By way of an October 31 2017 order, the Competition Commission of India (CCI) found a prima facie case of abuse of a dominant position by the Haryana Urban Development Authority (HUDA).
The claimant, the Gurgaon Institutional Welfare Association, is a registered association of individual purchasers of institutional plots in Gurgaon. HUDA is a statutory body under the Haryana Urban Development Authority Act 1977, responsible for the planned development of urban estates in the state of Haryana and the exclusive supplier of institutional plots located in those estates.
The claimant alleged that HUDA had violated Section 4 of the Competition Act 2002. It argued that on payment of the full consideration amount, allottees were entitled to the transfer of all rights and interests in the purchased plots, as is the case with a free-hold transfer. However, when the allottees approached HUDA for the execution of a conveyance deed, HUDA imposed ex facie illegal and void conditions, manipulating the terms of allotment which were contrary to the statutory provisions. The claimant argued that despite receiving the full consideration amount from the allottees, HUDA illegally restricted their rights to sell, mortgage, transfer or lease out the plots and any buildings that they had constructed. Further, HUDA imposed an additional liability on the allottees to pay an undetermined consideration amount towards future additional costs in relation to the plots. The claimant also argued that HUDA had created an artificial scarcity in the market by offering small numbers of plots at a time, thereby affecting supply.
Before considering the merits of the case, the CCI opined that it has jurisdiction to try the matter as Sections 60 and 62 of the Competition Act will have an effect and must be read in addition to any other law in force at the time. Thus, despite the Haryana Urban Development Authority Act and Regulations being the governing law in the case, the CCI has jurisdiction to examine the matter in order to establish any anti-competitive conduct or practice under the Competition Act. Further, since HUDA performs no government functions, it falls under Section 2(h) of the act.
The CCI held that the relevant market is the development and sale of institutional plots in the state of Haryana. HUDA is the sole supplier of institutional plots in this market and allottees can purchase similar plots in Gurgaon only from HUDA. As such, HUDA holds a dominant position in the market as it has the statutory power to acquire land for development throughout Haryana.
The CCI clarified that its jurisdiction was not affected even though the allotment letters had been executed before May 20 2009. It relied on Kingfisher Airline Ltd v CCI, in which it held that: "The moment the Act comes into force, it brings into its sweep, all existing agreements."
The CCI found a prima facie case of abuse of a dominant position under Section 4(2)(a)(i) of the Competition Act and sent the case to the director general for further investigation.
For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4249 2525) or email ([email protected]). The Vaish Associates website can be accessed at www.vaishlaw.com.
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