Case No. 59 of 2011. Case: Jyoti Swaroop Arora Vs Tulip Infratech Ltd. and Ors.. Competition Commision of India

Case NumberCase No. 59 of 2011
CounselFor Appellant: Party-in-Person and For Respondents: Avinash Sharma, Advocate
JudgesAshok Chawla, Chairperson, S.L. Bunker, Sudhir Mital, Augustine Peter and U.C. Nahta, Members
IssueCompetition Act, 2002 - Sections 18, 19(1), 19(1)(a), 19(3), 19(3)(a), 19(3)(b), 19(3)(c), 2(b), 2(i), 2(m), 21A, 26(1), 26(2), 27(b), 3, 3(1), 3(2), 3(3), 3(3)(a), 3(3)(b), 3(4), 3(4)(a), 4; Constitution of India - Article 14; Haryana Apartment Ownership Act, 1983 - Sections 11, 12, 13, 3(f); Haryana Development And Regulation Of Urban Areas ...
Judgement DateFebruary 03, 2015
CourtCompetition Commision of India

Order:

  1. The present information under section 19(1)(a) of the Competition Act, 2002 ('the Act') was filed by Shri Jyoti Swaroop Arora ('the Informant') against M/s. Tulip Infratech Ltd. ('the Opposite Party No. 1'/ OP-1), Director, Town & Country Planning Haryana ('the Opposite Party No. 2'/ OP-2) and Haryana Urban Development Authority ('the Opposite Party No. 3'/ OP-3) alleging inter alia contravention of the provisions of section 3 of the Act.

  2. In the instant case, the Informant alleged that various enterprises engaged in real estate development business including the Opposite Party No. 1 have an arrangement/understanding amongst themselves to adopt an anti-competitive modus operandi! practices. It was further alleged by the Informant that there is a tacit understanding amongst all the real estate players in the market. In support of this allegation, the Informant has referred to an article in the Economic Times of 14.11.2011 wherein Shri Pradeep Jain, Chairman of Confederation of Real Estate Developers' Association of India (CREDAI) was reported to have stated that all constituent members of CREDAI would be signing a Code of Conduct. As per the statement of Shri Jain, CREDAI Code of Conduct would include mentioning the actual usage area to the buyers, compensation in case of project delays and honouring agreement clauses of buyers' agreements. According to the Informant, the said Code of Conduct indicates collusion amongst all members of CREDAI.

  3. It has also been alleged that various enterprises engaged in real estate development business including the Opposite Party No. 1 have agreements/understanding amongst themselves on the marketing front as all these enterprises are marketing/selling their projects without first obtaining the necessary approvals from the competent authorities. All of them are selling the Floor Area Ratio (FAR) over and above the permitted/sanctioned limits.

  4. The Informant has also alleged that there is an understanding between various real estate developers to make it mandatory for the buyers to purchase the parking space which is a violation of section 3(4)(a) of the Act.

  5. The Informant has further alleged that the agreement between builders also exists on matters such as charging of interest rates on the defaulting customers and on various one sided and arbitrary clauses mentioned in their respective flat buyer's agreements such as exemption from builder's liability for any violations of Haryana Apartment Ownership Act (HOPA), forfeiture of advance deposits on flimsy grounds and builder's freedom to increase floors.

  6. The Informant has also filed a copy of the flat/apartment buyers' agreement of some of the real estate enterprises namely Unitech, DLF and Gupta Promoters Ltd. The Informant has submitted that these agreements though not identical, have certain similarities and common points which are exploitative which again goes to prove that the real estate enterprises were acting in concert and have been exploiting the customers all these years.

  7. Based on the above averments and allegations, the Informant has laid the instant information alleging inter alia contravention of the various provisions of section 3 of the Act.

    Directions to the DG

  8. The Commission after considering the entire material available on record vide its order dated 15.12.2011 passed under section 26(1) of the Act directed the Director General (DG) to investigate the alleged conduct of residential apartment complex builders including the Opposite Party No. 1 and CREDAI.

    Investigation by the DG

  9. The DG, on receiving the directions from the Commission, investigated the matter and filed the report on 25.03.2014. The findings and conclusions of the DG are as under:

  10. Investigation concluded that certain practices are being commonly carried on by builders/developers of residential apartments in the country as detailed below:

    (i) Non-disclosure of calculation of total common area and its proportionate apportionment on the apartments being sold on Super Area basis and, reserving the right to increase or decrease the flat area.

    (ii) Not expressly disclosing the applicable laws, rules and regulation etc. with respect to the projects being developed.

    (iii) Reserving the right of further construction on any portion of the project land or terrace or building and to take advantage of any increase in FAR/Floor Space Index (FSI) being available in the future.

