Delhi High Court
Jyoti Sawroop Arora vs The Competition Commission Of India & ... on 16 May, 2016
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 16th May, 2016
+ W.P.(C) No.6262/2015
JYOTI SAWROOP ARORA ..... Petitioner
Through: Mr. Vikas Goel and Mr. Abhishek
Kumar, R.V. Prabhat and Mr. J.S.
Arora, Advs.
Versus
THE COMPETITION COMMISSION OF INDIA
& ORS ..... Respondents
Through: Mr. D.P. Singh, Ms. Snuchita
Shrivastava and Mr. Devansh Arya,
Advs. for R-1.
Mr. Avinash Sharma, Adv. for R-2.
Mr. Rahul Malhotra, Adv. for R-
5&17.
Mr. Rakesh Kumar, Mr. Navin
Kumar and Mr. Bipin Kumar, Advs.
for R-6.
Mr. Amir Singh Pasrich and Ms.
Vinita Chhatwal, Advs. for R-7.
Mr. Dhruv Rajain, Adv. for R-8&19.
Mr. G. Ramakrishna Prasad, Ms.
Tatini Basu and Ms. Lovely Kumari
Singh, Advs. for R-10.
Mr. Preshit Surshe, Adv. for R-11.
Ms. Chandni Mehra, Adv for R-12.
Mr. Himanshu Tyagi, Adv. for R-13.
Mrs. Aayushi S. Khazanchi and Mr.
Karan Luthra, Advs. for R-14.
W.P.(C) No.6262/2015 Page 1 of 29
Mr. A.S. Chandhiok, Sr. Adv. with
Ms. Kalyani Singh, Ms. Ambika Soni,
Ms. Sweta Kakad, Ms. Monika tyagi
and Mr. Anukrit Gupta, Advs. for R-
15.
Mr. M.M. Sharma, Ms. Deepika
Rajpal and Mr. Danish Khan, Advs.
for R-16.
Mr. Krishnan Venugopal, Sr. Adv.
with Mr. Rahul Goel, Ms. Anu
Monga, Mr. Nitish Sharma and Mr.
Neeraj Lalwani, Advs. for R-18.
Ms. Neelambera Sandeepan and Mr.
Sammith S., Advs. for R-20.
Ms. Anindita Barman and Mr. Keshav
Mohan, Advs. for R-22.
Mr. Devashish Bharuka and Mr.
Abraham C. Mathews, Advs. for R-
23.
Mr. Subodh Prasad Deo and Ms.
Radhika Seth, Advs. for R-24.
Mr. H.S. Chandhoke, Ms. Deeksha
Manchanda and Mr. Arjun Nihal
Singh, Advs. for R-25.
CORAM:-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. This petition under Article 226 of the Constitution of India impugns
the order dated 3rd February, 2015 of the respondent no.1 Competition
Commission of India (CCI) in case No.59/2011 holding no violation of the
provisions of the Competition Act, 2002 having been committed, inspite of
W.P.(C) No.6262/2015 Page 2 of 29
the Director General (DG) of the CCI in its Report having recommended
that there is contravention of the provisions of the Act. The petition was
entertained and notice thereof issued.
2. After notice, when the petition was listed before this Court on 12 th
February, 2016, I had of my own enquired from the counsels whether not
such an order was appealable before the Competition Appellate Tribunal
(COMPAT).
