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INFORMANT
RESPONDENT
Shyam Vir Singh
M/S DLF Universal Ltd.
XXXXXXX,
DLF Centre
New Delhi – XXXXX
Sansad Marg,
E-mail: XXXXXXXXXXXXX
New Delhi – 110 001
INDEX
1.
Complaint
The Seller may abandon the project
without offering any reason and his
Pages 4 to 12
Para 'F', page 4 and
para 'R', page 6 of
Annexure I
liability is limited to refunding the money
2.
with 9% simple interest
The Seller has the right to make major
alteration in the project, after entering
into agreement with the Buyer, despite of
3.
the objections/ non-consent of the Buyer
The Seller has arbitrarily undertaken to
pay ₹ 25/- per Sq. Ft. per month as
compensation for the period of delay in
delivering possession of the Flat. No
interest will be paid on the amount
Page 4 of complaint
Para 9.2, page 16 of
Annexure I
Page 4 & 5 of
complaint
Para 11.4, page 20
of Annexure I
Also Annexure VI,
VII, VIII & IX
Page 5 of complaint
accumulated on account of
compensation amount and this amount
will be adjusted only in the final price of
4.
the Flat.
In the event of failure of Seller to deliver
possession within 36 months from the
date of allotment, the Buyer can give 90
days notice to terminate the agreement.
The Seller will be entitled to resell the
premises to another party and refund the
money within 90 days from the date of
full realisation of the total sale price from
Para 11.3, page 20
of Annexure I
Page 5 of complaint
Page – 2 –
5.
the new buyer but without any interest.
The Seller has unilaterally decided on
the amount to be deposited as
Maintenance Security @ ₹ 500/- per Sq.
Ft. of the Super area of the flat carrying a
Para 14.2, page 23
of Annexure I
Also Annexure II & III
Page 6 of complaint
simple interest applicable on one year
6.
fixed deposit accepted by SBI.
If agreement not signed and returned
within 30 days by the Buyer, the
application is treated as cancelled and
Para 29, page 31 of
Annexure I
Page 6 of complaint
earnest money is forfeited without notice/
7.
reminder.
The formation of Association of Owners/
Building Owners Society is the sole
8.
prerogative of the Seller.
The Seller has the right to amend/
modify the content of Annexures at any
time, in effect being able to alter the
Para 28, page 31 of
Annexure I
Page 7 of complaint
Para 32, page 32 of
Annexure I
Page 7 of complaint
agreement materially in a unilateral
9.
fashion.
The buyer is required to pay interest @
15% to 18% on delayed payment of
instalments but the Seller is required to
refund the amount received from the
Para 35, page 33
and Para 11.4, on
page 20 of Annexure
I
Page 7 of complaint
buyer with 9% simple interest in the
event of cancellation of the project and
that too after deducting interest received
1
on delayed payments.
The Arbitrator is to be appointed at the
0.
sole discretion of the Seller who may
also be his own employee and the
Arbitrator's decision being binding on
both parties.
Para 52, page 36 of
Annexure I
Page 7 of complaint
Page – 3 –
1
The Seller claimed that the Buyer
1.
purchased the properties on resale from
Annexure III
Also Annexure IV & V
M/S Devinder Gupta & Sons Realtors
Pvt. Ltd. and the Buyer had all the
Page 8 of complaint
options to review the agreement before
1
undergoing the said transaction.
Instalments drawn are not as per the
2.
actual progress of the project but
1
arbitrary.
DLF's dominant position in Real Estate
Page 9 of complaint
3.
1
Sector of Gurgaon.
PRAYER FOR RELIEF
Page 11 of complaint
4.
1
Copy of Flat Buyers Agreement
Annexure I
5.
1
Copy of letter dt. 08-09-2011 to DLF
Annexure II
6.
1
Copy of letter dt. 01-10-2011 received
Annexure III
7.
1
from DLF
Copy of DLF's letter dt. 13-01-2011
Annexure IV
8.
forwarding Flat Buyers Agreement for
Annexure I, page 41
Page 8 of complaint
signature of the Buyer after more than
1
FOUR months of booking the flat.
Copy of DLF's letter dt. 15-02-2011
9.
returning the Flat Buyers Agreement to
Annexure V
the Buyer after it was duly signed on
2
behalf of the Company.
Copy of letter dt. 07-07-2011 written to
Annexure VI
0.
2
DLF
Copy of DLF's letter dt. 04-08-2011
Annexure VII
1.
2
Copy of letter dt. 25-02-2014 written to
Annexure VIII
2.
