OPs in the information given and according to informant itself, all OPs were
developing different projects in „New Township Kolkata‟ under PPP model. None of
the parties had such market share that it could be considered as a dominant enterprise
within the geographic are of New Township or in the surrounding areas. All the
parties had to develop projects on the land allotted to them as per Rules& Regulations
laid down by government. A customer had a choice out of different builders as to
with whom he should register himself. Neither it is the case of the informant that
anyone of the opposite parties was so economically strong that it could operate
independent of the competitive forces prevailing in the New Town Kolkata.
Therefore, no case is made out under section 4 of the Act.
(Case No. 103/2013)
....Informant
Anonymous
And
(i)
Bengal Greenfield Housing Dev. Co. Ltd
...Opposite Party No. 1
(ii) Bengal Park Chambers Hsg. Dev. Ltd. ...Opposite Party No. 2
(iii) Bengal Peerless Housing Dev. Co. Ltd. ...Opposite Party No. 3
(iv) Bengal Shelter Housing Dev. Ltd. ...Opposite Party No. 4
(v) Begal DCL Housing Dev. Co. Ltd. ...Opposite Party No. 5
(vi) Bengal Shrachi Housing Dev. Ltd. ...Opposite Party No. 6
(vii) Bengal United Credit Belani Housing Ltd. ...Opposite Party No. 7
(viii) Bengal Emami Housing Ltd. ...Opposite Party No. 8
(ix) Bengal Unitech Universal Infrastructure Pvt. ...Opposite Party No. 9
Ltd.
(x)
...Opposite Party No. 10
DLF Universal Ltd.
CORAM:
Mr. Ashok Chawla
Chairperson
Dr. Geeta Gouri
Member
Mr. Anurag Goel
Member
Mr. M. L. Tayal
Member
Mr. Justice S. N. Dhingra (Retd.)
Member
Mr. S. L. Bunker
Member
Order under Section 26(2) of the Competition Act, 2002
Date: 12.02.2014
This information has been filed under Section 19(1)(a) of the Competition Act,
2002, (“Act”)alleging violation of the provisions of Sections 3 and 4 of the Act by the
Opposite Parties No. 1 to 10 (collectively referred to as “OPs”) with regard to
development of a township project.
2.
The Informant alleged that the Ministry of Urban Development, Government
of West Bengal and West Bengal Housing Board (“WBHB”) acquired a huge parcel
of land for a proposed new township called „New Town‟ in Kolkata. After acquisition
of land, Government of West Bengal handed over this parcel of land to West Bengal
Housing Infrastructure Development Corporation (“WBHIDCO”), a wholly owned
subsidiary of WBHB, with a mandate to WBHB and WBHIDCO to prepare a plan to
populate this new township as soon as possible. Further WBHB entered into several
joint ventures with various groups/developers (“JVs”)and also gave/sold land to other
private developers like Bharti Realty Ltd., Bengal Unitech, DLF and others, to
facilitate speedy and simultaneous development of land. Each JV partner was given
2-3-4 or more parcels of land of various sizes ranging from 1 acre to 5 acres or larger.
It was alleged that almost all the JV partners were known developers of Kolkata and
many of them knew each other and had partnership interest in each other‟s projects.
3.
It was averred that the construction of one of the projects was started in 2001-
02 where units were advertised to be sold at a starting price of INR 1,050-1,100 per
sq. ft approx. As the demand was huge, allotment was made through lottery. The
Informant stated that WBHB, JV partners and private developers squatted on the
remaining land parcels for quite long. Later Opposite Party No. 9 (“OP9”) as a
private developer initiated project on small part of its land at a higher price. The
justification given for higher price was inflation in construction cost. This system of
JVs commencing new project not simultaneously but after lapse of sometime and at
higher price continued and the reasons provided for such action were slow demand
and inflation. The Informant, however, submitted that facts such as absorption of new
supply of flats despite prices having gone upfrom Rs. 1100 to 4800 per sq. ft., sale of
application form and allotment through lottery suggested huge demand, manipulated
restricted supply and use of monopolistic and dominant status for monopolistic
pricing and merciless exploitation of buyers.
4.
