How to file a complaint with the Competition Commission & How homebuyers can benefit from CCI verdict

How to file a complaint with the Competition Commission
How homebuyers can benefit from CCI verdict

The Competition Commission of India (CCI) has imposed a penalty of around 600 crore on realty major DLF for abusing its dominant market position. Levied by the anti-monopoly watchdog, the penalty was imposed after DLF was found guilty of violating the Competition Act, 2002. The fine amounts to 7% of the company's average annual turnover in the past three years.
Following complaints in May last year by several people who had booked flats in a DLF project, the CCI had referred the matter for probe by the Director General (Investigations). According to one such complaint, DLF had promised to complete Belaire, its residential project in Gurgaon, in 2009, but buyers are yet to get possession of their apartments.
In addition, DLF has increased the number of floors in the apartment complex from the original figure given to buyers. This led to the number of apartments in Belaire shooting from 384 to 564. DLF has been penalised for an offence that is common among the hundreds of other builders in the country.
"This is a significant intervention by the Competition Commission and if upheld, it gives a powerful tool to the average property buyer against the developer. A buyer may refuse to sign the agreement quoting this judgement, saying that it is anti-competitive and, therefore, unacceptable to him," says Farhad Sorabjee, partner at law firm JSA Law.
Is your builder going the DLF way?
The CCI, in its 237-page order against DLF, has criticised the terms and conditions of the contract, which was signed by the company with the buyers of Belaire. It said that these were stacked in favour of the developer. DLF, in its defence, says that these were industry practices and it was merely adopting the same. Now, the Commission is likely to order a probe into other developers based on preliminary investigations, which suggest abuse of power by the developers.
To avoid the same fate as that of DLF homeowners, consider the following points highlighted by the CCI before signing the buyer's agreement. If, however, you are a victim, we tell you how to approach the Competition Commission in order to redress your grievances.
Punitive penalty: For any delay in payment by buyers, DLF wanted them to pay an interest of 15% per annum for the first 90 days after the due date, and 18% for delays beyond that. In sharp contrast, a delay of over three years on the part of the builder would entitle the buyer to a compensation of just 5 per square foot per month. There is no timeline specified for delivery of possession by DLF.
Unilateral right to increase/decrease super area: DLF has the unilateral right to increase or decrease the super area without consulting allottees, which are bound to pay an additional amount when demanded by the company or accept a reduction in area. If there is a reduction in the super area, the refundable amount due to the allottee is to be adjusted from the final instalment.
No exit option for buyers: Allottees have no exit option except when DLF fails to give possession within the agreed time. Even so, the buyer gets the refund without interest only after the sale of the said apartment by DLF and without accounting for the sale proceeds to the allottee.
Exit clause for the company: DLF's exit clause gives it full discretion, including abandoning the project, without any penalty. The company's liability in such a case is limited to refunding the amount paid by the allottee, with a simple interest of 9% per annum for the period for which the amount was lying with the company, and to pay no other compensation.
Unilateral changes in agreement: The developer claims the right to make changes in the agreement unilaterally without any right to the allottee.
Layout plan and land use: DLF retains the right to change the layout plan without the consent of the allottees. The agreement says, "It shall not be necessary on the part of the company to seek consent of the allottee for the purpose of making any changes in the layout plan. It is also the company's discretion to change areas for different uses like residential, commercial, etc, without even informing the allottees ('the total number of zones and their earmarked uses may be changed as per the sole discretion of the company').
Preferential location charges: The preferential location charges are to be paid upfront. However, if the allottee does not get the location, he only gets a refund or an adjustment of amount at the time of paying the last instalment without any interest.
Proportion of land: The proportion of land on which the apartment is situated and on which the allottees would have ownership rights shall be decided by DLF at its discretion and the allottee cannot raise any objections in this regard.
Community buildings: DLF enjoys full rights to community buildings, sites, recreational and sporting activities, including maintenance, with the allottees having no rights in this regard.
