MUMBAI: Realty developers' troubles regarding allegations of cartelisation have got murkier as the petitioner has now moved the Delhi High Court against competition watchdog Competition Commission of India (CCI) itself.
The petition, along with CCI, has dragged builders' body Confederation of Real Estate Developers Association of India (CREDAI) and 20 prominent developers including Unitech, Tata Housing Development Co, BPTP, Oberoi Realty and Puravankara Projects, to the court. The petition is challenging the CCI's January order to close the case regarding allegation of cartelization among builders.
The Delhi High Court has issued notices to CCI, CREDAI and developers seeking response to this petition and the matter is scheduled to be heard on January 18.
Following a complaint last year, CCI's investigation arm had prepared a report with findings that builders were engaged in unfair trade practices such as one-sided contracts with inadequate disclosures. The petition had then also alleged that the major realty developers were not disclosing crucial information such as total common area calculation and proportionate share of the apartment being sold on a super built-up area basis. CCI had, in January, dismissed the matter through an order.
"The case has been admitted in September this year. CCI had closed down the case on the grounds of insufficiency of evidence, whereas my contention is that evidence is not required due to presumption of law enshrined under section 3(3) of the Competition Act," said advocate Jyoti Swaroop Arora, who has challenged the anti-monopoly regulator's order. An email query to CCI and CREDAI remained unanswered until the time of going to press.
Confirming the development, Delhi-based developer BPTP said, "The matter is sub-judice and it would not be appropriate for us to comment on the matter at this stage, though it is matter of record that we have succeeded before the Hon'ble Competition Commission of India."
While according to Mumbai-based Tata Housing Development Company the petition has not been admitted yet. "CCI has disposed the complaint by giving a clean chit to Tata Housing Development Co. Ltd. and other developers vide order dated 03.02.2015 of CCI. However, we have been informed that the complainant has filed a writ petition before the Delhi High Court which is not admitted so far," a Tata Housing spokesperson said in an email response.
According to Rohan Pate, director of Pune-based Amit Enterprises Housing, the company has provided an immediate and complete response to the notice. "All calculations are made as per the industry standards and relevant information is shared with the client in advance. There's no question of making one-sided contracts and not sharing any important information with our clients," Pate explained.
A cartel typically implies arrangements among more than two firms aimed at increasing prices through tactics such as cuts in production. Cartelisation leads to high prices, poor quality and reduced choice. As per the Competition Act, the maximum penalty for cartelisation is three times a company's profit, or 10% of its turnover, whichever is higher.
BUILDERS DENY CHARGES
"We deny any allegation of cartelization. The real estate Industry is bustling with competition which in turn offers the best choices to the discerning customer. The sheer number of players in the industry overrules any form of cartelization, hence the CCI rightly dismissed the complaint before it earlier," said Ashish Puravankara - Managing Director, Puravankara Projects.
"We believe the CCI will file a suitable reply in response to the notice received from the Delhi HC and defend its earlier order," he explained.
The petition has named Gaursons India, K Raheja Corp, Amrapali Group, Supertech Ltd, Ansal Properties & Infrastructure, Prestige Estates Projects, Avalon Group, Salarpuria Group, Tulip Group and Ambuja Neotia Group as respondents in the matter. Email queries to these companies remained unanswered.