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Judgment
M/s Ohm Value Services Ltd. (the "Informant") has filed the instant information under section 19(1) (a) of the Competition Act, 2002 (the "Act") against Janta Land Promoters Ltd. (the "Opposite Party) alleging, inter alia, contravention of the provisions of Section 4 of the Act in the matter.
Facts of the case, as stated in the information, may be briefly noted:
The Informant is stated to be allotted an Industrial plot no. 164, admeasuring 4062 sq. yards for setting up non-polluting industries in sector 82, Mohali (the "Plot") which is developed by the Opposite Party.
The Opposite Party, vide its allotment letter dated 07/01/2008, alleged to have assured that all the infrastructure relating to the development of area in which the said plot is located, would be completed by the end of 2008. As per the said letter of allotment, the price of the plot was fixed at Rs.3,890/- per sq. yards and Rs.1,58,00,000/- as the total sale price. Out of the total amount, the Informant alleged to have paid an amount of Rs.38,00,000/- and the balance amount of Rs.1,20,00,000/- was to be paid in two yearly installments as per the schedule contained in the said letter of allotment.
After allotment of the said plot, the Informant alleged to have written several letters to the Opposite Party as regards the status of the Project and clearances pending before the Government Departments. It is alleged that certain material defects in the Project were concealed by the Opposite Party from the Informant. Punjab State Industries And Export Corporation Ltd., (PSIEC) a State Government Undertaking alleged to have claimed Rs 83.91 crores from the Opposite Party as outstanding connectivity charges. It is stated that due to non-payment of outstanding dues, PSIEC wrote a letter dated 22.11.2007 to the Chief Administrator, Greater Mohali Area Development Authority (GMADA), requesting them for rejecting the permission sought by the Opposite Party to develop the said area. The Informant, despite having allotment and possession of the plot, could not commence construction due to pending approvals before the Authorities.
The Informant further alleged that at the time of allotment i.e. 07.01.2008, the Opposite Party did not possess the environmental clearance and that the same was obtained on 24.06.2011.
It is alleged that the plot was cancelled arbitrarily by the Opposite Party on 03.02.2010 on account of non-payment of first instalment even though in terms of the allotment letter, the Informant was required to pay the first instalment till 07.07.2010. It is stated that the said cancellation of Allotment was held as illegal by the Court of Civil Judge (Jr. Division), Sas Nagar, Mohali.
The Informant has also stated that in terms of clause 18 of the letter of allotment, the Opposite Party had the right to resort to the cancellation of the allotment of the plot but after giving Show Cause Notice of 30 days on account of the grounds of default mentioned therein. The Opposite Party alleged to have cancelled the allotment within 14 days from date of the Show Cause Notice i.e., 20.01.2010. It is alleged that the plot was later re-allotted to Mr. Mohinder Singh and thereafter transferred in the name of Mr. Manjit Singh.
In additional information, submitted by the Informant, it is alleged that the Opposite Party manages its record in such a way which could be forged or manipulated to its advantage.
It is alleged that the Opposite Party has abused its dominant position by incorporating one sided and unfair clauses in the allotment letter. It is stated that in terms of clause 6 of the allotment letter, interest @ 18% per annum for the delayed payments or cancellation of allotment can be charged by the Opposite Party but there is no mention of any penalty proposed to be imposed on the Opposite Party in case of any default or deficiency on its part. As per the Informant, the Opposite Party has abused its dominant position by imposing unfair and one sided terms and conditions. Further the dispute settlement mechanism adopted by the Opposite Party is also alleged to be unfair.
The Commission has perused the information.
Facts of the case reveal that the grievance of the Informant primarily pertains to the alleged abusive terms and conditions of the letter of allotment and the cancellation of the allotment of the plot by the Opposite Party.
For examination of the alleged abusive conduct of the Opposite Party, it is required first to delineate the relevant market where the Opposite Party is operating and then to assess its position of dominance in the relevant market so delineated and finally, examination of conduct in case it is found to be in a dominant position in the relevant market.
The relevant product market may be defined as the market for industrial plots. The end use of the industrial plots is distinctly different from that of residential or commercial plots since the same are for an exclusive purpose. In case of a small but significant increase in price, a consumer is unlikely to shift away to buying a plot of land meant for residential or commercial use, thus forming an exclusive relevant market for industrial plots.
The relevant geographical market can be delineated as the State of Punjab. Since there are various cities in Punjab where areas have been earmarked for industrial activity and to provide consumers a wide array of choice for buying an industrial plot. Although Mohali, marked as one of the industrial Focal Points‟ in the State, is a popular choice for the same, other substitutes to Mohali also exists in the State of Punjab. For instance, other Focal Points are Bathinda, Mandi Gobdindgarh, Amritsar, Ludhiana, Pathankot, Hoshiarpur, Kapurthala and Raikot. These Industrial Focal Points (IFP) range between 50 acres to 500 acres of land at various towns and cities of Punjab and consist of developed plots equipped with power sub-stations & distribution networks, tele-communication facilities, residential area for workers, common effluent treatment plants for the clean environment. Thus, a small but significant increase in price of industrial plots in any one of these industrial Focal Points may lead the consumer to switch to another industrial hub in the State of Punjab. Therefore, the relevant market in the instant case is the market for industrial plots in the State of Punjab.
The Informant submitted that the Opposite Party holds a dominant position since this is the only private company which has been sanctioned industrial project with 60% industrial, 30% residential and 10% commercial component for the development of plots in Mohali. The Commission observes that in order to assess the dominance of the Opposite Party in the relevant market, a comparison between the Opposite Party and its competitors is required to be done on certain parameters.
Based on the information available in public domain, it is observed that as far as industrial plots are concerned, the Opposite party is present only in the city of Mohali. In the relevant geographical market of the State of Punjab, industrial plots through industrial parks are being offered by a number of other developers like Alpha Group, Hampton, Hansa Group, Mahakali, Krishna Infrastructure, Silicon Construction, EMAAR MGF, VAR Realtors, PACL India Ltd, Malhotra, Land Developers etc.
In view of the above, it is inferred that prima facie, the Opposite Party is not holding a dominant position in the relevant market. The Opposite Party may be one of the reputed players in the real estate market for industrial plots, but it cannot be said to be a dominant player.
Presence of other players in the relevant market indicates that the Informant had the option to switch to other players in the relevant geographic market. Since there is no information available on record and on the public domain to show the position of strength of the Opposite Party which enables it to operate independently of competitive forces prevailing in the relevant market, prima facie, the Opposite Party does not appear to be in a dominant position in the relevant market. In the absence of dominance of the Opposite Party in the relevant market, its conduct cannot be examined under the provisions of section 4 of the Act.
In the light of the above analysis, the Commission finds that no prima facie case of contravention of the provisions of section 4 of the Act is made out against the Opposite Parties in the instant matter. Accordingly, the matter is closed under the provisions of section 26(2) of the Act.
The Secretary is directed to inform all concerned accordingly.