All eyes now on CCI

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The most keenly watched case in the real estate industry, the DLF case, has reached another milestone. The case now back with the Competition Commission of India (CCI), is set to evolve a precedent on the nature of the contractual regime between a developer and the buyer.

It was in August last year, that the CCI had in a landmark order, levied a penalty of Rs 630 crore on the realty major for abusing its dominant position in the market to the detriment of buyers.

DLF appealed against the order with the Competition Appellate Tribunal (Compat). After a series of hearings, the tribunal on July 18, directed the CCI to complete the modification of the buyer's agreement by September.

By modification, the tribunal asked CCI to initiate the process of removing the allegedly abusive clauses in the agreement that the buyers of DLF's

'Belaire' project entered into with the company.

If the CCI is able to achieve closure of the case by the deadline, it would set a new standard in the manner in which buyer's agreements are drafted by developers, and could make the developer-buyer relationship more equitable.

"The DLF is the test case on the basis of which this new contractual regime will be evolved. All other cases will eventually find that whatever is decided here will apply to them," says Ranjeev Dubey, managing partner, NSouth Advocates.

CASE HISTORY

To understand the importance of the order, a quick recap of the case is necessary, for the activities encountered here, is found across the sector.

DLF, in 2006, launched a project called 'Belaire', a premium development in Gurgaon. The developer was to have delivered possession in three years, i.e. 2009. That, however, did not happen and the project was delayed and as of today, finishing works remain and would be complete only by November, a gap of six years.

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