Builder Forcing a Single Vendor? When RERA Can Refer a Practice to the Competition Commission
A Bengaluru buyer's guide to RERA Section 38(3): when the authority can refer a builder's practice to the Competition Commission of India, the two tests in the Act, the other tools that may be more direct, and how to handle a mandatory tie-in before booking.
A Bengaluru buyer is handed a cost sheet with an extra page. Every buyer in the project, it says, must take the builder's own interior package, sign up with a single named service provider, and route certain payments through a preferred channel. The sales team calls it standard. The buyer wonders whether a builder can simply make everyone use its chosen suppliers. RERA deals with most buyer disputes itself, but it also has a provision, easy to overlook, for practices that look like they restrict competition: the regulator can send the issue to the Competition Commission of India.
The short answer. Section 38(3) of the RERA Act says that where an issue is raised relating to an agreement, action, omission, practice or procedure that has an appreciable prevention, restriction or distortion of competition in connection with the development of a real estate project, or has the effect of market power or a monopoly situation being abused to affect the interests of allottees adversely, the authority may, on its own motion, refer the issue to the Competition Commission of India. The Ministry of Housing and Urban Affairs' FAQs describe the same power. The trade-off: the reference route exists for serious competition harm, not every inconvenient clause, so for most buyers the Act's own disclosure, consent and compensation rules are the first tools to reach for.
What does Section 38(3) say?
It gives the regulator a referral power. Section 38(3) of the Real Estate (Regulation and Development) Act, 2016 says that where an issue is raised relating to agreement, action, omission, practice or procedure that has an appreciable prevention, restriction or distortion of competition in connection with the development of a real estate project, or has the effect of market power of monopoly situation being abused for affecting interest of allottees adversely, "then the Authority, may suo motu, make reference in respect of such issue to the Competition Commission of India."
The Ministry of Housing and Urban Affairs' FAQs on RERA, dated July 2025, summarise it in plain terms: if an issue arises related to an agreement, action or practice that significantly restricts competition or abuses a monopoly position in a way that harms the interests of allottees, the regulatory authority can, suo motu, refer the matter to the Competition Commission of India.
What kinds of practice does the provision describe?
Two tests, in the Act's own words. The first is an agreement, action, omission, practice or procedure that has "an appreciable prevention, restriction or distortion of competition in connection with the development of a real estate project". The second is one that "has effect of market power of monopoly situation being abused for affecting interest of allottees adversely".
Whether any particular practice meets either test is for the authority and, on a reference, the Commission to decide. A buyer's job is narrower: to describe the practice clearly and show how it affects allottees. A requirement that every buyer use one named supplier at a price the buyer cannot compare, for instance, is the kind of practice worth describing in those terms, and leaving the legal characterisation to the regulator.
What else does the regulator's toolkit include?
The power sits in a section about the authority's general powers. Section 38(1) says the authority shall have powers to impose penalty or interest in regard to any contravention of obligations cast upon the promoters, the allottees and the real estate agents, under the Act or the rules and regulations. Section 38(2) says the authority shall be guided by the principles of natural justice and, subject to the Act and rules, shall have powers to regulate its own procedure.
Other provisions may be more direct for many disputes. Section 11(4)(d) says the promoter is responsible for providing and maintaining essential services, on reasonable charges, till the association of allottees takes over maintenance. Section 14(2) bars changes to the disclosed plans, specifications and the nature of fixtures, fittings and amenities of your apartment without your previous consent, apart from permitted minor changes. Section 7(1) lets the authority revoke a registration if the promoter is involved in unfair practices, and its explanation includes making false or misleading representations concerning services.
How does a buyer bring such an issue to RERA?
Through a complaint. Section 31(1) says any aggrieved person may file a complaint with the authority or the adjudicating officer for any violation or contravention of the Act, the rules or the regulations against any promoter, allottee or real estate agent, and the explanation includes an association of allottees within "person".
Section 38(3) says the authority may make the reference "suo motu", on its own motion. So the decision to refer is the authority's, not the complainant's. What a complaint can do is put the facts in front of the authority: what the practice is, who it applies to, and how it affects allottees. Our guide to reading a builder's cost sheet helps separate optional items from charges presented as mandatory.