3. The counsels drew attention to Section 53A(1)(a) of the Competition
Act which empowers COMPAT "to hear and dispose of appeals against any
direction issued or decision made or order passed by the Commission under
Sub-Sections (2) and (6) of Section 26.......". It was further pointed out that
Sub-Section (2) of Section 26 provides for CCI, on receipt a reference from
the Central Government or a State Government or a Statutory Authority or
information received under Section 19, closing the matter forthwith if of the
opinion that there exists no prima facie case. It was stated that CCI in the
present case did not so close the matter but rather was of the opinion that
there existed a prima facie case and in exercise of powers under Sub-Section
(1) of Section 26 had directed the DG to cause an investigation to be made in
the matter. It was further pointed out that DG submitted its Report
W.P.(C) No.6262/2015 Page 3 of 29
recommending that there was contravention as averred in the information;
however CCI, after consideration of the objections and suggestions of the
parties concerned has vide the impugned order dated 3 rd February, 2015
differed from the findings of the DG on issue of contravention of provisions
of Sections 3(3)(a) & (b) of the Competition Act and held that sufficient
evidence is not available on record which warrants a finding of
contravention of the provisions of the Act and accordingly closed the matter.
It is argued that Sub-Section (6) of Section 26 against a direction, decision
or order whereunder the remedy of appeal to COMPAT has been provided is
as under:-
"(6) If, after consideration of the objections or
suggestions referred to in sub-section (5), if any, the
Commission agrees with the recommendation of the
Director General, it shall close the matter forthwith
and pass such orders as it deems fit and communicate
its order to the Central Government or the State
Government or the statutory authority or the parties
concerned, as the case may be."
i.e. provides for a contingency where the CCI agrees with the
recommendation of the DG and closes the matter and not the contingency
where CCI has disagreed with the recommendation of the DG, as has
happened in the present case. It was argued that since the remedy of appeal
W.P.(C) No.6262/2015 Page 4 of 29
is not provided, the petition under Article 226 of the Constitution would be
maintainable against such an order.
4. Though the counsel for the petitioner on 12th February, 2016 also
contended that the said question is no longer res integra in view of the
judgment of the Supreme Court in Competition Commission of India Vs.
Steel Authority of India Limited (2010) 10 SCC 744 but to me it prima
facie did not appear so.
5. I had on 12th February, 2016 itself drawn the attention of the counsels
to Vinod Kumar Chowdhry Vs. Narain Devi Taneja (1980) 2 SCC 120
where the Supreme Court, though in the context of Section 25B(8) of the
Delhi Rent Control Act, 1958 held that the words "order for recovery of
possession of premises" have to be construed as an order deciding the
application for recovery of possession of premises because there can be no
discrimination between the remedies available to the two parties to a
litigation and which will render the provision unconstitutional and because
of the overall scheme of the Act. Attention of the counsels was also invited
to State of Maharashtra Vs. Marwanjee P. Desai (2002) 2 SCC 318 on the
interpretation of Section 7 of the Bombay Government Premises (Eviction)
Act, 1955.
W.P.(C) No.6262/2015 Page 5 of 29
6. Finding that there is no specific sub-section in Section 26 dealing with
contingency of the CCI disagreeing with the Report of the DG and closing
the case as has happened in the present case and being of the prima facie
view that by the reasoning in the two judgments aforesaid of the Supreme
Court and further citing V.C. Shukla Vs. State (1980) Supp. SCC 92 holding
that right of appeal has to be liberally construed, I had on 12th February,
2016 expressed prima facie opinion that even against an order where CCI
disagrees with the report of the DG and closes the case, an appeal to
COMPAT lies and the writ petition would thus not be maintainable. The
counsels who were not prepared on the said aspect were asked to address
this Court first thereon. In the light of the aforesaid turn of events which the
hearing took, the occasion for any of the respondents filing counter affidavits
or calling for the same did not arise. However the respondent no.1 CCI only
even before the hearing on 12th February, 2016 had filed a counter affidavit.
7. On 28th March, 2016, the counsel for the petitioner and the senior
counsel for the respondent no.15 M/s. Oberoi Realty Limited also
contending that appeal does not lie to COMPAT were heard and the matter
adjourned to 21st April, 2016 for arguments of other counsels for the
W.P.(C) No.6262/2015 Page 6 of 29
respondents supporting the contention of the petitioner that against the
impugned order no appeal lies before COMPAT.
