DLF penalty order a win for homebuyers' rights

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26 Aug, 2025 12:21

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Moneycontrol BureauA look at the some of the key clauses forming part of the agreement real estate major DLF signed with homebuyers in its Belaire, Gurgraon project reads makes clear the one-sided nature of buyer agreements that are found aplenty with such deals.Here are some, among many: the clause lays a high penalty if the buyer misses a payment but the same for the builder missing construction deadlines is extremely lax, the builder had the right to change the area to be delivered (if the area is increased, an upfront payment will be charged, if it is reduced, payment will adjusted from final installment), the right to bring about changes to the agreement, buyers had no legal right on community areas, while the builder would decide upon rates of power supply to be provided to the residents.Today, the Supreme Court asked DLF to deposit Rs 630 crore, an amount that had been slapped on it by a 2011 Competition Commission of India order for “abusing its dominant market position” and undertaking unfair trade practices with respect to the abovementioned project.The decision by the apex court raises hopes that it would uphold the CCI order that DLF later contested with the Competition Appellate Tribunal and subsequently lost. The company then appealed the SC.If the SC upholds the CCI and Compat’s contentions, such a ruling will provide a boost to rights of homebuyers across the country, who have often found themselves at the short end of the stick.“Traditionally, builders have prepared residential property agreements in their favour, and the buyer has borne most of the risk - be it costs overrun due to additional construction beyond what was disclosed, legal issues pertaining to building approvals, or payments being made without any milestone commitments,” Anil Rego, founder of advisory Right Horizons, wrote last year. “The CCI ruling laid the foundation for the buyers to assert their rights and will lead to demand for more transparency from builders.”CCI chief Ashok Chawla told CNBC-TV18 its ruling had set into motion a move where real estate developers will have to closely look at the arrangements they have with buyers.However, earlier, CCI had faced a host a questions over the legal validity of its ruling as it was seen by some as trespassing the freedom provided by the Contracts Act and competition watchdog had to prove that DLF had abused its market position and arm-twisted buyers.Similar agreements, even as they can be deemed unfair, may thus escape the CCI’s noose where the developer cannot be termed as taking advantage of its market position (and where the buyer has the full right to opt for another property that offers better terms).“We want to make sure such practices do not get entrenched and do not get part of the landscape for all times to come,” Chawla said.“But those [where it may be difficult to prove an anti-market effect] will be handled in a slightly different manner,” the CCI chief added, “but the objective that we have in mind is that the DLF order takes the case of the leader and should set right the distortions in the real estate market pending the arrival of real estate regulators, which we believe is part of the policy framework which is on the anvil.”