Tribunal Upholds Rs 630 Crore Penalty On DLF

The Competition Appellate Tribunal (Compat) has upheld a penalty of Rs 630 crore on the realty giant DLF. The fine was imposed by the fair trade regulator Competition Commission of India (CCI) in 2011 on a complaint that it had forced ‘arbitrary and unfair conditions’ on buyers in some housing projects located in Gurgaon.

The penalty sent a tough message to the builders on the importance of sticking to the rulebook.

Compat has allowed DLF 60 days to pay the amount and coupled with an interest rate of 9% per annum, it will approximately amount to Rs 750 crore. DLF said it would appeal to the Supreme Court against the order. "We have 60 days to move the Supreme Court and we will not comment before we read the entire ruling," a company spokesperson said.

The 2011 ruling by the CCI had held DLF guilty of violating Section 4 of the Competition Act, 2002. The buyers had accused DLF of delaying the possession of apartments.

"The order of CCI, as well as this judgment, is expected to go a long way to ameliorate all the conditions of the customers... If the consumer is exploited by a mighty builder, then such mighty builder cannot claim soft attitude from the State. We, therefore, refuse to bring down the penalty in any manner," Compat ruled in its 139-page order.

"It was also urged that since we have found the approach of the CCI in relying on the clauses of the ABA (apartment buyer's agreement) and dealing with the same incorrectly, therefore, we should lessen the penalty. We do not agree. An abuse of dominance, whether it is on one count or on many, remains an abuse and, therefore, it must be dealt with iron hands."

Following the ruling, a DLF statement said, "The company has respected in true letter and spirit the customer commitments made by it. In testament thereof, out of more than 2,600 apartments, over 2,200 have been handed over, and more than 1,800 families are residing therein."

Vaibhav Gaggar, a partner at the law firm Gaggar & Associates who is representing the buyers' association, said, "Compat found DLF abusive in its practices, especially in relation to modifying super area, common area, increasing the height of the building midway through the project and imposing holding charges. Under the CCI norms, this amounts to the abuse of its position of dominance."