Compat stays Rs 630-crore penalty imposed on DLF by CCI

NEW DELHI: In a temporary relief to DLF, the the Competition Appellate Tribunal (Compat) on Wednesday stayed Rs 630-crore penalty imposed on it by anti-competition watchdog in August following complaints regarding abuse of market position by country’s largest real estate player. The tribunal also directed DLF to give an undertaking that it would deposit the entire penalty amount with 9% interest if it finally loses the case.

The tribunal was hearing DLF’s appeal against an order passed by Competition Commission of India imposing the fine for abusing its dominant position and for one-sided contracts with buyers of its two projects in Gurgaon-—Belaire and Park Place.

Homebuyers had filed a complaint against in May 2010, challenging the delay in possession and alleged arbitrary changes to the building plan and structure. Belaire was to originally consist of five towers with 19 floors each, but DLF later increased the number of floors to 29.

Staying the penalty, tribunal chairman Justice Arijit Pasayat directed both sides to file their draft of the proposed modification to the contentious clauses that were part of the buyers’ agreement (which made the agreement one-sided) within eight weeks. Justice Rahul Sarin and Justice Pravin Tripathi are the other members of the threejudge tribunal.

The commission had earlier asked DLF to change the contentious buyers agreement within three months. Justice Pasayat said that while CCI had given three months time to modify the terms, it had not specified what changes needed to be made.

“DLF has been asked to give, without any prejudice, its suggestions on what modifications it will make to clauses in the buyers agreement,” said Harish Salve, the counsel for DLF. The tribunal will hear the final arguments in the case in the second week of February.

Harsh Sehgal, president of the Park Place Residents Welfare Association said that the decision was on expected lines. “It is still a bit of a disappointment for us as the penalty could have been a precedent for the real estate industry,” he said.

Sehgal pointed out that about 21 clauses were said to be arbitrary in DLF’s agreement with buyers. The association claimed that DLF has forfeited part of payments made by a number of homebuyers on the grounds that they have delayed payments.

He said that while DLF pays only about 1% per annum as penalty to homebuyers for delays, when buyers delay payments, they are asked to pay 15-18% as interest. “This should be equitable.”

“It was also brought to the notice of the tribunal that DLF has cancelled an allotment even after CCI’s interim order passed in September 2010, under section 33 of the Competition Act, 2002,” said Sehgal.
On Wednesday, DLF closed at Rs 233.75 on the Bombay Stock Exchange, down 3.59%