DLF Ltd has challenged the Rs 630-crore penalty imposed on it by the Competition Commission of India for abuse of dominant position. The real estate developer moved the Competition tribunal on Monday in appeal against the order.

The case pertains to a dispute with the flat owners of its Gurgaon project — Belaire.

DLF has challenged the CCI order on multiple grounds, including the issue of jurisdiction and the method used by the fair trade watchdog to define ‘relevant market' in the case.

DLF has also argued that it was not served a show-cause notice before CCI imposed the fine, and termed this as being against the principles of natural justice.

Another argument by DLF is that it does not indulge in sale of services but sale of immovable property, which is not an area under competition law.

The DLF petition also challenges the method of computing its market share in Gurgaon.

Tribunal hearing

The first hearing at the Competition Appellate Tribunal is slated for November 9, a source in the company said. DLF has also sought an interim stay on the penalty.

The outcome of the Belaire case will be closely watched by investors as the penalty has financial implications for the company. For fiscal 2011, DLF's net profit was pegged at Rs 1,640 crore with consolidated revenue of Rs 10,145 crore.

When contacted, a DLF spokesperson refused to divulge details of the petition, saying the matter was sub-judice .

Owners' grievance

The aggrieved flat owners of Belaire housing complex had complained to CCI that DLF delayed their project by almost 18 months, beyond the originally indicated time schedule of early-2010.

They also lamented the ‘one-sided' contract clauses loaded against the buyers. For instance, they told CCI that allottees 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 (that is one per cent a year ).

DLF also unilaterally increased the number of floors in the project to 29 from 19, they said.

Contravenes law

In its order delivered in August, the CCI concluded that DLF was in contravention of the competition law, as it imposed unfair conditions on the sale of its services.

The penalty amounts to seven per cent of the company's average annual turnover over the past three years. It is the highest such penalty imposed by CCI so far. Later that month, CCI passed another order in a separate case (DLF Park Place Residents Welfare Association), wherein it asked DLF to ‘cease and desist' from misuse of dominant position, but did not impose any penalty.

DLF shares on Monday rose 4.74 per cent on BSE to close at Rs 228.80 a share.

>moumita@thehindu.co.in

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