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TMI Blog2016 (5) TMI 1623X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. ORDER: 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 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 12th 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 clo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted the information to CCI and finding prima facie merit wherein CCI had ordered 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 respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice" 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of their functioning did not merit consideration. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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. (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 ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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' 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 cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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