7TH ANNUAL UNIVERSITY MOOT COURT SELECTIONS,

2014-2015

GRAND INTRA-II
(WINTER EDITION)

PROBLEM STATEMENT

MOOT COURT COMMITTEE

RMLNLU

PROBLEM STATEMENT
Mahesh Land Firm Ltd. (hereinafter referred to as MLF Ltd.), a subsidiary company of DLF
Infratech Ltd. (engaged in real estate and investment banking) is a company engaged in the real
estate business i.e. construction, development and sale and distribution of land and buildings for
residential and commercial purposes etc. DLF Infratech Ltd. holds 49% shares in MLF Ltd. The
average turnover for the preceding three financial years for DLF Infratech Ltd. is 2550 crores,
60-65 percent of which comes from the real estate business. While on the other hand, the average
turnover for the preceding three financial years for MLF Ltd. is 500 crores.
MLF floated a luxury-residential project in Greater Noida, NCR by the name of One Hamlet
(hereinafter referred to as Project) and invited applications for the booking of the project. The
Project was spread over 125 acres of land and consisted of a commercial area, plots and
residential flats. However for this project which was being developed in another area where MLF
did not have enough resources, it engaged the services of Pappu Lal Estate Ltd. (hereinafter
referred to as PLEL) for developing the Project area and entered into a Collaboration Agreement
dated 22.10.2011 which dealt exclusively with the development of the Project. The Collaboration
agreement provided for the purpose of the agreement, scope and duration, decision making
structure and authority, resource commitment to the collaboration, risk management strategies,
accountability process, termination of the agreement & assignment, entirety of agreement,
governing, jurisdiction, and dispute resolution. The relevant dispute resolution clause was:
That in the event of any difference or disputes between the parties arising out of or under this
agreement, the same shall be referred to arbitration of sole arbitrator to be appointed by the
parties mutually. All such arbitration proceedings shall be held in New Delhi and the provision
of Arbitration and Conciliation Act, 1996 shall apply in this regard.
The understanding between MLF and PLEL was that the Project and subsequent agreements
with buyers would be in the name of MLF Ltd. only because of its wide reputation and goodwill
in this industry. PLEL would merely be a Developer for the Project and in return would have
2/3rd share in the total proceeds from the project. They executed a Memorandum of
Understanding (MoU) dated 22.08.2012 to ink this arrangement between each other.

Jack Daniels booked a residential flat in the tower Kensington Park in the Project, as per the
Floor Plan/Site Plan (the tower consisted of 22floors) shown to him on 12.07.2012 and paid 10%
of the booking amount to DLF. He subsequently received a Provisional Allotment Letter dated
16.07.2012 and paid a further consideration of 25% when the Apartment Buyer Agreement
(hereinafter referred to as the ABA) was executed. The relevant Clauses of the ABA are annexed
in Exhibit 1.
As per the ABA, the residential flat would be handed over within 24 months of the
commencement of the Project. On visiting the site, Jack Daniels realized that the Project was
nowhere near completion and additionally MLF had unilaterally added 8 more floors to his tower
Kensington Park. Jack Daniels and other owners of residential flats in the Tower, file a case for
abuse of dominant position against DLF before the Competition Commission of India (CCI).
Based on the facts the Commission was of the prima facie opinion that there was a case of
contravention of Section 4(2) (a) (i) of the Act in the matter. After hearing the parties on merit,
CCI passed an order for abuse of dominant position against MLF Ltd and further imposed a
penalty of Rs. 225 crores. It also passed an order directing MLF Ltd. to modify the terms and
conditions of ABA and hand over the possession of the Flats to the customers within a period of
six months of the date of order. Against this order, MLF appealed before the Competition
Appellate Tribunal (COMPAT). COMPAT affirmed the order passed by the CCI but reduced the
penalty imposed from 225 crore to 100 crores. Against this order passed by COMPAT, MLF
appealed to the Supreme Court on 08/01/2015 under the relevant provision of the Competition
Act, 2002. The matter is listed for hearing in the second week of February in Civil Appeal No.
1100/2015
Subsequently PLEL which had left the development of the Project due to dispute over the
settlement of accounts with MLF and invoked the Arbitration Clause in its MoU ( Exhibit-2)
dated 22.08.2012,

and duly served a notice on MLF Ltd. to initiate the arbitration

proceedings.MLF Ltd. did not respond to the Notice served by PLEL. PLEL therefore proceeded
with a Section 11 application and Section 9 application before the Allahabad High Court. The
Honble High Court passed a Section 9 order against MLF Ltd stating that:
MLF Ltd. is restrained from receiving any money in respect of sale of any apartments, villas,
commercial space etc and handing over possession of any unit in the Project.

