CCI Dismisses Complaint against New Gurgaon Real Estate Developer

On October 3, 2019, the CCI dismissed allegations of violations of Sections 3 and 4 of CA02 against Vatika Limited (‘Vatika’), filed by Mr. Suresh Chander Gupta (‘Informant’).[1] Vatika is one of the top real estate developers in new Gurgaon and was developing ‘Vatika Town Square’, a commercial tower in a commercial-cum-retail shopping complex, at the junction of Dwarka Express Highway and the Delhi-Jaipur Highway.

The Informant was told by Vatika in 2012 that construction of Block-D of Vatika Town Square, where the Informant was looking to purchase commercial space, would be completed by the end of June 2015. The Informant paid a sum of Rs. 2,50,000 on January 3, 2013, and signed the application for allotment. The Informant also paid an advance of 40% of the total amount on February 18, 2013, with the remaining 60% being due at the time of possession. Lastly, the Informant was told verbally that if, for any reason, there was a delay in construction or any other default by Vatika, the Informant would be paid simple interest @ 8% per annum by Vatika. However, this condition was never included in the Builder-Buyer Agreement (‘BBA’) executed between Vatika and the Informant.

The Informant noted that despite being told otherwise by Vatika, the construction of and leasing/renting of commercial units in Vatika Town Square had not made adequate progress. Accordingly, the Informant inquired several times about the terms and conditions pertaining to the refund of the amount already paid by him, without any response from Vatika. The Informant approached the CCI against Vatika, alleging that the BBA imposed unfair and discriminatory terms on the buyer, as well as covered the builder from all foreseeable and unforeseeable events at the cost of the buyer.

The CCI noted that the issue at hand arose out of an agreement with a customer, which does not fall under Section 3 of CA02. The CCI then went on to assess the issue under Section 4. The CCI stated that based on customer use and price, commercial real estate and residential real estate formed two separate relevant product markets. Further, with respect to the relevant geographic market, customers looking for commercial units in one area would not prefer any other areas. Furthermore, the market conditions in Gurugram were different as compared to other NCR regions. Accordingly, the CCI defined the relevant market as the market for ‘provision of services for development and sale of commercial space in Gurugram’.

Within the relevant market, the CCI relied on a prior case pertaining to Vatika’s dominance,[2] and noted that there were enough players providing same or similar services as Vatika, which imposed competitive restraints on Vatika. Accordingly, the CCI held Vatika to not be a dominant player in the relevant market, and did not examine any abuse of dominance. CCI found no prima facie case against Vatika and dismissed the matter.

[1] Suresh Chander Gupta v. Vatika Limited, Case No. 26 of 2019.
[2] Shri Dominic Da’Silva v. M/s Vatika Group, Case No. 101 of 2014.

Published In:Inter Alia Special Edition- Competition Law - November 2019 [ English
Date: November 11, 2019