2
DLF
Copy of letter dt. 14-03-2014 received
Annexure IX
3.
from DLF
Page – 4 –
Page – 5 –
COMPLAINT
Brief Background to the complaint
The applicant's family had booked 9,668 Sq. Ft of commercial
space in DLF Corporate Greens, Sector 74 A, Gurgaon, in the shape of
five commercial flats as listed below:1. XXXXXXXX, total area 3,184 Sq. Ft. in the name of XXXX booked
on XX/09/2010.
2. XXXXXXXX, total area 1,621 Sq. Ft. in the name of XXXX booked
on XX/06/2010.
3. XXXXXXXX, total area 1,621 Sq. Ft. in the name of XXXX booked
on XX/08/2010.
4. XXXXXXXX, total area 1,621 Sq. Ft. in the name of XXXX booked
on XX/08/2010.
5. XXXXXXXX, total area 1,621 Sq. Ft. in the name of XXXX booked
on XX/06/2010.
The possession of the above five flats was to be delivered
between XX-06-2011 to XX-09-2011.
The manner in which the company has abused its
dominant position to short change customers:-
1.
As per para F (pg. 4) & para R (pg. 6) The Seller may abandon
the project WITHOUT offering any reason and his liability in this case is
limited to refunding the money and paying 9% simple interest.
2.
As per para 9.2 (pg. 16) in the case of Major Alteration/
Modification of the plans, the buyer has 30 days within which to file his
objections/ non-consent but his doing so does not in any way ensure a
fair hearing/ arbitration. On the contrary, the seller on receiving such
Cont... Page 5.
Page – 6 –
objections is free to cancel the agreement unilaterally. This means that
the buyer has no recourse whatsoever even if the seller decides to
make major alterations after entering into agreement with the buyer.
3.
As per para 8 of the Space Buyers Agreement TIME IS THE
ESSENCE for the intending allottees obligations to pay the sale price
of the said premises in accordance with the schedule of payments as
given in Annexure III along with other payments as applicable.
However, there is no such ESSENCE on the part of the Seller for giving
possession of the premises as per the stipulated Schedule (36 months)
given by the Developer/ Seller. The Seller has arbitrarily undertaken to
pay ₹ 25/- per Sq. Ft. per month as compensation for the period of
delay. However, this amount of compensation will not be paid to the
Buyer in cash as it accrues on monthly basis, but will be adjusted in the
final price of the flats without interest (para 11.4). Since the project has
been considerably delayed, the amount of penalty to the applicants has
accumulated to the tune of ₹ XX,XX,XXX/- till March-end 2014 and the
balance sale price to be paid to the Seller is only ₹ XX,XX,XXX-XX
(minus maintenance security) yet the Seller is not agreeable to adjust
the accumulated penalty amount against the balance sale price, and
are forcing the Buyer to make the payment. The buyer may have to
borrow the money at heavy interest, while his own money is lying with
the Seller which does not attract any interest.
4.
In the event of failure of Seller to deliver possession within 36
months from the date of allotment, the allottee can only demand his
money back by giving 90 days notice for termination of the agreement
and thereafter the Seller will be entitled to re-sell the premises to
another party and refund the money to the Buyer within 90 days from
the date of full realisation of the total sale price from the new buyer but
that too without interest for the period that the money was used by the
Cont... Page 6.
Page – 7 –
Seller (Para 11.3). What if the seller is unable to Sell the property for
several months or several years? Is it fair for him to retain the buyers
money in such manner and without any penalty for his own nonperformance.
5.
The Seller has himself decided that the intending purchaser has
agreed to deposit with the intending Seller/ the maintainer agency an
interest bearing Maintenance Security calculated @ ₹ 500/- (Rupees
Five Hundred Only) per Sq. Ft. of the Super area of the said premises,
carrying a simple interest as per the applicable rates of fixed deposits
(applicable to one year fixed deposit) accepted by State Bank of India
at the close of each financial year. The rationale why the intending
purchaser has to deposit ₹ 500/- per Sq. Ft. as security deposit, which
comes to about one years rent, has not been explained. Also, the
rationale why simple interest equal to applicable interest on one year
fixed deposit in S.B.I will be applicable has not been explained. When
the purchaser or his tenant will be required to pay the maintenance bills
within the stipulated period of the demand, then where is the need to
secure such a high amount of security? Moreover the seller has been
authorised to cancel the agreement without any notice for any nonpayment of the increase in the amount of Security within 15 days of
raising the demand and recover the shortfall from the sale proceeds of
the said premises. It is strange that the premises will be sold to recover
the shortfall in the maintenance security and the balance sale proceeds
will be refunded to the intended allottee after deducting other dues.
When the premises itself will be sold, where will be the need to make
good the shortfall in the maintenance security (para 14.2).
