Deposit Rs.630 cr penalty, SC to DLF

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SME Times News Bureau | 28 Aug, 2014
The Supreme Court Wednesday penalised real estate giant DLF Rs.630 crore for exploiting its dominant position to the disadvantage of its customers in three projects in Gurgaon.

The bench of Justice Ranjana Prakash Desai and Justice N.V. Ramana said DLF would furnish an undertaking to pay Rs.170 crore interest on the penalty of Rs.630 crore or the amount that the court may direct it to pay by way of interest if its appeal fails in the Supreme Court.

The court said DLF will deposit Rs.50 crore of the Rs.630 crore within three weeks and the balance of Rs.580 crore within three months from Wednesday.

The court directed the registry to put this amount in a fixed deposit in a nationalised bank.

In a statement, DLF said the "appeal filed by DLF against the order of the COMPAT has been admitted today (Wednesday) by the Supreme Court."

It said the Supreme Court has "directed DLF to deposit Rs.630 crore in an interest-bearing fixed deposit with the court for the duration of the appeal proceedings.

"The amount is to be deposited within a period of three months, of which Rs.50 crore is to be deposited within three weeks."

The entire deposit is subject to the final decision of the Supreme Court, the DLF statement said.

DLF will take all steps to comply with the directions of the Supreme Court and remains confident of the merits of its case, the statement said.

During the hearing, counsel Harish Salve assailed the order of the Competition Commission of India and its being upheld by the Competition Appellate Tribunal (COMPAT).

Salve said the addition of floors by DLF in no way impacted adversely the flat allotees of the original building plan that envisaged the 19-storey housing complex.

He also assailed the CCI order of Aug 12, 2011, which was sustained by the COMPAT in 2013, saying that the Commission could not have imposed penalty based on the three year average of the entire turnover of DLF's real estate operations in the country.

He said it should have been restricted to Rs.1,100 crore - the sale price of three housing complexes.

The CCI told the court that DLF used its dominant position to the disadvantage of the flat allottees.

"It is an exploitation of disadvantaged customers who were trapped", counsel Amit Sibal, who appeared for the CCI, told the court.

He said the flat allottees were asked to shell out more money after additional floors were added which also resulted in the delay of the project by two years.

Sibal said DLF presented a fait accompli before the flat allottees as they had the option of either paying extra money as demanded by DLF or exiting and getting only the money they had paid for the flat refunded along with interest.

He said DLF never told the applicants that there would be additional floors in the three complexes and all they were told was that they will apply for additional floors.

Sibal told the court that applying for the additional floors and having permission for additional floors were two distinct things.

Pointing to the abuse of the dominant position, Sibal said any delay in making the payment towards the flat used to attract 18 percent interest and they had no option.