CCI Closes Case Against Haryana's Urban Planning Authorities, Citing Immunity of Statutory Functions from Competition Act Scrutiny

Overview of the Case

The Competition Commission of India (CCI) has dismissed allegations of abuse of dominant position against the Department of Town and Country Planning (DTCP), Government of Haryana, and Haryana Shehri Vikas Pradhikaran (HSVP) in two clubbed cases (No. 14 and 16 of 2025). Filed by ILD Housing Projects Private Limited (ILD) and the Confederation of Real Estate Developers’ Association of India-NCR (CREDAI), the complaints stemmed from concerns over the levy of External Development Charges (EDC) and Infrastructure Development Charges (IDC) under the Haryana Development and Regulation of Urban Areas Act, 1975 (HDRUA Act). The informants accused the authorities of imposing one-sided obligations on developers without timely execution of corresponding infrastructure works, alleging violations of Section 4 of the Competition Act, 2002.

The cases were directed for urgent consideration by the Delhi High Court in its order dated 07.04.2025, following writ petitions (W.P.(C) 3705/2025 and W.P.(C) 10948/2024), which treated the petitions as fresh information under Section 19(1)(a) of the Act. The CCI bench, comprising Chairperson Ms. Ravneet Kaur, along with Members Mr. Anil Agrawal, Ms. Sweta Kakkad, and Mr. Deepak Anurag, issued the order under Section 26(2) on the basis of the record, without directing further investigation.

Background and Key Allegations

ILD, a Haryana-based real estate developer involved in projects like ILD Trade Centre and ILD Grand, and CREDAI, representing over 11,940 developers across 23 states, highlighted issues with the licensing framework for urban development in Haryana. Under the HDRUA Act and related rules, developers must obtain Letters of Intent (LOI), execute Bilateral Agreements, and secure licences from DTCP after fulfilling conditions such as paying conversion charges, EDC, and IDC, and providing bank guarantees.

The core grievances included: - Levy of EDC and IDC without corresponding infrastructure development, such as roads, water supply, and sewerage, leading to project delays and financial burden on developers and homebuyers. - Unilateral revision of charges post-agreement, imposition of 18% interest on delays, and clauses barring developers from claiming damages for the authorities' delays. - Specific references to templates like the Sohna LOI, Sohna Agreement, and Sohna Licence for projects under the Sohna Master Plan 2031, which allegedly imposed onerous, non-negotiable terms.

The informants delineated the relevant market as "development of infrastructure and real estate in Haryana," positioning DTCP and HSVP as dominant due to their exclusive statutory authority to issue licences and execute external works.

This marked the revival of similar issues from Case No. 40 of 2017, where the CCI had ordered an investigation, noting prima facie one-sided terms, but the case was withdrawn in 2022 amid ongoing litigation. Subsequent actions, including HSVP's withdrawal of a 2019 office order implementing CCI's interim relief, prompted the fresh filings.

Arguments Presented

Informants' Position

ILD and CREDAI argued that DTCP and HSVP, as "enterprises" under Section 2(h) of the Competition Act, abused their dominance through unfair practices under Section 4(2)(a)(i) and (d). They cited clauses in the LOI, Agreement, and Licence—such as obligations to pay enhanced EDC "as and when demanded," interest without statutory backing, and no recourse for delays—as discriminatory and prejudicial. The informants sought restraints on invoking bank guarantees, renegotiation of agreements, refund of excess interest, and penalties, emphasizing the impact on real estate consumers due to stalled projects.

They relied on the Director General's (DG) 2018 investigation report from the prior case, which found dominance in the market for licensing and infrastructure development services, and contravention via non-compensable delays and misuse of IDC funds.

Opposite Parties' Implicit Defense and Judicial Context

While the order does not detail responses from DTCP and HSVP (as the case was closed at the prima facie stage), prior litigation informed the analysis. The Delhi High Court directed consideration of Supreme Court orders, including the dismissal (as withdrawn) of appeals against a 2015 Punjab & Haryana High Court judgment in M/s VPN Buildtech Pvt Ltd. vs State of Haryana (CWP No. 9558 of 2015). That judgment upheld EDC liability independent of work completion, affirmed interest provisions as contractual, and clarified developers' remedies for non-execution via separate proceedings.

Precedents and Principles Applied

The CCI drew on key precedents to delineate the scope of its jurisdiction: - ICAI vs CCI (Delhi High Court, 02.06.2023, W.P.(C) 2815/2014): Held that regulatory decisions by statutory bodies are not reviewable under the Competition Act, as they do not operate in a commercial market. The court emphasized that CCI's role is market regulation, not addressing arbitrary statutory actions, and rejected outsourcing mandates for regulatory functions. - CCI's own order in Belaire Owners’ Association vs DLF Limited (Case No. 19 of 2010, 12.08.2011): Excluded government agencies like HSVP and DTCP from Section 4 scrutiny, as their approval-granting roles are non-commercial.

The Commission distinguished statutory obligations from economic activities, noting that licensing under the HDRUA Act (preamble: preventing haphazard urbanization) and rules (e.g., Rule 11 mandating fixed-form agreements) are regulatory, not market-driven. It rejected re-agitating settled issues like EDC finality from the 2015 High Court ruling, invoking judicial propriety.

Pivotal excerpt from the order: "Issue of Licences, in itself, by a government department under the mandate of legislation cannot be considered as a commercial activity... Thus, in the present matter, there is no market as such for buying and selling of Licences to Developers."

Court's Final Decision and Implications

Under Section 26(2), the CCI found no prima facie contravention of Section 4, closing the cases without market delineation or investigation. It held DTCP's functions—regulating colonies, declaring controlled areas, and issuing licences—as purely statutory and immune from Competition Act review. HSVP's role as an executing agency was secondary and non-dominant. Interim applications (IA Nos. 298 and 409 of 2025) for urgent relief, echoing the 2018 interim order restraining coercive EDC recovery, were also disposed of.

This decision reinforces boundaries on CCI's jurisdiction, shielding government regulatory bodies from antitrust challenges in statutory domains. For developers, it underscores pursuing remedies under planning laws or writs rather than competition forums, potentially prolonging disputes over infrastructure delays in Haryana's real estate sector. While affirming EDC's legality, it leaves open challenges to specific revisions or non-execution via other avenues, as noted in the 2015 precedent.

The order, issued post a 16.07.2025 meeting, communicates closure to parties, signaling finality unless appealed.