Investigations involving many realty cos still on: CCI
The investigation regarding operations of real estate companies and project delays is done by DG. We follow the practice of an arm's length relationship between the DG and Commission, because he is supposed to be the investigator and the prosecutor who presents the evidence before the Commission, says CCI Chairman, Ashok Chawla.
June 07, 2013 / 20:59 IST
Resident welfare association (RWA) of DLF Park Place - a group-housing society that fought DLF in a high-profile case at the Competition Commission of India (CCI) also managed a to get stay order from the Chandigarh High Court on another DLF project called The Crest. Park Place RWA, which joined hands with other buyers of DLF projects, extracted a favourable ruling from the competition watchdog which slapped the company with Rs 630 crore penalty, the largest fine ever imposed by the CCI.
DLF's appeal at the Competition Appellate Tribunal (COMPAT) is still pending. These buyer associations had claimed DLF had signed one-sided agreements and that they had been arm twisted into giving the company consent for increasing the number of storey. They alleged DLF of abusing its dominant position by charging almost up to 18 percent interest for late payments while compensating a much smaller amount for projects being delayed by over two-three years.
In an interview to CNBC-TV18 CCI Chairman, Ashok Chawla shared his views on this case and steps taken by CCI to protect consumers. He informed that the organisation is awaiting investigation reports from the director general on operations of various real estate companies and delayed projects.Recently, the Cabinet finally approved the Real Estate Regulatory Bill after reviewing it for the second time, which aims to protect consumers.Below is the edited transcript of Ashok Chawla’s interview with CNBC-TV18. Q: DLF's appeal is still being heard at the COMPAT. Till then can you tell me is CCI doing anything at all to ensure real estate developers do not continue to sign one-sided agreements with buyers?A: It depends on the final decision of the COMPAT. In terms of our order which has not been stayed by COMPAT they are supposed to cease and desist from the practices which were found violated in that particular case.Q: After the DLF order CCI was flooded with complaints against real estate developers. Till last September CCI was investigating as many as 70 real estate companies including Unitech, Parsvnath and Omaxe for entering these one-sided agreements with buyers and then colluding with one other to arm-twist buyers. What is the status of your investigation? How many companies are currently under scrutiny?A: There was one matter where a number of real estate companies were involved. To look at practices and to see whether all of them follow the kind of practices which are violative of the Competition Act, the matter was sent to the Director General for investigation. The investigation is going on and since it involves number of companies from all over the country I suppose it will take a little more time.Q: It is learnt that CCI had sent many notices to developers including in the NCR Supertech, Gaursons, Omaxe etc. asking these companies about their operations and project delays. What has happened since then? Companies say they have responded to these notices?A: The investigation is done by the Director General, so I am not aware of the actual status or details at this point in time. We also follow this practice of an arm's length relationship between the DG and the Commission, because he is supposed to be the investigator and he is the prosecutor who presents the evidence before the commission. So, once he is ready it will come to us.Q: Do you honestly believe that the CCI is the right forum for all of this? Real estate companies argue buyers should be approaching consumer forums. How would you respond to that?A: We come in if there is abuse of dominance which the commission had found in the case of DLF. But that is true. This is not going to apply to many other builders who many not be dominant in the area in which they are operating. They may not be such big entities. So, therefore the forums are Consumer Courts, but also because there is huge amount of consumer interface and sensitivity from the social point of view it maybe a good idea to have a separate real estate regulator, which the government is thinking about. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