6.
As per para 1 & 2 of Instructions and also para 29 (pg. 31
Annexure I) – if the agreement is not signed and returned within 30
days by the buyer the application is treated as cancelled and earnest
Cont... Page 7.
Page – 8 –
money (20% of the total as described under para 4 p. 14) is forfeited
without notice or reminder. On the other hand the seller may at its own
discretion choose to accept or reject the signed agreement after
receiving the same (within 30 days) with his liability limited to refund of
money paid and that too without any compensation or interest.
7.
As per para 28 (pg. 31) The formation of Association of owners/
building owners society is the sole prerogative of the Seller. Is this not
tantamount to preventing owners from forming their own society for
maintenance and upkeep of their own building thus ensuring revenue
in perpetuity to the Seller even after the owners have paid for the
building in full?
8.
As per para 32 (pg. 32) The Seller has the right to amend/
modify the content of Annexures at any time, in effect being able to
alter the agreement materially in an unilaterally and one-sided fashion.
9.
While the Buyer is required to pay interest @ 15% - 18% p.a for
any delayed payment of instalment BUT the seller is required to refund
only the amounts received from the Buyer without interest or in some
cases 9% interest in the event of cancellation of the project etc. and
that too after deducting interest received on delayed payments (Para
11.4 & 35a). Also, the interest on Maintenance Security is to be the SBI
rate for fixed deposits, why this discrepancy?
10. As per para 52 (pg. 36) In the case of any arbitration the arbitrator
is to be appointed at the sole discretion of the Seller and may also be
his own employee, the arbitrator's decision being binding on both
parties. Is it fair to expect that in such a situation the Arbitrator would
be impartial and fair in his decisions?
Cont... Page 8.
Page – 9 –
11.
The applicant has written a letter dated 08-09-2011 to the
company, raising some of the issues raised above. However, the
company has dismissed the objections raised stating that the
properties purchased by the applicants were purchased on resale from
M/s Devinder Gupta & Sons Realtors Pvt. Ltd. It was further stated that
the applicant had all the option of reviewing the agreement before
undergoing the said transition as the agreements are standard for all
the properties in this scheme. It may be stated here that the company
has been selling its property through M/s Devinder Gupta & Sons
Realtors Pvt. Ltd. and they have been listed as company's broker in
their documents. It would be worth investigating whether M/s Devinder
Gupta & Sons Realtors Pvt. Ltd. paid full price of the property and got
it transferred in their name and thereafter sold it to the applicants? It
may not be out of place to state here that office space Buyers
agreements were received by the applicants direct from DLF Universal
Ltd., several months after booking of the properties and applicants had
no choice except to sign on the dotted line, otherwise the amounts
already paid would have been forfeited. All the payments were also
made through cheques in the name of DLF Universal Ltd. and not in
the name of Devinder Gupta & Sons Realtors Pvt. Ltd.
12.
As per the payment schedule drawn by the Seller, purchaser is
required to pay 85% cost of the flat till completion of building structure
and of the remaining 5% on installation of MEP Equipment, 5% on
application of occupation certificate and 5% after possession. The cost
of raising the structure of the building comes to about 40%-50% of the
total cost of the building and not 85% of the total cost of the flat.
Moreover the instalments drawn are not as per the actual progress of
the project, but as per the whims of the company. Thus the amount of
instalments paid by the Buyers are not related to the actual cost
incurred by the company on construction of the building. In fact the
Cont... Page 9.
Page – 10 –
money collected from flat buyers has not been utilised for completion of
the project but has been diverted to other projects of the company. Had
all the money collected from flat Buyers been honestly invested in the
project, the flats could have been delivered to the buyers within the
stipulated period of 36 months.
13. DLF as dominant player in real estate in Gurgaon
Between 1981 and 1990, DLF got 57 of the 101 reality project licenses
awarded in Gurgaon – about 56 percent of the total. In the same
period, Ansal properties, another prime player in this market, held 32
project licenses in Gurgaon. In “New Gurgaon” DLF has about 4,000
acres of land to be developed as commercial/ residential properties.
The licenses issued between 1981 to 2012 is as under:198190
1991-
2001-
2011
2012
DLF
Ansal
Unitech
Bestech
Emaar-MGF
Chintels
Aakarshan
Juventus
2000
57
32
4
0
0
0
0
0
03
24
12
12
0
0
0
0
0
12
2
3
0
0
0
0
0
6
2
2
5
2
3
0
1
8
2
1
6
3
1
3
2
Estate
Total
101
109
33
84
73
Licenses*
*Total No of licenses includes those issued to other companies that are
not mentioned in the table.
