar prac­tices. “This new or­der will bring about a lot of or­der in the way things are done in the in­dus­try. De­vel­op­ers will be care­ful about how they man­age projects and what they dis­close and what they don’t,” said Mu­das­sir Zaidi, na­tional di­rec­tor — res­i­den­tial, at Knight Frank In­dia. “It will help buy­ers as de­vel­op­ers will now put for­ward more bal­anced agree­ments for them to sign,” he added. DLF said it will chal­lenge the or­der in Supreme Court within 60 days. “The com­pany wishes to point out that it has suc­cess­fully de­liv­ered Park Place, Belaire and Mag­no­lia projects, which were the sub­ject mat­ter of the above ap­peals. The com­pany has re­spected in true let­ter and spirit the cus­tomer com­mit­ments made by it,” DLF said in a state­ment. Vaib­hav Gag­gar, part­ner at law firm Gag­gar & As­so­ciates that rep­re­sented the two buy­ers as­so­ci­a­tions, said: “This or­der will be­come a prece­dent of sorts for other courts and tri­bunals in cases against other builders. We are hop­ing that the su­per-area game that builders play, chang­ing of plans

‘The COM­PAT or­der has paved the way for buy­ers in the DLF projects to file com­pen­sa­tion claims’

mid­way through the project, and the tus­sle be­tween res­i­dents and the builders on com­mon ar­eas and fa­cil­i­ties all be­come more trans­par­ent.”

Apart­ment own­ers in Belaire project had al­leged in their May 2010 com­plaint to CCI that each of the five tow­ers in the project were to have 19 floors but the builder “con­structed 29 floors in all the build­ings and con­se­quently the ar­eas and fa­cil­i­ties orig­i­nally ear­marked for apart­ment al­lot­tees were sub­stan­tially com­pressed”. They had also said: “The project was ab­nor­mally de­layed, as a re­sult of which hun­dreds of apart­ment al­lot­tees had to bear huge fi­nan­cial losses, in the sense that their hard-earned money was blocked, and they had to wait in­def­i­nitely for oc­cu­pa­tion.”

The buy­ers had also al­leged that the Apart­ment Buyer’s Agree­ments (ABA) were signed months af­ter the book­ing of the apart­ment and by that time they had al­ready paid a sub­stan­tial amount. “The said ABA was de­vised by the Ap­pel­lant for book­ing the apart­ments and a per­son de­sirous of book­ing the apart­ment was re­quired to ac­cept it in ‘toto’ by giv­ing as­sent to the ABA on sign­ing the dot- ted lines, even when clauses of the ABA were oner­ous and one-sided,” the COM­PAT or­der said.

The buy­ers had also pointed out in their com­plaint that the agree­ment did not con­tain pro­por­tion­ate li­a­bil­ity clauses to fas­ten com­men­su­rate penalty/dam­ages for breach in dis­charge of the builder’s obli­ga­tions.

San­jay Bhasin, pres­i­dent of the Belaire Own­ers’ As­so­ci­a­tion said the COM­PAT or­der has paved the way for buy­ers in the DLF projects to file com­pen­sa­tion claims. If all of the 2,500 own­ers in the three projects file for com­pen­sa­tion, the claims could po­ten­tially run into thou­sands of crores. “The mem­bers are happy that their stand has been vin­di­cated and we hope that this judg­ment will go a long way in ame­lio­rat­ing the hard­ships of apart­ment buy­ers,” said Harsh Se­h­gal, pres­i­dent of Park Place Res­i­dents’ Wel­fare As­so­ci­a­tion. DLF will now have to pay the penalty with an in­ter­est of 9% since the orig­i­nal or­der.

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