8. On 21st April, 2016 it was pointed out by some of the counsels that
with the coming into force on 26th March, 2016 of the Real Estate
(Regulation and Development) Act, 2016 (RERD Act), the remedy of the
petitioner in any case was not before the CCI but before the Real Estate
Regulatory Authority (RERA) constituted under the said Act. The counsel
for the petitioner sought time to consider the said aspect. Accordingly, the
matter was adjourned to today to enable the counsel for the petitioner to
consider. It was also the contention of the senior counsel for the respondent
no.18 M/s Puravankara Project Limited on that date that irrespective of the
legal question, there was no prima facie merit in the challenge by the
petitioner to the impugned order of CCI and for this reason also this Court
should not go into the legal question. It was yet further contended that the
legal question, as I had raised, was also pending before the Supreme Court.
9. Today, the counsel for the petitioner has stated that according to him
the jurisdiction for the grievance with which the petitioner had submitted the
information to CCI and finding prima facie merit wherein CCI had ordered
W.P.(C) No.6262/2015 Page 7 of 29
investigation lies exclusively with the CCI under the Competition Act and
RERD Act is prospective in nature and the petitioner presses this petition.
10. Per contra, the senior counsel for the respondent no.18 has contended
that even if this Court were to hold that this petition is maintainable, in any
case on facts there is no merit in the petition. It was contended that since
there are as many as 25 respondents in this petition, all represented through
Advocates and wanting to address this Court on the legal question aforesaid
of availability of appeal against the impugned order to COMPAT, this Court
rather than spending time on hearing on the said aspect may first hear the
counsels on the factual merit if any of the petition and only if convinced
therewith should proceed to go into the said aspect.
11. Being agreeable with the last of the aforesaid contention of the senior
counsel for the respondent no.18, the counsels for the petitioner and the
senior counsel for the respondent no.18 have been heard on the factual
merits of the petition.
12. The petitioner, alleging contravention by the respondent no.2 M/s.
Tulip Infratech Pvt. Ltd. (Tulip) and by respondents no.3 & 4 namely
Director, Town & Country Planning, Chandigarh and Haryana Urban
W.P.(C) No.6262/2015 Page 8 of 29
Development Authority (HUDA) of the provisions of Section 3 of the Act,
lodged information under Section 19(1)(a) of the Competition Act with the
CCI. It was the case of the petitioner that various enterprises engaged in real
estate development business including the respondent no.2 Tulip, by an
arrangement/understanding amongst themselves, adopt a anti-competitive
modus operandi/practices. Reliance in this regard was placed on a statement
of the Chairman of the respondent no.5 Confederation of Real Estate
Developers‟ Association of India (CREDAI) as reported in the newspaper of
its members signing a code of conduct including qua the actual usage area to
the buyers, compensation in case of project delays and other clauses of
buyers‟ agreements. It was further the case of the petitioner that various
enterprises engaged in real estate development have
agreements/understanding amongst themselves resulting in the flat buyers‟
agreement which the purchasers of real estate from the said developers are
compelled to sign being one sided and containing arbitrary clauses which
were exploitative of the buyers.
13. As aforesaid, CCI passed an order under Section 26(1) directing DG
to investigate the conduct of residential apartment complex builders
including of respondent no.2 Tulip and respondent no.5 CREDAI.
W.P.(C) No.6262/2015 Page 9 of 29
14. The senior counsel for the respondent no.18 has handed over a copy of
the separate opinion of the Member, Technical of CCI not finding a prima
facie merit within the meaning of Section 26(1) of the Act in the
complaint/information submitted by the petitioner inter alia observing that
the intention of the Competition Act is not to put each and every commonly
prevailing business practice detrimental to consumers under the Competition
Act scanner; citing the example of practice followed by shops, of "goods
once sold will not be returned", it was observed that every practise is not
capable of being treated as a practice carried on if there is no indication of
meeting of the minds and it was held that if neither the prices are getting
jointly fixed nor outcome is getting jointly controlled nor market is being
consciously shared nor any bid being rigged through practice then even that
conscious and jointly decided "practice" cannot come in the purview of
Section 3(3).
