CCI, SC raise the bar for builders with DLF fine

Builders feel the heat as supreme court asks DLF to deposit fine of Rs 630 crore imposed on it by CCI

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Puja Bhattacharjee | August 28, 2014



With the supreme court order asking realty giant DLF to deposit the penalty imposed on it by the competition commission of India (CCI) for abusing its dominant position in the market, there is cause for the common man to rejoice. Competition commission of India, which was established to protect the interest of consumers besides ensuring fair trade practises had passed a ruling in favour of the hapless consumers when it fined DLF Rs 630 crore for abusing its dominant position in the market in 2011.

In May 2014, COMPAT had upheld the judgment and told DLF to either pay the fine within 60 days or approach the supreme court. The case relates to three DLF projects- Belaire, Park Place and Magnolias. The buyers had approached CCI alleging that DLF had added extra floors without informing them.

Amit Jain, a buyer of DLF Belaire had earlier told Governance Now that in spite of the CCI ruling; DLF had continued to escape paying the fine by constantly filing appeals. Though buyers had applauded the CCI and COMPAT judgments, they continued to remain sceptical as no major dent was made on DLF. But the supreme court order states that DLF has to deposit the entire fine along with the interest for the duration for which the amount had remained unpaid, before it hears its appeal.

According to a report in Mint, DLF is deep in debt and the order further enhances its burden. As of June, DLF had a debt of around Rs 18,500 crore and its shares fell 4.4 percent to Rs 183.05 on the Bombay stock exchange (BSE) after the supreme court direction.  DLF had sought six months' time to comply with the direction but the court asked it to deposit Rs 50 crore within three weeks and the rest Rs 580 crore in the next three months. In spite of the tight situation, DLF managed to put up a brave face and said that it had full faith in the merits of its appeal.

At a time when there has been an upsurge in the skirmishes between buyers and developers, the order becomes quite significant. In absence of a proper real estate regulation law, developers are free to impose their will and might on clueless buyers. Though local development authorities are empowered to take action against the builders, largely they have proved ineffective in containing their malpractices. But with this order and the recent order asking Supertech to refund home buyers along with interest, developers are beginning to feel the heat. For years, developers have exploited legal loopholes to harass homebuyers and escape justice. But these orders have restored faith in homebuyers that nobody is above the law.

 

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