Case Nos. 01 of 2014 and 93 of 2015. Case: Ashutosh Bhardwaj and Ors. Vs DLF Limited and Ors. Competition Commision of India
| Case Number | Case Nos. 01 of 2014 and 93 of 2015 |
| Counsel | For Appellant: K.K. Sharma, Advocate and For Respondents: Ramji Srinivasan, Senior Advocate, Kanika Chaudhary Nayar, Tripti Malhotra, Jahnavi Mitra, Advocates, Rajbeer H. Sachdeva and Poonam Madan |
| Judges | G.P. Mittal, J. (Member), Devender Kumar Sikri, Chairperson, S.L. Bunker, Augustine Peter and U.C. Nahta, Members |
| Issue | Competition Act, 2002 - Sections 19(1)(a), 19(4), 19(6)(b), 2 (r), 26 (1), 26(1), 27, 27(a), 4, 4(2)(a), 4(2)(a)(i), 4(2)(d), 5 |
| Judgement Date | January 04, 2017 |
| Court | Competition Commision of India |
Order:
Order under Section 27 of the Competition Act, 2002
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This common order shall govern the disposal of the informations filed in Case. No. 01 of 2014 and Case No. 93 of 2015, as the issues involved in these cases are similar and the Commission vide order dated 29.12.2015 clubbed these cases for investigation and for subsequent consideration.
Facts:
Case No. 01 of 2014
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The information in Case No. 01 of 2014 was filed by Shri Ashutosh Bhardwaj (hereinafter, "Informant") u/s. 19(1)(a) of the Competition Act, 2002 (hereinafter, 'the Act') against M/s. DLF Limited (hereinafter, 'OP-1'), M/s. DLF Home Developers Limited (hereinafter, 'OP- 2') and M/s. DLF New Gurgaon Homes Developers Pvt. Ltd. (hereinafter, 'OP-3') (hereinafter collectively 'OPs/OP Group') alleging abuse of dominant position by OPs by imposing unfair/discriminatory conditions/prices on the Informant in contravention of the provisions of section 4 of the Act.
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The Informant in this case is an individual working as General Manager in Oil and Natural Gas Corporation Ltd. The OP-1 is a public limited company and its primary objective is development and sale of residential, commercial and retail properties. As per Annual Report (FY-2012-13) of the OP-1, OP-2 is a 100% subsidiary of the OP- 1. The OP-3 was a private limited company in which OP-1 held 94.02% shareholding before it was merged with the OP-2 on July 30, 2013.
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As per the information, the Informant booked an apartment, "GAJ001", located on ground floor in Tower J in the housing project of OPs named 'New Town Heights' located in sector-86, Gurgaon having super area of 1535 sq. ft. at a total price of Rs. 42,91,000/- which included preferential location charges of Rs. 4,60,500/- and Rs. 3,00,000/- for parking space. Pursuant to this, an Apartment Buyers' Agreement (hereinafter the "Agreement") was entered into between the Informant, the OP-2 and OP-3 on 22.12.2009, on the terms and conditions set in the Agreement by the OP-2 and OP-3. Subsequent to the execution of the Agreement, the said apartment was allotted to the Informant.
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The Informant alleged that the OP Group has abused its dominant position by imposing highly arbitrary, unfair and unreasonable conditions on the apartment buyers through the Agreement. By citing various clauses of the agreement, the Informant further alleged that the terms of the Agreement were heavily loaded in favour of the OPs and were made non-negotiable. The Informant has thereby alleged violation of Section 4(2)(a)(i) and 4(2)(d) of the Act.
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Based upon the various averments and allegations in the information, the Informant inter alia prayed for issuing direction to the OPs; to modify the clauses of the Agreement and; to give appropriate compensation to the allottees for delay in delivery of possession of the apartment beyond 36 months.
Case No. 93 of 2015
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The information in Case No. 93 of 2015 was filed by Shri Lalit Babu along with Smt. Madhu Jindal W/o Shri Lalit Babu; Shri Gaurav Kumar S/o Shri Lalit Babu; Shri Saurab Kumar S/o Shri Lalit Babu; and Shri Varun Bansal S/o Shri S.L. Bansal ('Informants'), under section 19(1)(a) of the Competition Act, 2002 ('Act') against M/s. DLF New Gurgaon Homes Developers Pvt. Ltd. ('OP-3') alleging violation of Section 4 of the Act.
