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Case Analysis Report


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Case Analysis Report

  1. 1. 1 | P a g e Competition Commission of India Case Analysis Report Rajarhat Welfare Association & Anr (Informants) Versus DLF Commercial Complex Ltd & Ors (Opposite Parties) Case No. : 10/2011 Author: Ashish Sarkar Intern (November, 2015) 4th Year, BBA,LL.B(Hons) NEF law College, Guwahati, Assam. 19th November, 2015. The Case Analysis Report is in the Format as Prescribed under Regulation No. 23(1) of the CCI (General) Regulations, 2009.
  2. 2. 2 | P a g e In the matter of: Rajarhat Welfare Association & Anr Vs. DLF Commercial Complex Ltd & Ors Informants: 1. Rajarhat Welfare Association (Juristic Person; Registered Society) 2. Mr. Rajendra Kumar Vidhawan (Natural Person; President of Informant No. 1) Opposite Parties: 1. DLF Commercial Complex Ltd (Juristic person; Subsidiary of DLF Group of Companies) 2. DLF Retail Developers Ltd (Juristic Person; Subsidiary of DLF Group of Companies) 3. State/Government of West Bengal (Juristic Person; Instrumentality of the State of West Bengal) 4. Mr. Sudhir Seghal (Natural Person; Director of Opposite Party No. 2) 5. Mr. Sanjay Pandey (Natural Person; Director of Opposite Party No. 2) 6. Mr. Kushal Pal Singh (Natural Person; Marketing Head of Opposite Party No. 2) 7. Mr. Rajiv Singh (Natural Person; Control the Business & Affairs of DLF)
  3. 3. 3 | P a g e 8. Mrs. Priya Singh (Natural Person; Control of the Business & Affairs of DLF) Facts of the Case 1) The Informant No. 1 is the Society registered under the Society Registration Act, 1860 and its members comprise of the intending purchasers of commercial unit of different multi-storied projects developed in Rajarhat area. The Informant No. 2 is the President of the Informant No. 1. 2) The OP No. 1 and 2 are engaged in the business of real estate development. The OP 4 to 6 are working for the gain of OP 1 and 2 were responsible for conducting business and affairs of OP No 1 and 2. The OP No. 3 is the State of West Bengal. 3) Contention of the Informant: i. OP No 1 and 2 have misrepresented the facts and by these OP has abused of its Dominant Position. ii. It has been alleged that even though 90% of the members of the Informant No 1 have made payments in excess of 35% of their unit cost within 6 periods of four months from the date of issuance of allotment letter but no construction activity was started on the construction site even after a lapse of four months from the date of issuance of allotment letter. iii. Furthermore Informant alleged that the terms and conditions are one sided and onerous and there is no scope of
  4. 4. 4 | P a g e negotiating the said terms and conditions. Thus, imposing on the buyers to unfair and one sided terms and agreements by leaving no option them to sign the agreement is abusive of dominant position. The alleged terms and conditions by the Informant which are one sided and unfair in application form are reproduced as under:- a) Exclusive discretion upon the respondent company with regard to the provisional and/or final allotment and specifically reserved a right unto the company to reject the provisional and final allotment without assigning reason thereof. b) Intending Allottee has seen and accepted the plans, designs, specifications which are tentative and the Intending Allottee Authorizes the company to affect suitable and necessary alterations/modifications in the layout/building plans, designs and specifications as the company may deem fit or as directed by any compete authorities. c) In the event of DLF failing to deliver the possession, the Apartment Allottee shall give notice to DLF for terminating the agreement. DLF thereafter has no obligations to refund the amount to the Apartment Allottee, but would have right to sell the Apartment and only thereafter repay the amount in the process DLF is neither required to account for the sale
  5. 5. 5 | P a g e proceeds nor even has any obligations to pay interest to the Commercial Unit Allottee. 4. Based on the facts and allegations, the Informants have prayed to the Commission to initiate enquiry against OP 1 and 2 for, inter alia, abuse of dominant position; to direct the OPs to produce the relevant records involving the decision making process culminating into the grant of sanction/approve of the building plans/layout plans as well as the increase of building up to 12th floor; to pass order directing discontinuation of all the arbitrary clauses in the agreement forthwith; to pass appropriate orders restraining the opposite parties from the arbitrary cancellation of allotment; to pass order providing exit option to an allottee with full refund of money paid along with 18% interest p.a. as well as compensation. Analysis: The questions to be resolved to hold OP 1 and 2 blameworthy of conferring any demonstration which is in repudiation to Section 4 of the Competition Act, 2002 are as underneath:- Q-1) Whether OP 1 and 2 enjoy Dominance Position in relevant market? Q-2) If yes, then whether the OP 1 and 2 have abused his Dominant Position?
  6. 6. 6 | P a g e Analysis No 1 The allegation made under point 6 of the information is reproduced as under: The general public including the Petitioner and the members of the said Association at all material times have been identified the Respondent Nos. 1 and 2 as forming part of DLF Group. The Respondent Nos. 1 and 2 as DLF Group entitles claimed to have developed various properties in India and also claimed to be the largest developer operating in India. The allegation is not adequate in determining the dominant position. The dominant position is to be determined in the relevant market of Rajarhat, New Town, Kolkata and not in the reference to whole India. It might be laid out that commercial unit of different multi-storied project were available by many builders in the relevant market and also by leading builder like Unitech, Godrej Properties, Astra etc. which is sufficient to show that there is good numbers major players competing with each other in the relevant market. Thus, the OP No 1 and 2 are not dominant in the relevant market. While determining the dominant position in the relevant market, the following data may also be taken into account. Unitech Infospace1 1
  7. 7. 7 | P a g e Unitech Infospace is 45.4 Acres of Land, bought from WBHIDCO Master Plan sanctioned by WBHIDCO. Principal Architect was RMJM Hong Kong. Unitech Infospace is located in the heart of central business district of action area and it is just 8 kms away from NSCB Airport and nearest Metro station coming up near to HIDCO Bhavan which is less than a kilometer away from Infospace and is surrounded by projects like Eco Park, Rabindra Tirtham, City Centre I, Axis Mall, DLF Mall, Home Town Mall, Road Network, Police Station etc. Thus, Unitech Infospace would have a healthy mix of Office-Goers and retail walk-ins. Since, OP 1 and 2 have not been found to be dominant in the relevant market, there is no need to examine the “abused of dominant position” in terms of Section 4 of the Competition Act. Conclusion: Hence, based on the above analysis it is clear that OP 1 and 2 does not enjoy dominance in the relevant market. The Informant had an option to purchase commercial shop or office from any other builder in the relevant market like Unitech, Godrej Properties or Local Builder like Astra. To abuse the dominant position a party or player must be dominant in relevant market. Furthermore author would like to give opinion that constructing a building without clearance is illegal but it does not violate or attract any provision of the Competition Act.