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India – CCI Alters Realty Agreements.

5 January, 2013

 

India’s antitrust regulator, the Competition Commission of India (“CCI”) is proactively exercising its powers to gain its due and relevant place in the affairs of the world’s largest democracy. The CCI has recently taken a step forward towards protecting the interests of the property buyers by modifying the terms of the agreement executed between one of India’s largest real estate player and the apartment buyers for two different real estate projects. The provisions of the Apartment Buyers Agreement have apparently been modified to make the agreements more equitable and fair to the property buyers.

 

The CCI has reportedly modified approximately 16 (sixteen) sub-clauses which were deemed abusive and unreasonable to the buyer, as also required modifications in view of the laws applicable to the development of group housing projects in the state of Haryana. CCI has, inter alia, also commented that:

 

  • the builders should adhere to the compensation promised to the buyers in case of delay in construction or delivery of flats;
  • the group housing projects must be constructed in line with the layout plans, floor plans and specifications; and
  • the builder will no longer have the sole ownership of open spaces within the residential project area not sold to the allottee and has thus suggested joint ownership mechanisms among the owners for such open spaces.  

 

The CCI has initiated the move of amending the property buyer’s agreement post directions from the Competition Appellate Tribunal, where DLF challenged the penalty of INR 630 crores imposed upon DLF by the CCI on hearing the complaints filed by the Flat Buyer’s Association of two different DLF projects in the national capital region.

 

The modified DLF agreement is expected to work as the model framework for commercial agreements between real estate developers and property buyers and thus serves as a benchmark for the real estate industry.

 

Reportedly, the CCI is also carrying on investigation in to the affairs of approximately 70 real estate developers across India pursuant to allegations of arm twisting the property buyers and of executing one-sided agreements with them. 

 
 

 

 

For further information, please contact:

 

Alishan Naqvee, Partner, LexCounsel
anaqvee@lexcounsel.in
 
Dhruv Manchanda, LexCounsel
dmanchanda@lexcounsel.in
 

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