Buchi Ramarao Valury And Covai Property Centre (India) Private Limited (Covai) & Others

Case No. 30 of 2023 Page 1 of 7 COMPETITION COMMISSION OF INDIA Case No. 30 of 2023 In Re: Buchi Ramarao Valury B 609, Urbana Irene, Ozone Urbana Township, Kannamangala, Bengaluru Rural- 562110 Informant And Covai Property Centre (India) Private Limited (Covai) 13/4, Third Floor, Covai Care Tower, Gem Nirmaalayam, V G Rao Nagar, Coimbatore 641006. Opposite Party No.1 Covai Senior Citizen Services Pvt. Ltd. 13/4, Third Floor, Covai Care Tower, Gem Nirmaalayam, V G Rao Nagar, Coimbatore 641006. Opposite Party No.2 Ozone Urbana Infra Developers Private Ltd. 38, Ulsoor Road, Yellapa Garden, Yellapa Chetty Layout, Sivanchetti Gardens, Bengaluru, Karnataka-560042. Opposite Party No.3 CORAM Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Order under Section 26(2) of the Competition Act, 2002 1. The present Information has been filed by Mr. Buchi Ramarao Valury (“Informant”) alleging contravention of provisions of Section 3 and 4 of the Competition Act, 2002 (“Act”) by Covai Property Centre (India) Private Limited (Covai) (“Opposite Party No. Case No. 30 of 2023 Page 2 of 7 1”/ “OP-1”/ “Covai Centre”), Covai Senior Citizen Services Pvt. Ltd. (“Opposite Party No.2”/ “OP-2”/ “Covai Services”) and Ozone Urbana Infra Developers Private Limited (“Opposite Party No.3”/ “OP-3”/ “Ozone Urbana Developers”) (collectively as “Opposite Parties”). 2. The Informant is a resident of “Urbana Irene”, Ozone Urbana Township, Kannamangala, Bengaluru Rural. OP-1 is private limited company, incorporated under the Companies Act, 1956 and is based in Coimbatore. It provides consultancy services and care in terms of designing, building and operating retirement communities. OP-2 is a subsidiary/assignee of OP-1 and is the authorized service provider for Project “Urbana Irene”. OP-3 is a company incorporated under the Companies Act, 1956, and is a developer of “Urbana Irene”, Ozone Urbana Township, located at NH 44, Kannamangala, Karnataka. 3. As stated, the Informant purchased a two-bedroom apartment bearing unit no. 609, sixth floor, in the “B” Block of the multi-block residential complex known as “Urbana Irene” and signed an agreement for sale, which was executed on 10.07.2018 with OP-3 as promoter and OP-1 as confirming party. As per the Information, by virtue of the alleged tie-in arrangement between OP-1 and OP-3, the Informant has been forced to accept catering and housekeeping services provided by OP-2, with which the Informant has signed a service agreement on the same day of signing of agreement for sale. 4. As per the Informant, by virtue of clause “I” of the agreement for sale through which OP-1 has been made a confirming party towards providing requisite services, the Informant had no choice in selecting their service provider. It is stated that clause “N” of the agreement for sale mandated that the Informant will enter into a service agreement with the service provider and abide by the terms and conditions imposed by it. It is also stated that by virtue of Clause 12 of the sales agreement, the Informant is bound for making timely payment of total maintenance and service charges, as determined and billed by OP-1 or it’s nominees/assignees. 5. As per the Information, the unilateral changes in allotment of housekeeping staff and increase in Monthly Maintenance Charges (“MMC”) are the result of abuse of dominant position. It has been alleged that since OP-2 is the only service provider, it simply makes Case No. 30 of 2023 Page 3 of 7 a statement of increase in costs – without validation – and then uses it as a reason for increasing MMC and decreasing number of housekeeping staff. Thus, the Informant is left with no choice in the matter. 6. As per the Informant, because of the alleged tie-in arrangement between OP-1 and OP-3, the Informant is forced into signing a separate service agreement with OP-1 (stated to be the confirming party in the sale agreement) and its nominee, OP-2. The service agreement, signed between the Informant and OP-2 has made the Informant pay for the amenities as provided in Annexure I of the service agreement. It is stated that no account is given on the funds spent, the balance of unspent/ parked amount and the interest thereof. 7. It is stated that though the service agreement has a provision for participative management through Residents Committee; however, no such practices are followed and OP-2 simply presents costs without corresponding revenues and raises the monthly maintenance and catering costs, without providing any data and opportunity for discussion. 8. The Informant claims that the OP-1 is misusing its dominant position and increasing the service charges on its own whims. In support of the above claim, bills for MMC have been provided for the months of February, April and June of 2023, which show that MMC charges increased from Rs.10,892/- in February to Rs.11,294/- in April and then to Rs.11,343.28/- in June. It is stated that there is a price increase every alternate month approximately @1.0% per month, which is way beyond the price index. It is stated that this can lead to unprecedented increase of bills which the senior citizens cannot afford. 9. It is stated that the residents are at the mercy of OP-2 who has occupied the first floor of A and B Block at the apartment complex in the garb of providing much needed services to the senior citizens. It is also stated that OP-1 cannot be a perpetual service provider by virtue of their occupying the first-floor of the apartment complex. The Residents’ Committee or the Association as the case may be, ought to be the final authority to decide on the contract terms, including amending, adding, removing the terms and conditions as well as the power to annul a contract and issue a fresh contract to the present service provider or appoint a new one. Case No. 30 of 2023 Page 4 of 7 10. In view of the above, the Informant has alleged contravention of Section 4 and Section 3(4) of the Act and has sought the following reliefs: i. The reference to Covai Centre as a confirming party, which is in violation of the Act (tie-in arrangement) be removed from the expected Sale Deed whenever it is finalised. ii. The first floor of the A and B blocks are common amenities areas and shall be the property of the Association and should not be sold to any service provider/ confirming party. iii. All the terms and conditions and rates of the service at present and in future are to be mutually decided by the service provider and residents’ committee with transparent display of costs and revenues. iv. The one-sided service agreement between the residents and the service provider be annulled and redrawn. 11. The Informant has also sought interim relief under Section 33 of the Act by way of formation of a residents’ committee to supervise and control all aspects of the services i.e., extent, type and rates. 12. The Commission considered the matter in its ordinary meeting held on 07.02.2024 and decided to pass an appropriate order in due course. 13. The Commission has perused the Information as well as materials available in public domain and observes that the instant matter pertains to sale of residential unit/ apartment in a project developed by Ozone Urbana Developers. As per clauses of the sale and service agreements, Ozone Urbana Developers is the absolute owner of Urbana Irene and has engaged Covai Centre for the purposes of inter-alia, design, development, provision of services and care to senior citizens. Further, Covai Services has been authorized to undertake this work. 14. The Commission notes that the Informant is primarily aggrieved with having to accept catering and housekeeping services of Covai Services, by virtue of the conditions