15. In accordance with the order under Section 26(1) of majority of the
members of CCI, as aforesaid, DG submitted a Report of certain practices
being commonly carried on by the builders/developers of residential
apartments by way of tacit agreement/understanding/informal co-operation
and having caused implications for consumers and resultantly
W.P.(C) No.6262/2015 Page 10 of 29
impacting/determining the final prices of apartments in contravention of
Section 3(3)(a) of the Competition Act and controlling the provisions of
services in contravention of Section 3(3)(b) of the Act. However DG did not
find any contravention of the provisions of the Competition Act by the
respondent no.5 CREDAI.
16. CCI, vide its order dated 15th April, 2015 ordered impleadment of 20
builders who were selected by DG as a representative sample for the purpose
of investigation in the matter, i.e. the respondents 5 to 25 herein and after
considering the replies, objections and submissions of the respondents and
the rejoinder of the petitioner/informant thereto, has found/observed/held:-
(i) That the petitioner/informant, prior to the information (Case
No.59/2011) on which investigation by DG was ordered also,
had filed information being Case No.07 to 2011 against the
respondents no.2 to 4 namely Tulip, Director, Town & Country
Planning, Chandigarh and HUDA on similar facts, alleging
abuse of dominant position.
(ii) CCI had vide order dated 29th April, 2011 closed that case
observing that there was no prima facie indication of
W.P.(C) No.6262/2015 Page 11 of 29
dominance by the respondent no.2 Tulip in the relevant market
and that there was no allegation of any agreement between the
respondent no.2 Tulip and other enterprises engaged in similar
or identical business and therefore none of the clauses of
Section 3(1) read with Sections 3(3) or 3(4) of the Competition
Act was found to be applicable.
(iii) The subject information (Case No.59/2011) however alleged
anti-competitive agreements / arrangements / understanding
amongst various real estate enterprises including respondent
no.2 Tulip and tacit understanding amongst all the real estate
players in the market; according to the petitioner/informant the
Code of Conduct adopted by the respondent no.5 CREDAI also
indicated collusion amongst its members.
(iv) That as far as the alleged anti-competitive conduct arising out
of the agreement between the petitioner/informant and the
respondent no.2 Tulip was concerned, the same did not fall
within the discipline of Section 3(3) read with Section 3(1) of
the Competition Act as the petitioner/informant and the
respondent no.2 Tulip are not operating at the same level; the
W.P.(C) No.6262/2015 Page 12 of 29
agreement also does not come within the purview of Section
3(4) as an end-consumer is not part of any production chain in
the market as envisaged thereunder. Similarly with respect to
the alleged conduct of the respondent no.2 Tulip in terms of the
provisions of Section 4 of the Act, CCI in the previous case
filed by the petitioner/informant had ruled out applicability of
Section 4 as dominance of the respondent no.2 Tulip was not
established; the petitioner/informant had neither filed any fresh
material to establish contra nor did the DG come across any
material which could be reflective of any change in the market
dynamics.
(v) That there was no specific allegations of anti-competitive
conduct in terms of provisions of Sections 3 and 4 of the
Competition Act against the respondents no.3 & 4 namely
Director, Town & Country Planning, Chandigarh and HUDA
and the prayer of the petitioner/informant seeking examination
of their functioning did not merit consideration.
W.P.(C) No.6262/2015 Page 13 of 29
(vi) That the common practices carried on by the
builders/developers found by the DG to be emanating out of a
tacit agreement were as follows:-
"(a) Non-disclosure of calculation of total
common area and its proportionate
apportionment on the apartments being sold
on Super Area basis and, reserving the right
to increase or decrease the flat area.
(b) Non expressly disclosing the applicable laws,
rules and regulation etc. with respect to the
projects being developed.