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As per the information, in the year 2008, the Informants booked five flats at Rs. 5 lakhs each (total Rs. 25 lakhs) in the OP-3's residential apartments development scheme, 'New Town Heights', being developed at Phase-2 Sector-86 Gurgaon, Haryana. Thereafter, the Informants were given provisional allotment letters dated 11.06.2008 for the residential flats in the aforesaid property having a covered area of 2125 sq. ft. at a total cost of Rs. 47,81,250/- each. It is averred that the OP-3 assured that the project would be completed within two years and the flats would be transferred in the name of the Informants after receiving the payments. However, despite reminders, the OP-3 did not inform the informants regarding the progress of construction of the project.
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It is stated that on 17.11.2008, the OP-3 issued a letter to the Informants asking to deposit further payment of Rs. 12,60,000/- without any construction on the proposed site. Another letter was also sent on 17.12.2008 informing that the project was being delayed and the OP-3 had decided to hand over the aforesaid flats after three years instead of two years. As there was no progress for 6 months and since the Informants had urgent requirement of flats, they wrote letters to the OP-3 on 25.12.2008 asking for refund of advance money along with 18% interest and compensation of 10 lakhs for each flat to purchase alternate accommodation as, in the meantime, there had been an increase in market price of the properties. The Informants even wrote to the Managing Director of the OP-3 for the refund of amount paid with interest but OP-3 did not respond and remained silent.
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The Informants alleged that the OP-3 first executed an Agreement which was prejudicial to the Informants and then vide letter dated 17.12.2008 intimated Informants about delay in the construction. Thereafter, the OP-3 threatened the Informants to make payments even though the construction had not yet started. Further, it is alleged that the OP-3 sent a letter demanding the payment of outstanding amount failing which the allotment would be cancelled and the amount already deposited would be forfeited.
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As per the allegations made in the information the entire Agreement was loaded in favour of the OP-3 and it lacked the clauses for protection of the interest of consumers like the Informants. Based on the above allegations, the Informants alleged that the actions of the OP-3 amounted to abuse of dominant position under Section 4 of the Act.
Order for DG investigation
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After considering the facts of Case No. 01 of 2014, the Commission, in its order under Section 26(1) of the Act dated 27.02.2014, found a prima facie case of violation of Section 4 of the Act against the OPs and, therefore, directed the DG to cause an investigation to be made into the matter and submit a report. Accordingly, the DG investigated the matter and submitted its investigation report dated 26.11.2015 to the Commission.
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The Commission also considered the information in Case No. 93 of 2015 and observed that the issues involved and the allegations levelled in this information were substantially similar to the allegations investigated in Case No. 01 of 2014. Therefore, the Commission vide order dated 29.12.2015 decided to club this case with Case No. 01 of 2014 in terms of Section 26 (1) of the Act read with Regulation 27 (1) of the Competition Commission of India (General) Regulations, 2009.
Findings of the DG's Investigation
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In consonance with the decisions of the Commission in the previous cases against the OPs the DG found that the OPs fall within the definition of group as defined under Section 5 of the Act.
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For the purpose of investigation, the DG first delegated the relevant market and examined the dominance of the OP Group in the same. Thereafter, the DG assessed whether the OP Group contravened the provisions of Section 4 of the Act.
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The DG examined several aspects of the real estate sector to delineate the relevant product market. Firstly, the DG discussed parameters that make residential property such as apartments, flats, units, etc. a separate relevant product market from commercial or industrial property. Secondly, the DG noted that once the consumer decides to buy a residential unit, the relevant factors that he would normally consider are the budget, value for money, developer's brand value, its historical background, number of completed projects, delivery schedule, etc. The DG has further noted that the consumer would also consider the amenities provided by the developer, general plan of development, location of the project, provision of facilities such as sewerage, developed roads, proximity to railway station/metro station/bus-stand/main roads, etc. According to the DG report, these factors together determine the aspect of substitutability and interchangeability of services provided by the developers in respect of residential units apartments.
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Apart from the aforesaid, DG also highlighted that Director General, Town & Country Planning, Haryana (DGTCP) grants different types of licenses for the purpose of development of residential apartments/units/villas/independent floors etc. under the categories such as Residential Plotted Colony (RPL), Residential Group Housing (RGH), Low Cost Housing, Residential Group Housing with minority Plotted area and Affordable Housing Project (AHP).
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Further, DG was of the view that the dynamics of AHP category license were entirely different from RGH and RPL category of licenses and was out of the purview of the relevant product market. While arriving at this conclusion, DG looked at the distinct requirements prescribed for various licences...
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