CCI | Builder Buyer Agreement does not fall within the ambit of S. 3 of Competition Act

Competition Commission of India (CCI): The Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma (Member) and Bhagwant Singh Bishnoi (Member), analysed the dominance of Vatika Limited and held that it has no dominance in the relevant market.

Present information filed by “Informant” under Section 19(1)(a) of Competition Act, 2002 alleging contraventions of the provisions of Sections 3 and 4 of the Act.

Informant approached a property dealer in December, 2012, for the purchase of a residential flat in Gurugram. The property dealer arranged a meeting of the Informant with Vatika officials in the Vatika office. The informant has averred that the sales executive of Vatika informed that ‘Vatika Town Square’, would be situated at the entrance of a large number of residential and commercial complexes in new Gurugram.

Further, it has been stated that, the informant was told by Vatika that Block-D was under construction and would be completed by the end of June 2015. It was stated that by that time the entire Dwarka Express Highway Road would also be complete.

Informant was also told that possession of the property would be given after 2.5 years and in case of delay in construction or any other default by Vatika, the interest of 8% would be payable by Vatika. Along with this, the Informant was told that the stated terms and conditions would be incorporated in the Builder Buyer Agreement (BBA) to be executed by Vatika with the Informant.

Allegations of Informant

Informant alleged that in the BBA there was neither any mention of the construction /completion/ possession date nor of the payment of simple interest to the buyer, for the delay, if any, in completion of construction by Vatika.

On a later date, Informant in a meeting with Vatika was told that leasing / renting / of commercial units in ‘Vatika Town Square’ was already going on in a big way and property may be able to fetch some premium. It has been alleged that on a visit to ‘Vatika Town Square’ there was no activity of leasing/ renting at D Block and the construction was not complete. All floors had only bare columns and bare floors without any partitions for the individual units, except for some activity.

Informant on several occasions requested Vatika to inform him about the refund he would get on terminating the BBA along with deductions that would be involved, but no reply came along.

Informant alleged that Vatika was required to complete construction and offer possession by June 2015. Vatika neither informed about any delay due to force majeure event nor sought an extension of time. He further submitted that, construction activities in Block-D, ‘Vatika Town Square’ are still in progress, although Vatika issued intimation for possession and further kept demanding huge extra amount from buyers for delay in taking possession.

“…BBA was not only one-sided imposing unfair, discriminatory terms and conditions on the buyer, but also covered builder from all foreseeable or un-foreseeable events at the cost of buyers.”

“…there is selling of property through unfair means by nexus between Vatika and property dealers.”

“…Vatika is probably diverting funds collected from Block-D for other projects.”

Decision of the Commission

On perusal of the information stated above, provisions of Section 3 of the Act have no application to the present case as the Informant is a consumer and agreement with a consumer does not fall within the ambit of Section 3 of the Act.

In respect to Section 4 of the Act,

“What is of concern to the Commission in the present case is that the Informant booked a commercial space in Vatika Town Square project at Gurugram.”

Taking into account the factors such as physical characteristics or end-use of goods, price of goods or services, consumer preferences and nature of service offered, the relevant product market for the purposes of the present case is the “provision of services for development and sale of commercial space”.

Thus, the Commission keeping in view the factors held that Vatika has no dominance in the relevant market, no case to examine alleged abuse of dominance by Vatika in the matter, under the provisions of Section 4 of the Act, remains for determination by the Commission.

No prima facie case and the information filed is closed forthwith under Section 26(2) of the Act. [Suresh Chander Gupta v. Vatika Ltd., 2019 SCC OnLine CCI 34, decided on 03-10-2019]

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