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Competition panel to aid home buyers

india Updated: Mar 26, 2012 01:56 IST
Mahua Venkatesh

Property buyers now have a friendly watchdog.

The Competition Commission of India (CCI), whose job is to ensure fair competition between corporate entities, plans to take steps to create rules to stop real estate developers from abusing their dominant positions at the cost of customers.

The anti-trust watchdog says it has observed several instances of unfair practices involving "abuse of dominance" by home builders in several cities including Chennai, Bangalore and Kolkata, while it has already come to the rescue of Gurgaon home buyers as it did last year.

In some cases, while a home buyer is charged a penalty for delayed payments in the purchase of a flat, when the builder delays the delivery of the same flat, the rate at which the builder pays is only a minuscule fraction of what the buyer pays, showing an unfairly loaded contract.

The CCI is looking to come up with changes in contractual clauses linked to purchases to ensure that home buyers do not suffer and their money is protected.

"Contractual rules must be set to ensure that this practice stops and consumers are not unnecessarily harassed," Ashok Chawla, CCI's chairman, told Hindustan Times.

"However, this problem is not linked only to the real estate biggies. Several builders at regional levels have also been found abusing their position of dominance," Chawla added.

Malpractices also involve changing building rules to benefit the developers, such as adding extra floors that were not part of the original plan, or commercially selling off shared parts of the premises.

Last year, CCI imposed a penalty of Rs 630 crore on Delhi-based realty major DLF, saying it had indulged in an unfair practice. In another instance this year, no penalty was imposed but the CCI issued a "cease and desist" order to following a compliant by flat owners.

DLF has approached the Competition Appellate Tribunal against CCI's orders.

While home buyers can now approach the CCI on a case-by-case basis, Chawla said that the need of the hour was to bring in changes in the ground rules to ensure that such cases do not recur and consumer interests are protected.

Here comes the watchdog