    (iv) Charging high interest from the apartment owners on delayed payments as against payment of significantly lower interest/inadequate compensation on account of delay on the part of the builder in implementation of the project.

    (v) Restricting the rights, title and interests of apartment allottees to the apartments being sold, and retaining the right to allot, sell or transfer any interests in the common areas and facilities as per their discretion.

    (vi) Fastening the liability for defaults, violations or breaches of any laws, bye laws, rules and regulations upon the apartment owners without admitting corresponding liability on the part of builder/developer.

    (vii) Non-disclosure of all the terms and conditions of sale to the prospective buyers at the stage of booking of apartments and taking booking amount from interested buyers without disclosing the terms and conditions of the sale agreement to be executed at a later stage.

  11. The DG report states that the aforementioned practices were being carried on by builders/developers in India by way of a tacit agreement/understanding/informal co-operation.

  12. Investigation further concluded that carrying on of certain practices by builders/developers that have cost implications for consumers and resultantly impact/determine the final prices of apartments in contravention of section 3(3)(a) of the Act.

  13. Lastly, it was concluded that making provision of services by builders/developers contingent upon acceptance by buyers of certain clauses incorporated in the sale agreements, tantamounts to controlling the provision of services in contravention of section 3(3)(b) of the Act.

  14. Though, it was concluded by the DG that CREDAI provides its platform to its members to meet and discuss various issues related to the sector, in the absence of any substantive evidence, the DG did not find any contravention of the provisions of the Act by CREDAI.

    Consideration of the DG report by the Commission

  15. The Commission in its ordinary meetings held on 09.04.2014 and 15.04.2014 considered the investigation report submitted by the DG. Vide its order dated 15.04.2014, the Commission ordered impleadment of the following 20 builders, who were selected by the DG as a representative sample for the purposes of investigation, in the matter:

    (1) Amrapali Group

    (2) Ansal Properties and Infrastructure Ltd.

    (3) Ambuja Neotia Group

    (4) Avalon Group

    (5) Aparna Constructions & Estates Pvt. Ltd.

    (6) Amit Enterprises Housing Ltd.

    (7) BPTP Limited

    (8) Gaursons India Limited

    (9) K. Raheja Corp. Pvt. Ltd.

    (10) Oberoi Realty Limited

    (11) Omaxe Ltd.

    (12) Parsvnath Developers Ltd.

    (13) Puravankara Project Limited

    (14) PS Group

    15) Prestige Estates Projects Ltd.

    (16) Purohit Construction Limited

    (17) Supertech Ltd.

    (18) Salarpuria Group

    (19) Tata Housing Development Company Ltd.

    (20) Unitech Ltd.

  16. The report of the DG was ordered to be forwarded to the parties. Subsequently, the Commission vide its order dated 26.06.2014 noted that the DG report does not contain any particular information relating to M/s. Purohit Construction Limited i.e. one of the identified parties by the DG and as such, the Commission decided not to seek any reply from it.

    Replies/Objections/Submissions of the parties

  17. On being noticed, the parties filed their respective replies/objections to the report of the DG besides making oral submissions.

  18. It may be mentioned that some of the parties have taken certain common pleas and therefore while noting the submissions of the opposite parties, the Commission has not reproduced the same for each such party. Besides, most parties have adopted each other's submissions during the oral hearings and as such the Commission has considered all written and oral pleas submitted by all the parties.

    Replies/objections/submissions of the Opposite Parties (OPs)

    Replies/objections/submissions of M/s. Tulip Infratech Ltd.

  19. Shri Avinash Sharma, counsel appearing for the answering Opposite Party has contended before the Commission that the findings of the DG are flawed, misleading and erroneous. It was also contended that there is complete disregard to the well settled principles of competition law and economics, and the findings of the DG are contrary to the jurisprudence evolved by the Commission so far. It has been emphasized by the counsel that the conclusions in the DG Report are based on two premises: Firstly, there are 'certain practices', which are uniform across different builders/developers, therefore, attracting the rigors of section 3(3)(a) of the Act and secondly, there are 'uniform'/'similar' agreements offered by different builders/developers and buyers have no choice except to either take it in toto or leave it, thereby attracting the rigors of section 3(3)(b) of the Act. It has been explained by the counsel that on both the aforesaid premises, the DG report completely fails.

  20. It has been further submitted that once the Commission in its own wisdom and overall analysis decided to close the matter (Case No. 07 of 2011) under section 26(2) of the Act, no fresh case (i.e. the present case) could have been brought before the Commission, on the same factual matrix, between the same parties, and on the same issue/cause of action as the same would be squarely hit by the principle of res judicata.

  21. It has been emphasized by the counsel that in both the previous as well as present case (i.e. Case Nos. 07 of 2011 and 59 of 2011) the Informant has alleged that certain conditions included by the answering...

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