The Competition
Commission of India (CCI) is investigating about 70 real estate developers and
promoters around India including Parsvnath
Developers, Unitech and Omaxe as well as many mega builders in Mumbai, for
entering into one sided agreements with buyers and for allegedly colluding with
each other to arm-twist them.
According to a CCI official, In probably the biggest scrutiny of the industry, the competition watchdog CCI has over the last few months sent out notices to many of these builders and promoters, asking them to furnish details about their operations & their agreements with buyers.
One
Sided Clauses..!
The
CCI has asked its director general to investigate a number of practices that
real estate developers follow, such as announcing projects before getting all
approvals from authorities and not revealing all applicable costs to buyers at
the time of purchase, said the official further.
It will also
look into one sided clauses through which a developer or pormoter can delay
completion of projects, increase / or decrease the size of apartments (flats),
and change building plans mid way through projects.
Penalty Rs. 630 ..!
If the CCI finds
the developers guilty of having framed unfair agreements, it can impose heavy
fines on them. Last year (2011), it had imposed a penalty of Rs 630 crore on
DLF, the country's largest real estate company, for misusing its dominant position
in Gurgaon and forcing buyers to enter into one-sided contracts in three
projects. DLF is contesting this fine at the Competition Appellate Tribunal.
Major real
estate experts said, ''This is a all over India problem".
Mr. Anckur Srivasttava, Chairman, GenReal Property Advisors said, "Buyers do not have an option as most developers have one-sided, heavy handed agreements which are to their advantage. Some clauses allow for frivolous termination of agreements, increase in sale price and change in building plans, which are arbitrary"
Time over-runs in real estate projects have been another sore point with buyers.
Mr. Anckur Srivasttava, Chairman, GenReal Property Advisors said, "Buyers do not have an option as most developers have one-sided, heavy handed agreements which are to their advantage. Some clauses allow for frivolous termination of agreements, increase in sale price and change in building plans, which are arbitrary"
Time over-runs in real estate projects have been another sore point with buyers.
According to a recent research report by
property research firm PropEquity, about half of the 9,30,000 under
construction residential units in India, scheduled for delivery between 2011
and 2013, are likely to be delayed by up to 18 months.
The current round of investigations was kicked off when CCI got a complaint against NCR-based developer Tulip Infratech. The commission decided to expand the scope of the investigation to look at wider practices across the industry and has sent legal notices to developers in the NCR. It now plans to include developers in the western region in its scrutiny.
Many mega developers / promoters including Omaxe, Supertech, Eldeco, Gaursons, Tulip Infratech and Earth Infrastructure, confirmed they have received notices and replied to them.
The current round of investigations was kicked off when CCI got a complaint against NCR-based developer Tulip Infratech. The commission decided to expand the scope of the investigation to look at wider practices across the industry and has sent legal notices to developers in the NCR. It now plans to include developers in the western region in its scrutiny.
Many mega developers / promoters including Omaxe, Supertech, Eldeco, Gaursons, Tulip Infratech and Earth Infrastructure, confirmed they have received notices and replied to them.
The CCI official said the commission has got close to 200 complaints against real estate developers and propmoters in the past one year, with many of them pertaining to agreements & delays in delivery of properties.
ET
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