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Dlf Limited v. Competition Commission Of India
Factual and Procedural Background
The dispute concerns Residents' Welfare Associations connected with DLF's “DLF Park Place” and “The Belaire” schemes. Several purchasers had not received possession, although the CCI found certain Apartment Buyers' Agreement clauses abusive and faulted the agreement more generally. The main appeal against the CCI's order dated 12.08.2011 remained pending. [1]
The Tribunal stayed the penalty against DLF subject to conditions and sought proposals for modifying the agreement. It later directed the CCI to specify the extent and manner of modification under Section 27(d) of the Competition Act, 2002. The CCI subsequently passed orders dated 03.01.2013, 10.01.2013 and 28.01.2013, stating that their effect would depend on the outcome of the main appeal. [2]
Legal Issues Presented
- Whether the CCI's order dated 03.01.2013 could be treated as an order under Section 27(d) of the Competition Act, 2002 and whether an appeal would lie against it. [3][4]
- Whether the orders purportedly passed under Section 42 of the Act required interim relief or could operate before the main appeal was finally decided. [3][4]
- What relief should be afforded to flat purchasers who wished to obtain possession after making the payments demanded by DLF. [5]
Arguments of the Parties
DLF's Arguments
- DLF sought a stay of the order dated 03.01.2013, contending that it was an appealable order under Section 27(d), and that the subsequent orders dated 10.01.2013 and 28.01.2013 followed from it. [3]
- DLF's counsel stated that non-compliance with its demand letters would not result in cancellation of the purchasers' allotments until the main appeal was decided. [5]
- DLF further stated that payments made by purchasers seeking possession could be treated as made without prejudice to their rights in the main appeal. [5]
CCI's Arguments
- The CCI submitted that the order dated 03.01.2013, despite being described as a supplementary order under Section 27, actually contained suggestions invited pursuant to the Tribunal's earlier order dated 09.11.2011. [3]
Flat Owners' and Residents' Welfare Associations' Position
- Counsel for the flat owners and Residents' Welfare Associations emphasized that purchasers who had allegedly paid 95% of the consideration still lacked possession and were placed in a difficult situation. [5]
- It was submitted that DLF was prepared to give possession only upon payment of allegedly unreasonable sums, and that the assurance regarding cancellation of allotments did not adequately address the purchasers' difficulties. [5]
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Tribunal considered the contents of paragraph 30 of the CCI's order dated 03.01.2013 and accepted the CCI counsel's characterization that the material was in substance suggestions invited by the Tribunal, rather than a substantive supplementary order. [3]
The Tribunal observed that there was no provision for a supplementary order under Section 27 and that suggestions would not have binding effect under that provision. It nevertheless declined to decide at that stage whether the appeals concerning the 03.01.2013 order were maintainable. [4]
Regarding the Section 42 orders, the Tribunal relied on the CCI's clarification that their final execution was subject to the outcome of the main appeal. Consequently, no action could proceed under those orders until the main appeal was finally decided, making a specific interim order unnecessary. [4]
To address the purchasers' concerns, the Tribunal recorded DLF's assurance that demands would not lead to cancellation of allotments pending the main appeal. It further clarified that purchasers choosing to pay the demanded amounts and take possession would make those payments without prejudice to their rights in the main appeal. [5]
Holding and Implications
INTERIM RELIEF DECLINED; APPEALS DIRECTED TO BE HEARD WITH THE MAIN APPEAL. The Tribunal did not pass separate orders concerning the Section 42 directions because their operation was already subject to the final outcome of the main appeal. It directed that the appeals, whether maintainable or not, be heard along with that main appeal. [4][5]
The connected interlocutory applications were disposed of. Purchasers who paid the demanded sums to obtain possession retained their rights in the main appeal, and non-payment was not to result in cancellation of allotment pending that appeal. No new precedent was set. [5][6]
The dispute between the Residents' Welfare Associations in respect of the ‘DLF Park Place’ and in respect of ‘The Belaire’ Schemes of DLF has been pending since at least more than 2½ years. It is a common ground that, owing to this dispute, number of persons, who had entered into the agreement of sale with DLF, have not been able to get the possession. The CCI has found that some clauses of the agreement of sale between the DLF on one side and the persons desirous of purchasing the flats which have been highlighted in its order are of abusive nature. Of course, the whole agreement was found fault with by the CCI and it seems that, by way of example, 16 clauses were considered by the CCI as abusive clauses. We are presently not on that question as the main appeal is pending against the order dated 12.08.2011 of the CCI which is being heard from day to day.
