Commission Orders DLF Ltd. to Revise Unfair Apartment Contracts, Protecting Buyer Rights and Ensuring Fair Terms.

The Commission mandated DLF Ltd. to amend its buyer's agreement to eliminate abusive clauses, ensuring compliance with applicable laws and fairness in terms and conditions for apartment allottees. This decision aimed to safeguard buyer rights and prevent DLF Ltd. from abusing its dominant market position. The Commission required DLF to consult with buyers to finalize a fair agreement, ensuring equitable treatment in penalties and defining force majeure appropriately. These modifications were intended to protect the rights of apartment owners and ensure compliance with relevant legal standards.

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Issues Involved:
1. Abuse of Dominant Position
2. Modification of Buyer's Agreement
3. Compliance with Applicable Laws
4. Rights of Apartment Allottees
5. Penalties and Remedies

Detailed Analysis:

1. Abuse of Dominant Position:
The Commission found that DLF Ltd. had abused its dominant position in the geographic area of Gurgaon by making flat owners sign a highly abusive apartment buyers agreement. The agreement contained several clauses that were biased in favor of DLF Ltd., including sole discretion to make changes in zoning plans, usage patterns, super area, carpet area, and alteration of structure without giving buyers any rights to raise objections. The Commission concluded that this conduct was unfair and amounted to abuse of dominance under Section 4 of the Competition Act, 2002.

2. Modification of Buyer's Agreement:
The Commission directed DLF to cease and desist from formulating and imposing such unfair conditions in its agreements with buyers in Gurgaon and to suitably modify the unfair conditions imposed on its buyers within three months. The exact terms and conditions of the agreement were not formulated, leaving it to DLF to finalize the modified agreement in consultation with buyers. The Commission expected that the modified agreement would properly define the product/service, state all requisite clearances, and clearly lay down the delivery schedule stage-wise. One-sided clauses were to be suitably modified to remove the abuse of dominance.

3. Compliance with Applicable Laws:
The Commission emphasized the necessity to comply with the Haryana Development and Regulation of Urban Areas Act, 1975, Haryana Development and Regulation of Urban Area Rules, 1976, and the Haryana Apartment Ownership Act, 1983. The laws mandate specific requirements such as maximum permissible coverage, FAR, car parking space, and the transfer of residential units to allottees. The Commission highlighted that the builder's rights in the land area and common facilities should be transferred to the apartment owners as per the law.

4. Rights of Apartment Allottees:
The Commission observed that the apartment owners jointly become owners of the entire land of which FAR is utilized for construction. The agreement clauses that gave DLF ownership rights over common areas and facilities were deemed abusive. The Commission directed modifications to ensure that apartment owners have undivided ownership rights over land and common facilities. The Commission also addressed issues related to preferential location charges, increase or decrease in super area, and the rights of allottees to use common areas and facilities subject to timely payment of maintenance charges.

5. Penalties and Remedies:
The Commission found that the agreement imposed heavy penalties on buyers for defaults while imposing insignificant penalties on DLF for its defaults. The Commission suggested modifications to make the agreement equitable in dealing with both parties and to levy interest/penalty equally on both sides. The Commission also directed that force majeure should be defined as understood in common parlance of law. The Commission ordered DLF to modify clauses related to forfeiture of earnest money, delivery of possession, and execution of conveyance deed to ensure fairness and remove abusive terms.

Conclusion:
The Commission's judgment required DLF Ltd. to modify the buyer's agreement to remove abusive clauses, comply with applicable laws, and ensure fairness in the terms and conditions imposed on apartment allottees. The modifications aimed to protect the rights of buyers and prevent the abuse of dominance by DLF Ltd.

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