(c) Reserving the right of further construction on
any portion of the project land or terrace or
building and to take advantage of any
increase in FAR/FSI being available in the
future.
(d) Charging high interest from the apartment
owners on delayed payments as against
payment of significantly lower
interest/inadequate compensation on account
of delay on the part of the builder in
implementation of the project.
(e) Restricting the rights, title and interests of
apartment allottees to the apartments being
sold, and retaining the right to allot, sale or
transfer any interests in the common areas
and facilities as per their discretion.
(f) Fastening the liability for defaults, violations
or breaches of any laws, bye laws, rules and
regulations upon the apartment owners
without admitting corresponding liability on
the part of builder/developer.
W.P.(C) No.6262/2015 Page 14 of 29
(g) Non-disclosure of all the terms and
conditions of sale to the prospective buyers
at the stage of booking of apartments and
taking booking amount from interested
buyers without disclosing the terms and
conditions of the Sale Agreement to be
executed at a later stage."
(vii) That DG, to arrive at the aforesaid finding conducted a
comparative study of the flat buyers agreements executed by
such builders with their respective buyers and based on the
commonalities aforesaid it was concluded that the same
reinforces the presumption of "one follows the other"
phenomenon; the DG further observed that though the various
clauses of the agreements conveying same or similar intent
were differently worded, the same could not be reached through
independent actions of the various builders and thus concluded
that contravention of the provisions of Sections 3(3)(a) and
3(3)(b) of the Act was made out.
(viii) That for establishing contravention of Section 3(3) read with
Section 3(1) of the Act, some evidence of practice carried on or
decision taken by the CREDAI which further results into price
fixing, limiting and controlling provision of services etc. has to
W.P.(C) No.6262/2015 Page 15 of 29
be shown; in the present case the DG did not find any evidence
which is suggestive or indicative of any role played by
CREDAI in providing its platform to the members for anti-
competitive practices. In such a scenario, it was incumbent
upon the DG to have gathered sufficient evidence in the light of
the thresholds laid down in the Act.
(ix) The DG, de hors the platform of CREDAI for conducting the
impugned practices, did not find any material other than the
agreements executed between the builders and the buyers
containing the common clauses to a varying degree.
(x) Such commonality, in the absence of any evidence to establish
role of CREDAI or understanding, arrangement or action in
concert between the individual enterprises which are arrayed as
opposite parties, cannot be held to be in contravention of the
provisions of Section 3(3) read with Section 3(1) of the Act.
(xi) CCI itself after looking into the matter in great depth found no
evidence to corroborate that CREDAI has provided any
W.P.(C) No.6262/2015 Page 16 of 29
platform, directly or indirectly to its members for indulging in
any anti-competitive practices.
(xii) CREDAI had over 9000 members; there were other players in
the real estate development market who were not associated
with CREDAI.
(xiii) Since DG had not produced sufficient material on record
wherefrom any concert amongst the players can be gleaned, it
would be futile to examine the common practices to ascertain
the contravention of the relevant provisions of the law.
(xiv) Though CREDAI does provide platform to real estate
enterprises to meet and discuss issues of common interest and
find common solutions to their problems to further the
commercial interest of its members who are all
builders/developers but DG did not find any evidence of any
role played by CREDAI in providing its platform to the
members for anti-competitive practices.
W.P.(C) No.6262/2015 Page 17 of 29
(xv) That a perusal of the Code of Conduct including the clauses
relating to booking, agreement to sell and forfeiture also did not
make out a case of contravention of the provisions of the Act.
Resultantly, CCI differed from the finding of the DG on issue of
contravention of provisions of Sections 3(3)(a) and (b) of the Act and held
that no sufficient evidence was available on record warranting a finding of
contravention.
17. The senior counsel for the respondent no.18 on the basis of
findings/reasons aforesaid of CCI contends that there is no scope of
interference therewith under Article 226 of the Constitution of India. During
the hearing, a copy of the order dated 29th April, 2011 of the CCI of
dismissal of the earlier information submitted by the petitioner (Case
No.7/2011) is also handed over.