2. When the appeal first came before this Tribunal and a stay order was sought for by the CCI, this Tribunal firstly stayed the penalty which was ordered against the DLF, the appellant herein, on certain conditions and, secondly, observed that the CCI had merely directed the DLF to “suitably modify” the agreement but had not given suggestion or directions in their behalf. The Tribunal, by its order dated 09.11.2011, sought the suggestion of both the parties in respect of the clauses and, more particularly, about an agreement itself. This Tribunal in that order made it clear that the draft modifications, which the parties were to suggest, would be without prejudice to the claims involved in the appeal of both the sides. After this order, came the order of 29.03.2012 wherein the Tribunal directed the CCI to pass an order under Section 27(d) of the Competition Act, 2002 (hereinafter referred to as “the Act”) specifying the extent and manner in which the terms and conditions of the Apartment Buyers' Agreement needed to be modified. The parties were then directed to appear before the CCI to press their claims and ultimately the CCI came with an order dated 03.01.2013 which order has been in challenge by the DLF treating the same to be an order under Section 27(d) of the Act. On the heels of the orders passed on 03.01.2013, the CCI seems to have passed two more orders purportedly under Section 42 of the Act. However, the CCI has specified in all the three orders that the directions given in the three orders shall, however, not be final and would depend upon the final order passed in the main appeal against the order dated 12.08.2011
3. Learned senior counsel, Shri Harish Salve, appearing on behalf of the DLF has brought to our notice the subsequent three orders, which appear to have been passed on 10.01.2013 and 28.01.2013 The learned counsel seeks the stay of the order dated 03.01.2013 as, according to him, this is appeal under Section 27(d) and the orders dated 10.01.2013 and 28.01.2013 are a direct fallout of that order. Detailed arguments were advanced on the question, firstly, as to whether this order could be treated to be an order under Section 27(d) of the Act and, secondly, as to whether the CCI was justified in passing the alleged order purportedly under Section 42 which obviously appeared to have been passed in pursuance of the orders passed by the CCI on 03.01.2013 During the debate, Shri Balbir Singh, learned counsel for the CCI, referred to the contents of the order dated 03.01.2013 and more particularly, paragraph 30 thereof and pointed out that though CCI had passed this order as a supplementary order under Section 27 and also in pursuance of the order of this Tribunal dated 29.03.2012, in reality, these were actually the suggestions which were invited by the Tribunal in its first order dated 09.11.2011 We have gone through that paragraph and Shri Balbir Singh is quite justified in saying so on the basis of the contents of the paragraph 30 of the order dated 03.01.2013
4. If that is so, there would be no question of proceeding with these appeals as firstly there is no provision of passing any supplementary order under Section 27 of the Act and, secondly, if these are only the suggestions, they do not have the binding nature under that Section and, therefore, appeal in itself will not lie. However, we do not wish to record a finding at this juncture on the tenability or otherwise of the appeals filed against the order dated 03.01.2013 However, Shri Salve expresses his apprehensions about the aforesaid three orders under Section 42 of the Act by CCI and says that they will be under the constant hanging sword of those orders. We feel that this is also not necessary because the CCI has made it very clear that these orders have been passed in pursuance of the order dated 03.01.2013, yet the final execution of those orders shall be subject to the final outcome of the main appeal pending before us against the order dated 12.08.2011 Therefore, we need not pass any specific orders regarding the interim relief. It is obvious that nothing can proceed in terms of the purported orders under Section 42 of the Act unless the appeal itself is finally decided one way or the other. We, therefore, do not propose to pass any such orders.
5. However, the matters do not stand here. A great concern has been shown by Shri Meet Malhotra and Shri Vaibhav Gaggar, learned counsel appearing on behalf of the flat owners and, more particularly, Residents' Welfare Association. Our attention was invited to the fact that inspite of the 95% of the consideration having been claimed to have been paid, yet these persons do not have the advantage of the possession of the flats and this has put them in a miserable situation. When this was put to the learned counsel for DLF, Shri Salve as well as Shri Ravinder Narain, they firstly suggested that even if the demands have been raised by the DLF vide their letters dated 23.03.2012 and 31.01.2012, those letters will not be acted upon by the DLF in the sense that non-compliance of these letters would not result in cancellation of the allotment in favour of the proposed flat owners at least till the final results of the main appeal. This is undoubtedly a fair statement. Shri Gaggar appearing on behalf of the flat owners, however, said that does not allay the woes of those persons who have made huge payments to DLF. Shri Gaggar also pointed out that DLF was prepared to give possession only on the payments of some unreasonable sums. In fact, it is not for us to go into that aspect in these appeals at this juncture. However, Shri Salve and Shri Narain, pointed out that if the payments as demanded are made, those payments could be without prejudice to the rights of those persons who wanted to take possession after making the payments in terms of the letter dated 31.01.2012 We, therefore, clarify that if the proposed owners choose to make the payments as demanded by the DLF and get the possession, then those payments would be without prejudice to their rights in the main appeal. We hope that these orders would allay the woes of the proposed flat owners to some extent. Accordingly, we direct that these appeals (whether maintainable or not maintainable) shall be heard along with the main appeal.
With this, I.A No. 8/2013 in Appeal No. 08 of 2013 and I.A No. 9/2013 in Appeal No. 09 of 2013 stand disposed of.
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