Following complaints in May last year by several people who had booked flats in a DLF project, the CCI had referred the matter for probe by the Director General (Investigations). According to one such complaint, DLF had promised to complete Belaire, its residential project in Gurgaon, in 2009, but buyers are yet to get possession of their apartments.
In addition, DLF has increased the number of floors in the apartment complex from the original figure given to buyers. This led to the number of apartments in Belaire shooting from 384 to 564. DLF has been penalised for an offence that is common among the hundreds of other builders in the country.
"This is a significant intervention by the Competition Commission and if upheld, it gives a powerful tool to the average property buyer against the developer. A buyer may refuse to sign the agreement quoting this judgement, saying that it is anti-competitive and, therefore, unacceptable to him," says Farhad Sorabjee, partner at law firm JSA Law.
The CCI, in its 237-page order against DLF, has criticised the terms and conditions of the contract, which was signed by the company with the buyers of Belaire. It said that these were stacked in favour of the developer. DLF, in its defence, says that these were industry practices and it was merely adopting the same. Now, the Commission is likely to order a probe into other developers based on preliminary investigations , which suggest abuse of power by the developers.
To avoid the same fate as that of DLF homeowners, consider the following points highlighted by the CCI before signing the buyer's agreement. If, however, you are a victim, we tell you how to approach the Competition Commission in order to redress your grievances.
Punitive penalty:
For any delay in payment by buyers, DLF wanted them to pay an interest of 15% per annum for the first 90 days after the due date, and 18% for delays beyond that. In sharp contrast, a delay of over three years on the part of the builder would entitle the buyer to a compensation of just 5 per square foot per month. There is no timeline specified for delivery of possession by DLF.
Unilateral right to increase/decrease super area:
DLF has the unilateral right to increase or decrease the super area without consulting allottees, who are bound to pay an additional amount when demanded by the company or accept a reduction in area. If there is a reduction in the super area, the refundable amount due to the allottee is to be adjusted from the final instalment.
No exit option for buyers:
Allottees have no exit option except when DLF fails to give possession within the agreed time. Even so, the buyer gets the refund without interest only after the sale of the said apartment by DLF and without accounting for the sale proceeds to the allottee.
Exit clause for the company:
DLF's exit clause gives it full discretion, including abandoning the project, without any penalty. The company's liability in such a case is limited to refunding the amount paid by the allottee, with a simple interest of 9% per annum for the period for which the amount was lying with the company, and to pay no other compensation.
Unilateral changes in agreement:
The developer claims the right to make changes in the agreement unilaterally without any right to the allottee.
Layout plan and land use:
DLF retains the right to change the layout plan without the consent of the allottees. The agreement says, "It shall not be necessary on the part of the company to seek consent of the allottee for the purpose of making any changes in the layout plan. It is also the company's discretion to change areas for different uses like residential, commercial, etc, without even informing the allottees ('the total number of zones and their earmarked uses may be changed as per the sole discretion of the company').
Preferential location charges:
The preferential location charges are to be paid upfront. However , if the allottee does not get the location, he only gets a refund or an adjustment of amount at the time of paying the last instalment without any interest.
Proportion of land: The proportion of land on which the apartment is situated and on which the allottees would have ownership rights shall be decided by DLF at its discretion and the allottee cannot raise any objections in this regard.
Community buildings:
DLF enjoys full rights to community buildings, sites, recreational and sporting activities, including maintenance, with the allottees having no rights in this regard.
External development charges:
Allottees are liable to pay external development charges without these being disclosed in advance and even if these are enhanced.
Power supply and charges:
The arrangement of power supply and rates levied for the same are at DLF's discretion. These rates will be fixed from time to time by the company and may not be limited to the rate charged at the time by the state electricity boards.
Forfeiture of the amount paid:
The allottees are required to authorise the company to forfeit the amounts paid or payable by them, the earnest money if the allottee
Third-party rights:
securitisation of receivables of the apartment, building, complex or a portion of land. The company/ financial institution / bank shall always have the first lien/ charge on the said apartment for all their dues and other sums payable by the allottee or in respect of any loan granted to the company for the purpose of construction of the said building or complex.
Sourec: ET
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