DLF gets stay on CCI’s Rs 630-cr penalty

Moumita Bakshi Chatterjee New Delhi | Updated on March 12, 2018 Published on November 09, 2011

A view of DLF project.


Realty major DLF has got a stay on the Rs 630-crore penalty imposed on it by the Competition Commission of India. The stay was granted on Wednesday by the Competition Appellate Tribunal.

The Competition Commission, in mid-August, had imposed the fine on DLF for “grossly abusing its dominant position”, after aggrieved flat owners of Belaire housing complex, Gurgaon, complained about prolonged delays in their project.

A similar complaint was filed by the apartment owners of another DLF project, Park Place. Buyers of these two projects – which together entail over 2,000 flats – had alleged that the builder imposed “one-sided contract clauses” on them. They also objected to DLF unilaterally increasing the number of floors in the project.

But, in October, DLF challenged the penalty imposed on it and moved the competition tribunal to appeal against the order.

The hearing

In the first hearing of the case on Wednesday, a three-member bench – headed by Dr Justice Arijit Pasayat – stayed the imposition of penalty. The tribunal clarified that in an event where DLF loses the case, it will have to deposit the entire amount along with nine per cent interest. The tribunal has asked the company to give an undertaking to this effect.

The tribunal will hear the final argument in the case in the second week of February.

In a statement, Mr Sriram Khattar, Senior Executive Director, DLF Ltd, said, “DLF is pleased that the tribunal appreciated its contention that the order passed by the CCI imposing penalty and directing modification of terms of agreement, is contrary to law and as such admitted the appeal.”


Asked if the stay on penalty came as a setback to the buyers, Mr Harsh Sehgal, the President of Park Place Residents' Welfare Association, said, “No…the sword still hangs over their (DLF's) head.”

“Anyway, the penalty amount was not coming to us…But, yes, we would have felt better if the tribunal had set a precedence…It could have had a ripple effect on the real estate sector,” Mr Sehgal added.

He said that residents' association would like removal of clauses that were “loaded” in favour of the builder. For instance, an allottee who failed to pay instalments on time were to cough up 15-18 per cent interest, whereas the builder would only have to shell out compensation at the rate of Rs 5 per square foot a month for delay (only about one per cent annually).

“We want the clauses to be made equitable and reciprocal,” Mr Sehgal said.

DLF shares fell by nearly 4 per cent on BSE, to Rs 233.7 a share.

The outcome of the case will be closely watched by investors as the penalty has financial implications for the company. It is the highest such penalty imposed by the CCI so far. For 2010-11, DLF's net profit was pegged at Rs 1,640 crore with consolidated revenue of Rs 10,145 crore.


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Published on November 09, 2011
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