NCLAT sets aside CCI order on DLF, directing it to examine matter

CCI had rejected complaint against DLF and its subsidiary for alleged abuse of the dominant position on the basis of a second/supplementary report from Director General (DG).

NCLAT said that CCI was not authorized to pass an order for further investigation if DG has already  ‘noticed the violation’ in its first report and ‘the same cannot be justified’.

Based on the second/supplementary DG report, CCI passed the order concluding that ‘the contravention of the provisions’ of the Competition Act was not established against DLF and its wholly-owned subsidiary DLF Home Developers.

A two-member NCLAT bench said it was “of the opinion that without going into further detail or delving into the merit of the case the order impugned is liable to be set aside since the order is primarily passed on the supplementary investigation report submitted by the DG which was conducted on a void order of the CCI.”

The matter pertains to Regal Garden in Sector 90, DLF Garden City, Gurugram, where an informant had complained against the realty firm alleging the clauses in the buyer-seller agreement reflected abuse of dominance by DLF Home Developers.

The informant had complained before the CCI alleging clauses to be “highly unfair and discriminatory”, however, the fair trade regulator had on August 31, 2018, closed observing that there was no violation.

The CCI order was subsequently challenged before NCLAT, an appellate authority over the fair trade regulator, which after more than four years set aside the order and remanded the matter back to it for re-examination.

The National Company Law Appellate Tribunal (NCLAT) “remitted back” the matter “to CCI to pass the order afresh on the basis of the first report” filed by DG office.

“The CCI is required to examine the entire issue and pass appropriate order in accordance with law after giving opportunity of hearing to all concerned within a period of three months from the date of receipt/production of copy of this order,” it said.

NCLAT had observed that DG had in compliance with the order of CCI conducted investigations and in its report showed a violation of provision under Section 4 of the Act by DLF and its subsidiary.

“Even though DG in its investigation report dated March 2016 noticed the violation committed by Respondents under Section 4 of the Act, by its order dated November 9, 2016 the CCI directed the DG to conduct further investigation,” it said.

And after receipt of the second/supplementary DG report, CCI passed the order concluding that the contravention of the provisions under Section 4 of the Act are not established in the matter.

Questioning the CCI direction for a second/supplementary probe, NCLAT said:”Further investigation as per Act is required in a case of closure not in a case where DG has submitted report showing contravention of provisions of the Act by a party/parties.” PTI KRH ANU ANU