18. The senior counsel for the respondent no.18 also draws attention to
the prayer paragraph of the petition inter alia seeking restoration of the
allotment of a flat in a project Tulip White in Sector-69, Gurgaon of the
respondent no.2 Tulip and contends that the petitioner has been litigating in
that respect before foras/courts and the present petition is yet another steps in
W.P.(C) No.6262/2015 Page 18 of 29
the said direction. A summary of the common practices found by the DG and
the conclusion of the DG thereon is also handed over to show that even DG
has found variations from builder to builder and project to project and some
of the practices being followed by only a few of the builders.
19. I tend to agree with the senior counsel for the respondent no.18 that
irrespective of the legal question on which the hearing was commenced,
there is no merit in the petition on the merits of its own facts. I have in fact
asked the counsel for the petitioner that when several enterprises are
carrying on the same business/enterprise, whether not owing to the peculiar
features/factors of that business/enterprise common to all, there is bound to
be a commonality in certain respect in the clauses of the contracts which
such businesses/enterprises enter into with all those with whom they enter
into contracts and whether such commonality which is inherent owing to the
nature of business/enterprise can be called violation of the provisions of the
Competition Act. Instance of vendors of fruits and vegetables is given and it
is enquired, whether not all are bound to call their goods „fresh‟ irrespective
of whether in fact they are fresh or stale and whether by their said conduct
they can be said to be in violation of the Act.
W.P.(C) No.6262/2015 Page 19 of 29
20. No proper reply to the said query is forthcoming save that the counsel
for the petitioner draws attention to the paragraphs of the impugned order of
CCI, after the paragraph where the CCI concludes that a finding of
contravention of the Competition Act is not warranted. In the said paragraph,
CCI has clarified that its finding should not be taken as ignoring the
hardships which the consumers of real estate face at the hands of developers
of real estate and comments on the absence of a regulatory mechanism for
the said sector and the need for redressal thereof by the policy makers and
expresses hope of the Parliament bringing a suitable legislation therefor (and
which has now been brought in the form of RERD Act).
21. I am unable to agree. Merely because CCI has made such
observations, would not dilute the findings of CCI of there being no
evidence of any agreement between the developers of real estate or of
formation of cartels resulting directly or indirectly in determining the
purchase or sale price or any anti-competitive practice.
22. The counsel for the petitioner, from the report of DG has not been
able to show any evidence which the CCI in the impugned order has ignored
W.P.(C) No.6262/2015 Page 20 of 29
or which can be said to be showing anything contrary to the reasoning
adopted by CCI in the impugned order.
23. The challenge in this petition is thus to the application by CCI of
Section 3 of the Act to the facts of the case and the scope of this petition has
to be confined to see whether the said application is in accordance with
settled principles of law and interpretation of statutes and if it is found to be
so, cannot be extended to judge the correctness of the conclusions drawn by
CCI, an expert body comprising of members from several fields and which
is the domain of an appeal and not exercise of jurisdiction under Article 226.
24. Section 3(1) to (3) of the Competition Act, relevant for our purpose
are as under:
"3. Anti-competitive agreements.-- (1) No enterprise or association of
enterprises or person or association of persons shall enter into any
agreement in respect of production, supply, distribution, storage,
acquisition or control of goods or provision of services, which causes
or is likely to cause an appreciable adverse effect on competition within
India.
(2) Any agreement entered into in contravention of the
provisions contained in sub-section (1) shall be void.
