2014 (4) TMI 538 - Commission - Indian Laws

Contravention of the order of the Commission and the Tribunal - The applicant has stated that the cease and desist order passed by the Commission and confirmed by the Tribunal was binding on the opposite party - Held that - The plea is thoroughy misconceived. It is no doubt true that after passing of final orders in terms of the provisions contained in section 27 of the Act, the inquiry conducted by the Commission comes to an end. However, the proceedings contemplated under section 42 of the Act, by very nature, will arise post passing of the orders by the Commission. The inquiry envisaged under section 42 of the Act may be initiated by the Commission either suo moto or on an application moved by any member of the public bringing to the notice of the Commission the alleged contravention by a party against whom an order was issued by the Commissions - The Commission has noticed the various orders passed by COMPAT in those proceedings. No stay on the cease and desist order passed by the Commission has been granted by COMPAT. In fact, when the applicant approached COMPAT with an application seeking stay on the impugned demands, COMPAT requested the Commission to dispose of the said application instead. Opposite party No. 1 had contravened the order of the Commission dated 31.01.2012 by issuing the impugned demand letters dated 28.11.2012. The opposite party No. 1 has failed to show any cause, much less any reasonable cause, for non-compliance of the aforesaid order. It is made clear that order passed by the Commission need to be complied with by the parties and the same cannot be permitted to be opted out by the parties through negotiations. No stay on the cease and desist order passed by the Commission was operating when the non-compliance occurred. The said demand letter has not been withdrawn till date - opposite party No. 1 is directed to pay the fine accordingly - Decided in favour of appellant.

Summary

Issues Involved:
1. Contravention of the Commission's order dated 31.01.2012.
2. Legality of demand letters issued under the concept of "super area."
3. Jurisdiction and locus standi of the applicant.
4. Compliance with cease and desist orders.
5. Imposition of penalties for non-compliance.

Detailed Analysis:

1. Contravention of the Commission's order dated 31.01.2012:
The original informants filed an application to notify the Commission about the contravention of its order dated 31.01.2012, which was confirmed by the Tribunal. The order required the opposite party No. 1 to cease and desist from imposing unfair conditions in its agreements with buyers. The Commission found that the opposite party No. 1 continued to impose abusive clauses, violating the cease and desist order.

2. Legality of demand letters issued under the concept of "super area":
The Commission noted that the opposite party No. 1 issued demand letters to the members of the applicant association, demanding exorbitant sums under the concept of "super area," which had been declared illegal and abusive. The Commission found that the opposite party No. 1 had increased the super area by about 36%, resulting in demands of more than Rs. 2 crore on each flat owner. This action was in direct contravention of the Commission's order.

3. Jurisdiction and locus standi of the applicant:
The opposite party No. 1 contended that Shri Brij Raj Singh had no locus standi to move any application under section 42 of the Act as he was not a party to Case No. 67 of 2010. The Commission rejected this argument, stating that proceedings under section 42 of the Act could be initiated post the passing of final orders by the Commission, either suo moto or on an application by any member of the public.

4. Compliance with cease and desist orders:
The Commission emphasized that the cease and desist order had not been stayed by the Tribunal. Therefore, the opposite party No. 1 was bound to comply with the order, except for the payment of the penalty. The Commission conducted an inquiry and found that the opposite party No. 1 had indeed contravened the order by issuing the impugned demand letters.

5. Imposition of penalties for non-compliance:
The Commission held the opposite party No. 1 in contravention of the order dated 31.01.2012 and imposed a fine of Rs. 50,000/- per day of non-compliance from 28.11.2012, totaling Rs. 2,41,50,000/-. If non-compliance continued beyond the date of the order, an additional fine of Rs. 1 Lakh per day would be imposed until compliance or until the total fine reached Rs. 10 crores.

Conclusion:
The Commission directed the opposite party No. 1 to pay the imposed fine within 60 days and comply with the modified agreement terms as per the supplementary order. The demand letters issued were declared not binding on the applicants. The secretary was instructed to inform the parties accordingly.