COMPAT upholds CCI fine on DLF, tells developer to pay Rs 630Cr

The Competition Appellate Tribunal (COMPAT) has upheld a penalty of Rs 630 crore on real estate major DLF for abusing its dominant position in Gurgaon real estate market. The tribunal has dismissed DLF’s plea against the fine imposed by Competition Commission of India (CCI) and given it 60 days to pay up or approach the Supreme Court.

Following complaints from flat buyers’ associations of DLF Park Palace and The Belaire — two of the firm’s projects in Gurgaon, CCI had imposed the penalty on DLF in 2011. CCI had asked the company to modify the apartment buyers’ agreement on buyers’ complaints of delay in the project and increase in the number of floors beyond what was planned.

DLF had then moved COMPAT and managed to get a stay order on the CCI penalty.

On Monday, Judge V S Sirpurkar said in his order: “We cannot expect a leading player like DLF to go on in this fashion… If the consumer is exploited by a mighty builder, the mighty builder cannot claim a soft attitude from the state.”

DLF said it would challenge the order in the Supreme Court pointing out that it has successfully delivered the Park Place, The Belaire and Magnolia projects, the subject matter of these appeals.

It added that out of over 2,600 number of apartments, over 2200 have been handed over, and over 1,800 families are already residing therein.

DLF is also under scanner by CCI for allegedly drafting a one-sided agreement with flat buyers in its New Town Heights project in Gurgaon.

The penalty is being seen as a blow to DLF and a warning to real estate developers at large. This ruling will encourage resident welfare associations (RWAs) to speak out against malpractices in the sector.

DLF has sold a slew of non-core assets straddling hotels, land parcel, wind energy and insurance businesses to pare debt over the last three years.

In December last year, DLF sold its 74 per cent stake in the joint venture DLF Pramerica Life Insurance to Dewan Housing Finance for an estimated Rs 250 crore. DLF also sold its wind turbine projects in Gujarat, Rajasthan, Karnataka and Tamil Nadu—with a total capacity of 227 MW—for about Rs 700 crore.

In other sell-offs, DLF had sold 17 acres of prime land in Mumbai to Lodha Developers for about Rs 2,700 crore in August 2012, nearly four times higher than the price at which the company had bought this parcel seven years ago in 2005.

(Edited by Joby Puthuparampil Johnson)

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