(3) Any agreement entered into between enterprises or
associations of enterprises or persons or associations of persons or
between any person and enterprise or practice carried on, or decision
taken by, any association of enterprises or association of persons,
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including cartels, engaged in identical or similar trade of goods or
provision of services, which--
(a) directly or indirectly determines purchase or sale prices;
(b) limits or controls production, supply, markets, technical
development, investment or provision of services;
(c) shares the market or source of production or provision of
services by way of allocation of geographical area of market, or type
of goods or services, or number of customers in the market or any
other similar way;
(d) directly or indirectly results in bid rigging or collusive bidding,
shall be presumed to have an appreciable adverse effect on competition:
Provided that nothing contained in this sub-section shall apply
to any agreement entered into by way of joint ventures if such agreement
increases efficiency in production, supply, distribution, storage,
acquisition or control of goods or provision of services.
Explanation.--For the purposes of this sub-section, "bid
rigging" means any agreement, between enterprises or persons referred
to in sub-section (3) engaged in identical or similar production or
trading of goods or provision of services, which has the effect of
eliminating or reducing competition for bids or adversely affecting or
manipulating the process for bidding"
25. In my analysis, Section 3
A. Prohibits i) an enterprise; ii) an association of enterprises; iii) a
person; and, iv) an association of persons from entering into any
agreement as specified in sub-section (1) thereof.
B. declares such an agreement to be void.
C. presumes i) such an agreement; or ii) „practice carried on‟; or
iii) „decision taken‟
W.P.(C) No.6262/2015 Page 22 of 29
by such associations engaged in identical or similar trade of goods or
provision of services, if it
a) determines price
or
b) limits or controls
or
c) divides / allocates areas or types or customers
or
d) results in price rigging
to have an adverse effect on competition.
26. An agreement, in law, may be oral or in writing but requires a meeting
of minds of the parties entering into agreement on all the essentials of the
subject qua which they are entering into agreement so as to bind each other
thereto and compel performance or to measure damages in lieu of
performance. Such meeting of the minds, in the absence of a writing, has to
be proved as a fact and without it being so proved, there cannot be said to be
contravention of Section 3(1).
27. However, rarely is evidence available, even if applying test of
preponderance of probabilities, to establish / prove that an agreement which
is prohibited by law has taken place. Agreements prohibited by law are
always shrouded in secrecy.
W.P.(C) No.6262/2015 Page 23 of 29
28. To take care of such an eventuality, Section 2(b) of the Act while
defining „agreement‟, takes within its ambit "any arrangement" or
"understanding" or "action in concert", even if arrived at informally and
even if not intended to be enforceable. Thus, an agreement within the
meaning of Section 3(1) will be found if the action of parties are found to be
in pursuance to some common intention, even if not in pursuance to an
„agreement‟ within the definition of Contract Act, 1872, but in pursuance to
an „understanding‟ or „arrangement‟. Conversely it follows that merely
because two or more persons are doing similar or identical thing, will not
find an agreement within the meaning of Section 3(1) unless some, if not all
the way, meeting of their minds or common intention to do so is established.
29. Further, Section 3(1) does not prohibit „association‟ or „agreement‟
per se, as indeed it cannot. The agreements which are prohibited are those i)
in respect of production, supply, distribution, storage, acquisition or control
of goods and provision of services; and, ii) which causes or is likely to cause
an appreciable adverse effect on competition.
30. „Appreciable adverse effect on competition‟, vide Section 3(3) is
presumed from such agreement i) determining price; and, broadly, ii)
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limiting or controlling availability of goods or services. Though the word
„or‟ is found to be missing from between categories (a) to (d) of sub-section
(3) of Section 3 but in the context thereof, in my opinion has to be
necessarily read. It is thus not as if only when all the clauses (a) to (d) are
applicable, has the presumption to be drawn.
