DLF, the country’s largest real estate developer, has approached the Competition Appellate Tribunal, questioning the Competition Commission of India’s (CCI’s) powers to initiate proceedings on an issue dating to 2006, much before CCI got its authority to act on such cases. It has also questioned the procedure followed by CCI, citing a CAT precedent.
The Tribunals refused to stay the proceedings but, on August 18, directed CCI “that the jurisdiction issue should be decided first and further issues will follow”. It gave CCI till September 15 to decide on this matter. The next CCI hearing is on September 8.
DLF is charged with alleged abuse of its dominant position by putting “discriminatory and abusive clauses” in the apartment agreement provided to the allottees of The Belaire and Park Plaza apartments in Gurgaon. DLF says all agreements were put through in January 2007, so CCI can’t initiate any proceedings against it. CCI initiated the move under Section 4 of the Competition Commission Act, which took effect from May 2009.
Procedural plea, too
DLF, in an e-mailed statement, said: “CCI had issued directions on May 20, 2010, initiating an inquiry under Section 26(1) of the Act in respect of the agreements entered into with apartment allottees. The said direction was contrary to the judgment of the Appellate Tribunal in the case of Steel Authority of India that no inquiry can be initiated unless reasons are recorded to arrive at an “opinion” that a “prima facie case” exists.”
CCI, in today’s hearing, took an oral undertaking from the developer to cancel no allotment and also not transfer funds of the projects in question to anywhere else till the next hearing.
“On a voluntary basis, DLF does not propose to cancel any allotment in these complexes till the next date of hearing, while maintaining that it is entitled to cancel allotments in accordance with the agreement, if any apartment allottee has committed any breach of the agreement, including default in payment of installment,” a company executive said.
CCI also directed the association of the apartment allottees to file further documents if they so desire and to DLF to file its arguments on the jurisdictional objections by September 2.
The petition before CCI was filed by Belaire Owners Association against DLF, Department of Town & Country Planning, Haryana, and Haryana Urban Development Authority. It states DLF failed to deliver the residential project on time and put “discriminatory and abusive clauses” in the apartment agreement provided to the allottees.
The two projects are expected to have 2,200 flats priced between Rs 1.5 crore and Rs 3 crore, making the apartments worth Rs 4,500-5,000 crore.
This appears to be a most fundamental question about the jurisdiction of a court not even in existence before the Act under which it was created came into force.