As the India's
largest real estate company, DLF Ltd plans to launch projects on 85 lakh square
feet in Gurgaon by March, 2013.
DLF launched 2
projects — Regal Gardens and Primus — in March and sources say the it would
launch more till March, 2012 as CCI was the one to suggest changes in the
clauses.
Major annalysts and leading lawyers argue the
‘cease and desist’ order of the CCI (Competition Commission of India)
might prove a hurdle.
DLF Ltd said the
order did not bar it from launching a project.In August last year (2011), CCI
had had given the order to DLF Ltd that prevented it from selling further units
using the same buyer - builder agreement.
A buyers’ association of DLF Bellaire &
DLF Parkplace, two (2) residential complexes in Gurgaon, had moved the CCI over
“abuse of dominance” by the real estate firm, and alleged the buyer - builder
pact was in favour of DLF Ltd.
Then, CCI imposed a
fine of Rs. 630 crore. Though this got a stay order from the competition
appellate tribunal, it was status quo for the ‘cease and desist’ order. This
implies DLF Ltd can not have one-sided buyer-builder agreements anymore.
Compat in its
November 2011 hearing had noted, the CCI is required to direct in a given case
the extent & the manner of modification of the agreement. Keeping that
statutory requirement, we direct that without prejudice to the claims involved,
the parties shall within a period of 8
weeks submit the draft modified terms.
"This is made
clear the submission of such draft shall not be construed as concession on the
part of the parties on any point involved in the present appeal", said the
COMPAT order.
The final hearing in
tribunal began November 29, 2012.
According to major
sources, CCI had to submit the modification in buyer-builder agreement by
December 5, 2012.
Leading Lawyers said,
"If DLF Ltd goes ahead with the launches, it needs to tweak buyer-builder
clauses, else buyers’ money could be at risk".
Mr. Meenakshi Arora,
Partner, Hemant Sahai Advocates said, ''“The CCI’s order is clear & if
DLF Ltd launches the project with the same agreements, it will not be in
buyers’ interest”
Mr. Srinivas Kotni,
MD, Corporate Lexport
said, '' DLF Ltd already may be working on moulding the current buyer - builder
agreement. But, needs to get a CCI clearance before it sells flats''
Unfair Terms of Contract Act..!
Mr. Pradeep S Mehtha,
Secretary General, CUTS (Consumer Unity of Trust Society)International
said, '' DLF can surely launch new
project, but it cannot sell any units to buyers using the same agreement. But I
feel a company as big as DLF Ltd is sensible enough to make changes in the
agreements & then sell the project. In India there is a need for Unfair
Terms of Contract Act, which has been recommended by the Law Commission."
Mr. Sanjay Sharma,
MD, Qubrex, a real estate consultancy said, '' 'There is no stay from COMPAT,
Supreme Court, or / any other body on the cease & desist ordered by CCI, So
this activity also may delay the construction of flats, thus opening them to
even further damages''
Mr. Ashok Tyagi, CFO,
DLF Ltd
said, Cease and desist does not bar us
from launching a new project. If need be, we will conceptualise & modify
the buyer - builder agreement. If need be, we will conceptualise and modify the
buyer-builder agreement”.
There are about 15 to
20 changes in the clauses that the builder needs to modify.
Competition
Act ..!
Lawyers said that DLF
Ltd needs to make 100 per cent
modification in the clauses before it goes to sell flats.
The Competition Act
states that “if any person contravenes, without any reasonable ground, any order
of the Appellate Tribunal, he /she shall be liable for a penalty of not
exceeding Rs. 1 crore or / imprisonment for a term up to three (3) years or
with both as the Chief Metropolitan Magistrate, Delhi may deem fit.”
The DLF Ltd’s income
from operations (sales) dropped about 20% during the quarter to Rs. 2,040
crore, compared to Rs. 2,532 crore last year (2011) same quarter. It is even
lower than the first quarter sales of Rs. 2,197 crore. According to DLF Ltd,
launch of 'high impact' projects may have positive impact on its financials
this fiscal (2012-13).
Src: ET and BS
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