31. However Section 3(3) while providing so, besides to „agreement‟
refers also to "practice carried on" or "decision taken". The word „decision‟
again connotes meeting of minds of those engaged in identical or similar
trade of goods or provision of services. The question which arises is,
whether the words "practice carried on" refers to a situation resulting even
without meeting of minds. If that were to be so, then the second question
which would arise is, whether a practice carried on by those engaged in same
trade even without any meeting of minds to carry on such a practice would
be covered. Section 2(m) defines a "practice" as including relating to the
carrying on of any trade. However what is peculiar is that Section 3(3)
which contains the words "practice carried on" is only raising a presumption
as to what the same words in Section 3(1) mean. Section 3(3) by itself is
neither prohibitory nor a voiding provision as Sections 3(1) and 3(2)
W.P.(C) No.6262/2015 Page 25 of 29
respectively are. Thus, the words "practice carried on" have to be
understood as a practice of trade in pursuance to meeting of minds.
32. Seen in this light, in the absence of any evidence of meeting of minds
between any two or more developers of real estate with an intention of
causing an appreciable adverse effect on competition, there could be no
violation of Section 3 as was complained/ informed of by the
petitioner/informer. Mere formation of an association i.e. the respondent
No.5 CREDAI, is not violation of Section 3, without it being further
established that such an association was to or has resulted in appreciable
adverse effect on competition. DG, which is an investigative agency of CCI
and with whose findings/recommendations CCI, which has adjudicatory role
is not bound, found such violations because of finding certain common
practices followed by all the developers of real estate surveyed/examined by
DG. CCI has however found such practices to be not a result of any
common intention. CCI has further found such practices to be not having
any appreciable adverse effect on competition.
33. I find no error in such reasoning/logic/approach of CCI.
W.P.(C) No.6262/2015 Page 26 of 29
34. The seven common practices found by DG and as have been listed out
hereinabove are found by me to be such which are inherent to the
business/enterprise of real estate and/or real estate development. The
transactions in real estate are governed by the Transfer of Property Act, 1882
and the Apartment Acts of different States besides by the other laws which
vary from state to state and within the state vary qua different type/category
of real estate. The principle of caveat emptor i.e. buyer alone is responsible
for checking the quality and suitability and title of the property also applies
to real estate transactions. The development/construction of real estate is
governed by separate set of state and municipal laws, besides the Master
Plan, and norms whereof keep on changing from time to time enabling
further construction/expansion of construction on the land. In fact during the
hearing I have drawn the attention of the counsel for the petitioner to the
decision of HUDA in the recent past of increasing the FAR and which has
resulted in the land, of which development was complete, also becoming
capable of being built on further and enquired whether not owing to such
happenings, there is bound to be a clause in the agreement reserving the right
of further development/construction. Merely because all carrying on the
same business are following certain practices, cannot label the said practices
W.P.(C) No.6262/2015 Page 27 of 29
which are inherent to the nature and needs and contingency of the
trade/enterprise, a violation of the Act and if it were to be held so, I wonder
as to how the various developers of real estate would draft the contracts of
sale of real estate without providing for the various eventualities which are
common to sale and purchase of real estate. In fact when individuals not in
the business/enterprise of real estate also develop their own properties and
sell part of the development, they also are known to have same clauses as
found by DG, in their agreements.
35. From my law practice of over 25 years, largely in the field of real
estate also, I can say that a large number of developers of real estate, to save
legal cost, merely copy paste either the agreements of their earlier real estate
projects or the agreements as in vogue in the market. This is not to say that
the Advisors in the field of real estate do not themselves follow the practice
of cut and paste and which in my practical experience, is responsible to a
large extent for the commonality found by the DG and from which
commonality DG presumed contravention of the provisions of the Act.
W.P.(C) No.6262/2015 Page 28 of 29
36. Moreover, the counsel for the petitioner has been unable to tell how
the seven practises determine price or limit or control availability of real
estate.
37. No error is thus found in the impugned order of the CCI. The petition
is dismissed.
38. In this view of the matter, need to render finding on the
maintainability of appeal against the order or on the exclusive jurisdiction of
RERA established under the RERD Act over the subject matter of the
grievance is not felt.
No costs.
RAJIV SAHAI ENDLAW, J.
MAY 16, 2016 „pp‟ (corrected & released on 21st June, 2016) W.P.(C) No.6262/2015 Page 29 of 29