The CCI has dismissed the complaint against Indiabulls Housing Finance Limited, citing a lack of sufficient evidence to prove dominance in the loan against property market.

July 27, 2024

The Competition Commission of India (CCI) bench, consisting of Chairperson Ms. Ravneet Kaur, and Members Ms. Sweta Kakkad, Anil Agrawal, and Mr. Deepak Anurag, has dismissed the complaint against Indiabulls Housing Finance Limited (IHFL) and its former and current officials. The Commission determined that despite IHFL being the third-largest non-bank mortgage lender in India, the market remains highly competitive

due to the presence of various other players, and thus, IHFL does not hold a dominant position.

Background

The complainant alleged that the opposing parties (OPs) used deceptive advertising to suggest they were reputable lenders offering favorable interest rates on loans against property. Based on these claims, the complainant entered into a loan agreement with OP-1 for a floating interest rate loan. The complainant received two loans: the first, approved on March 1, 2013, at an interest rate of 13.25% per annum, with an EMI of ₹3,21,180 for 120 months; the second, approved on June 1, 2013, also at 13.25% per annum, with an EMI of ₹60,316 for 121 months.

Between 2013 and 2023, the complainant received emails from OP-1 indicating an increase in their Floating Reference Rate (LFRR). Despite multiple requests for loan statements to settle accounts, OP-1 did not provide them. After making the final payment on March 3, 2023, the complainant did not receive a no-dues certificate or acknowledgment. On March 25, 2023, the complainant contacted OP-1 via email, only to be informed that additional EMIs were required and threatened with foreclosure of the mortgaged property if payments were not made.

The complainant argued that OP-1’s practices, including high-interest rates and pre-payment penalties, prevented customers from transferring accounts and discouraged competition, which could be deemed an Appreciable Adverse Effect on Competition (AAEC) under Section 19(3) of the Act. Consequently, they claimed these agreements were anti-competitive and void under Sections 3(1) and 3(2) of the Act.

Additionally, the complainant alleged that OP-1, being dominant in the Delhi and NCR regions, exploited its market position to impose unfair interest rates and extend loan terms without consent, resulting in unjust enrichment through Electronic Clearance Service (ECS) payments.

Commission’s Observations

The Commission found that OP-1, while being the third-largest non-bank mortgage lender in India and regulated by the Reserve Bank of India, operates in a competitive market with numerous banks, Non-Bank Financial Companies (NBFCs), and housing finance companies. As a result, there was insufficient evidence to prove that OP-1 holds a dominant position in the loans against property market in India.

The Commission also dismissed the complainant’s claims of aftermarket abuse, stating that the loan services in question did not involve an aftermarket. Furthermore, it concluded that the agreement with an end-consumer did not qualify as an anti-competitive agreement and thus did not violate Section 3 of the Competition Act, 2002.

Posted and reproduced in Public Interest by

Adv. Sulaiman Bhimani Legal Consultant

Expert in RERA & Consumer Matters, Co-operative Scty Matters,

Deem Conveyance, Family Matters, and Property Disputes.

Human and Civil Rights Campaigner

President Citizens Justice Forum https://citizensjusticeforum.in