The Informant also alleged that the JVs/developers sold the car parkings
separately despite the fact that flat owner had undivided share in the land of the
premises for all purposes. Developers delayed the delivery and paid no compensation
and interest for the delayed period except OP9 but they increased area by adding new
super built up area. The developers made buyers pay exorbitant maintenance bill
without occupation certificates. All the JV developers overcharged super-built-up
area and reduced the size of flat/unit by adding area of construction. Many of these
JVs, without knowledge of buyer, inserted clause in the sale deed to amalgamate
premises developed by them separately with one another at the will of developer and
to retain right over the land and roof for future development and sale. The sale deed
was drafted in such a manner that it appeared more like „transfer of right deed‟.
Almost all the JVs charged interest on delayed payment ranging from 15%-21%
whereas in case of delay in delivery by JVs, the buyers were offered less than 1% and
there were many clauses and riders in the agreement which enabled the JVs to go scot
free even if there was a delay of a decade. Many of the JVs recovered price in excess
of agreed amount before possession. Based on the above submissions the Informant
contended that OPs were violating provisions of Sections 3 and 4 of the Act.
5.
The Commission considered the information, facts and data placed on record
by the Informant. The crux of the allegation of the Informant appears to be the launch
of schemes by the OPs in such a manner that only one scheme was launched at a time
rather than simultaneous launch and each subsequent scheme was launched at a
higher price, thereby indicating a concerted action to restrict supply of flats.
6.
In order to cover a case under section 3 of the Competition Act, it is
necessary that there should have been an agreement between different enterprises for
production, supply, distribution, storage, acquisition or control of goods or provision
of services which was likely to cause an appreciable adverse effect on competition
within India. The agreement could be in writing or oral or could be inferred from the
circumstances. Section 2(b) provides that an agreement includes an arrangement or
understanding or an action in concert of the parties. However, in the present case,
there is no allegation of an agreement between the parties. The inference of an
agreement cannot be drawn merely because different OPs launched their projects at
different times. It is to be noted that the „New Town Kolkata‟ was a project started
by West Bengal Govt. under Public Private Partnership and this entire township was
to be developed in a phased manner. It is well known that a township cannot be
developed at one go. In a phased manner development, there has to be someone who
would come out with the project first and there would be someone who would come
up with the project at the end. Merely because the prices of different projects differed
from each other and the prices kept rising with passage of time would not show that
there was an agreement among opposite parties for bringing out their projects one
after another in a concerted manner. The „New Town Kolkata‟ project is about 15
year old and is being developed in phased manner to meet the housing shortages.
Different categories of flats and houses were to be brought out by private parties in
cooperation with the government undertakings for development of the entire
townships. 40% of the project land was reserved for bulk housing and remaining
60% of land was released to cooperatives/individuals for subsidised housing. There
is no case made out by the informant of a concerted effort on the part of parties to
launch projects on different dates. In fact this is a natural outcome of a phased
manner development of the township.
7.
The next issue arises whether there was an abuse of dominance. There are 10
OPs in the information given and according to informant itself, all OPs were
developing different projects in „New Township Kolkata‟ under PPP model. None of
the parties had such market share that it could be considered as a dominant enterprise
within the geographic are of New Township or in the surrounding areas. All the
parties had to develop projects on the land allotted to them as per Rules& Regulations
laid down by government. A customer had a choice out of different builders as to
with whom he should register himself. Neither it is the case of the informant that
anyone of the opposite parties was so economically strong that it could operate
independent of the competitive forces prevailing in the New Town Kolkata.
Therefore, no case is made out under section 4 of the Act.
8.
Several allegations have been made by the informant in respect of many
practices alleging that these practices were one sided and the builders were taking
benefit of consumers weaknesses.
9.
In view of the above discussion, the Commission considers that the case
should be closed under section 26(2) of the Act and is hereby closed.
10.
Secretary is directed to informed all concerned suitably.
Sd/-
(Ashok Chawla)
Chairperson
New Delhi
Date: 12.02.2014
(Dr. Geeta Gouri)
Member
Sd/-
(Anurag Goel)
Member
Sd/-
(M.L. Tayal)
Member
Sd/-
(Justice (Retd.) S.N. Dhingra)
Member
Sd/-
(S.L. Bunker)
Member
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