External development charges: Allottees are liable to pay external development charges without these being disclosed in advance and even if these are enhanced.
Power supply and charges: The arrangement of power supply and rates levied for the same are at DLF's discretion. These rates will be fixed from time to time by the company and may not be limited to the rate charged at the time by the state electricity boards.
Forfeiture of the amount paid: The allottees are required to authorise the company to forfeit the amounts paid or payable by them, the earnest money if the allottee fails to perform his obligations, or doesn't sign and return the agreement in its original form within 30 days of its dispatch by the company.
Third-party rights: Third-party rights have been created without the allottees' consent and against their interests. The company can raise money from any financial institution by mortgaging or securitisation of receivables of the apartment, building, complex or a portion of land. The company/ financial institution / bank shall always have the first lien/ charge on the said apartment for all their dues and other sums payable by the allottee or in respect of any loan granted to the company for the purpose of construction of the said building or complex.
When to approach the Competition Commission
The Competition Act prohibits three thingsanti-competitive agreements, abuse of dominant positions and mergers, as well as acquisitions and amalgamations that hamper competition. In cases related to real estate, it is usually the abuse of dominant position that is relevant. So before approaching the commission, make sure that you have enough evidence to show that the company you are complaining against is dominant in the correctly defined market.
You can do this by way of market shares as a starting point. "Any individual can approach the Competition Commission if he can prove that the practice followed by the developer is anti-competitive. In that sense any shifting of goal post after you have signed the agreement may also be construed as anti-competitive," says Sorabjee.
How to file a complaint with the Competition Commission
Filing the application
The application should be in the form of a statement of facts, containing details of the alleged contraventions of the Competition Act. The application should also have:
1. A complete list of all the documents presented in support of each of the alleged contraventions.
2. A narrative supporting the contraventions.
3. A mention of relief or interim relief which you seek from the Commission.
This information should be signed by the individual, or by the sole proprietor in the case of a proprietorship firm, or the karta in the case of a Hindu Undivided Family (HUF). Your counsel can also append his signature to it.
Any additional documents that you want to present in support of the information should be filed at least seven days prior to the date of the first meeting. This, after copies of documents have been served on the other parties regarding the proceedings. All information should be typed in the Arial 12 font on one side of A4 size (210 x 297mm or 8.27"x 11.69") white bond paper. The text should have double spacing, with a 2" margin on the left and a 1" margin on all other sides.
You should also indicate your preferred mode of service through which you would like a reply from the Commission. Mention the legal name (s) and address (es) of the enterprise (s) that are alleged to have contravened the provisions of the Act and also the legal name and address of the counsel or other authorised representative, if any.
Whom to address and where to file
The information should be sent to the secretary of the Commission in person, or by registered post, or courier service, or facsimile, addressed as follows: The Secretary, Competition Commission of India, The Hindustan Times House, 18-20, Kasturba Gandhi Marg, New Delhi - 110 001 Tel: + 91 - 11 - 23704651 Fax: + 91 - 11 - 23704652 Provide your complete postal address with the PIN code, telephone number, fax number and e-mail address.
Fee to be paid
The information should be accompanied by proof of paying the fee. This is 5,000 for an individual, HUF, NGO or consumer association; 20,000 for firms, companies having a turnover of up to 1 crore in the preceding year; and 50,000 in case of others.
The fee can be paid through a demand draft, pay order or a banker's cheque, payable in favour of the Competition Commission of India (Competition Fund), New Delhi, or through the Electronic Clearance Service (ECS) by direct remittance to the CCI accounts. These can be either: Account No. 1988002100187687, Punjab National Bank, Bhikaji Cama Place, New Delhi-110066 ), or Account No. CLCA01100002, Corporation Bank, Bhikaji Cama Place, New Delhi-110066.
Further assistance:
In case of any doubt or help needed, you can approach the Secretariat of the Commission at 011- 23704651.