Source: Town and Country Planning, Haryana
The DLF's office segment is nearly 32 million Sq. Ft. of developed as
well as on-going projects, about half of which is located in Gurgaon.
The company is so dominant in Commercial Space segment in
Gurgaon that majority of their buildings have been leased out to
Page – 11 –
Cont... Page 10.
multinational companies and the company has the holding power to
retain the property rather than sell it at a competitive market price.
In its presentation of May 2008 (pg. 16) on integrated
townships, DLF has disclosed that in addition to the 3,000 acres that it
has in established Gurgaon, it has another 4,000 acres of land that falls
in the region of “New Gurgaon” i.e. new Sectors of Gurgaon that were
notified on February 05, 2007 in the Gurgaon Manesar Urban Complex
Masterplan 2021.
As per Q3 2013-14 Analyst presentation published on their
website
•
60 million Sq. Ft under construction nationwide as on date
(Page 8 of presentation)
•
In Gurgaon alone DLF has existing 15.23 million square feet of
grade A commercial space out of a total of about 30 million
square feet nationwide (page 10 of presentation)
•
Of total “Development Potential” i.e. land banks with DLF
amounting to 312 million square feet nationwide, it lists 143
million square feet in Gurgaon alone (page 12 of presentation)
For above presentations please see:http://www.dlf.in/dlf/wcm/connect/Corporate/DLF_SITE/HOME/TOP+LI
NK/Investors/Presentations/
It would be seen from the above that DLF is a dominant player in
Commercial/ residential real estate sector of Gurgaon and is short
changing the customers by drawing agreements having balance of
convenience in its favour and customers have no say in the matter. The
agreement should be equitable and reasonable for both parties. The
agreement so drawn by the company are not given to the customer at
the time of booking the flat but only after the customer is trapped by
Page – 12 –
Cont... Page 11.
paying substantial amount and has no choice except to accept the
terms offered to him/ her to the detriment of his/ her own financial
health.
PRAYER FOR RELIEF
The company has been misusing its dominant position in commercial
real estate sector of Gurgaon and is imposing its unfair conditions on
the buyers for causing unfair loss to the purchasers and robbing their
hard earned money. The company may be investigated to assess
whether it has been misusing its dominant position to short change
customers and provide relief to the applicant as requested below:1.
The arbitrarily drawn commercial office space buyers agreement
by the Developer needs to be redrawn in a manner which is fair and
equitable to both the Developer as well as the Buyer.
2.
The money deposited by flat buyers for construction and
completion of the project and diverted to other projects of the company
needs to be audited and in case the developer is found to have short
changed the purchaser by drawing more money than the requirement
of the project at different stages, the developer may be directed to pay
interest to the purchaser, which was extracted from him/ her before
time.
3.
Since the developer has been authorised to sell the premises for
failure in payment of the maintenance bills within the stipulated period
of the demand, there is no rationale to burden the flat buyers with the
requirement to deposit a maintenance security @ ₹ 500/- per Sq. Ft.,
which comes to ₹ 8,10,500/- for an office space of 1,621 Sq. Ft. In
case it is felt necessary to keep a maintenance security, it should not
be kept more than three months rent that could be calculated @ ₹ 40/per Sq. Ft. which comes to about ₹ 1,94,520/- for a flat of 1,621 Sq. Ft.
Page – 13 –
Cont... Page 12.
4.
The Developer may be directed to pay the compensation
amount (for delay in project completion) of ₹ 25/- per Sq. Ft. on
monthly basis to the purchaser and may be asked to pay interest, at a
rate equivalent to that charged from the buyer for delayed payment, for
the period of delay on the accumulated amount . Alternatively this
amount of compensation may be adjusted in the price of the project as
and when it becomes due to the purchaser.
5.
In the event of cancellation of the project by the Developer, the
Developer is only required to refund the money deposited by the
purchaser without any interest but in the instance of failure on the part
of the purchaser to pay the instalment in time, he/ she is required to
pay interest. The Developer may be directed to pay interest to the
purchaser in the event of cancellation of the project, the interest should
be at the same rate as the developer charges the purchaser on
delayed payment of instalment.
6.
The Company may be restrained from demanding more money
from the Buyers, till they adjust the penalty amount lying with them
towards the cost of the flats.
7.
The Competition Commission of India may scrutinise all clauses
of Space Buyers Agreement and determine whether the clauses are
fair and just and the Developer is not misusing its dominant position to
the detriment of the customers and to enrich themselves at the
expense of the innocent customer.
Thanking you
yours faithfully,
(SHYAM VIR SINGH)
XXXXXXXX, New Delhi – 110 0XX