As a result of this order passed by the Allahabad HC, several allottees including Jack Daniels
could not be handed over the possession of their residential flats that they had booked in the
Project. However, on 10/01/2015, MLF appealed to the Supreme Court under Article 136 of the
Constitution of India. The appeal bearing SLP No. 1110/2015 is listed for hearing in the second
week of February, 2015. Meanwhile, the buyers of the residential flats including Jack Daniels,
aggrieved by the order passed by the Allahabad HC filed an intervention application in Civil
Appeal No. 11/2015 for vacating the order passed by the Allahabad High Court. Both the appeals
are listed for hearing in second week of February.
The Honble Supreme Court has framed the following issues:
1. Whether the SLP No. 1110/2015 is maintainable or not.
2. Whether the petition filed under Section 11 and Section 9 of the Arbitration and
Conciliation Act, 1996 before the Allahabad HC was maintainable or not? Did the
Honble High Court of Allahabad err in passing the order based on the terms of a MoU.
3. Whether MLF Ltd. is guilty for abuse of its dominant position under the Competition
Act, 2002.
4. Whether the penalty imposed by COMPAT is in accordance with the provisions of
Competition Act, 2002.

EXHIBIT 1

Clause 2: That the Allottee hereby agrees that he shall pay the price of the said Flat/villa and
other charges calculated on the basis of super area, which is understood to include pro-rata share
of the common areas as defined in the U. P. Apartment Act, 2010.
Clause 3: Nothing herein shall be construed to provide that the Allottee with any right, whether
before or after taking possession of the Said Premises or at any time thereafter, to prevent DLF
from:
(iii) amending/ altering the Site Plans enclosed herein.
Clause 4: That it is further understood and agreed by the Allottee that the area of the said
Flat/villa given in this Agreement is subject to change as per direction of the Sanctioning
Authority or Architect or Structural Engineers of the Developer which may result in change
(decrease/increase) in the area of the said Flat/villa, change in its dimensions, size, number, etc.
In case of variation in the area due to such reasons to the extent of 1%, there shall be no
adjustment in the price of the flat/villa shall be claimed by Allottee. However in case the
variation in the flat/villa area is more than 10%, the Allottee agrees to pay for the total
increased area at the booking rate. In case of decrease of the allotted area of the said Flat/villa,
beyond the permissible variation, the amount received in excess over and above the total cost of
the said Flat/villa based on the changed area, shall be refunded/adjusted (as the case may be) by
the Developer to the Allottee without any interest.
Clause 5: For the sake of clarity it is stated that nothing herein shall be construed to give the
Applicant /Allottee any right to raise any claim against the Company/JIL on account of any
Alterations (as defined herein), if any.

Exhibit-2
Clause 15:
All or any dispute arising out of or touching upon any term(s) of this Agreement including the
interpretation and validity of the terms thereof and the respective rights and obligations of the
Parties shall be settled amicably by mutual discussion failing which the same shall be settled
through Arbitration. The arbitration proceedings shall be governed by the Arbitration &
Conciliation Act, 1996 and/or statutory amendments/ modifications thereof for the time being in
force. The arbitration proceedings shall be held at an appropriate location in Noida / UP. The
sole Arbitrator shall be appointed by the Developer, whose decision shall be final & binding on
both parties. The Allottee(s) hereby confirms that the Allottee(s) shall have no objection to this
appointment by the Developer even if the person so appointed as the arbitrator is an employee or
advocate of the Developer or otherwise is connected to the Developer and the Allottee(s)
confirms that notwithstanding such relationship/ connection, the Allottee(s) shall have no doubts
as to the independence or impartiality of the sole arbitrator, appointed by the Developer. It is
understood that no other person or authority shall have the power to appoint the arbitrator. The
Courts at Gautam Budh Nagar and the High Court of Judicature at Allahabad alone and the alone
shall have the jurisdiction.

This problem statement has been drafted by Kritika Khanijo and Abhinandan Banerjee (20092014 batch). Any attempts by any participant(s) to contact the framers regarding this problem
will lead to the concerned participant(s)s disqualification from the Competition. All queries
must be directed to the Moot Court Committee.