The authority can also dig into the facts. Section 35(1) says that where the authority considers it expedient, on a complaint or on its own motion, it may by order in writing, recording reasons, call upon any promoter, allottee or real estate agent to furnish in writing such information or explanation relating to its affairs as it may require, and appoint one or more persons to make an inquiry into those affairs. Section 35(2) gives it the same powers as a civil court for that purpose under the Code of Civil Procedure on specified matters. Section 37 adds that the authority may issue directions to promoters, allottees or real estate agents, and those directions are binding on all concerned.
What should you do with a mandatory tie-in before booking?
Get it in writing and compare it with the agreement. Section 13(2) says the agreement for sale must specify the particulars of development, specifications, internal and external development works, payment dates and manner, the possession date and the default interest rates. A tie-in that appears only on a separate sheet, and not in the agreement, is worth asking about directly.
The ten per cent rule gives you time to ask. Section 13(1) says a promoter shall not accept more than ten per cent of the cost of the apartment as an advance or application fee without first entering into a written agreement for sale and registering it. That means the detailed terms, including any conditions on suppliers or services, should be in front of you before the larger payments start. Our explainer on builder charges beyond the base price lists other lines to question.
What you are shown at booking matters too. Section 11(3) says that at the time of booking and issue of the allotment letter, the promoter shall make available the sanctioned plans, layout plans and specifications approved by the competent authority, and the stage-wise time schedule of completion of the project, including provisions for civic infrastructure like water, sanitation and electricity. Compare any tie-in against what those documents say the project will provide.
Your own obligations are also set by the agreement. Section 19(6) says an allottee who has entered into an agreement for sale shall make the payments specified in it and pay their share of registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent and other charges. That is why the wording of any service condition in the agreement deserves the same care as the price.
Control shifts at handover. Section 11(4)(d) ties the promoter's duty to provide essential services to the period "till the taking over of the maintenance of the project by the association of the allottees", and Section 11(4)(e) requires the promoter to enable the formation of that association under the applicable laws. Once the association takes over maintenance, the owners are the ones running it.
How do the routes for a problem practice compare?
This table sets out where different concerns fit under the Act.
| Concern | Provision | What it does |
|---|---|---|
| Practice that appreciably restricts competition or abuses a monopoly position | Section 38(3) | Authority may suo motu refer it to the Competition Commission of India |
| Contravention of obligations by a promoter | Section 38(1) | Authority may impose penalty or interest |
| Essential services before handover | Section 11(4)(d) | Promoter must provide them on reasonable charges |
| Changes to disclosed fixtures, fittings and amenities | Section 14(2) | Need your previous consent, apart from minor changes |
| Unfair or misleading practice | Section 7(1) | Ground for revoking registration |
What should you check if a builder insists on a tie-in?
Use this list before you sign.
- Ask for the tie-in condition in writing, on the builder's letterhead.
- Check whether the same condition appears in the draft agreement for sale.
- Ask whether the condition applies to every buyer in the project.
- Ask for the price and scope of the tied service in writing.
- Check whether it changes fixtures, fittings or amenities already disclosed.
- Keep the cost sheet and brochure that described the condition.
- Raise it with other buyers or the association if it affects everyone.
For any registered project, such as the one on our page for Sowparnika Life on the Green in Sarjapura, the K-RERA registration number is what you quote when you raise a concern with the regulator.
Frequently asked questions
Can RERA refer a builder's practice to the Competition Commission?
Yes. Section 38(3) of the RERA Act says that where an issue relates to a practice with an appreciable prevention, restriction or distortion of competition in developing a real estate project, or an abuse of market power or monopoly affecting allottees adversely, the authority may suo motu refer it to the Competition Commission of India.
Can I ask RERA to refer my builder to the Competition Commission?
You can raise the facts, but the decision is the authority's. Section 38(3) says the authority may make the reference suo motu, on its own motion. Section 31(1) lets any aggrieved person, including an association of allottees, file a complaint about violations of the Act, which puts the practice before the authority.
What test does RERA use before referring a practice to the Commission?
Section 38(3) of the RERA Act describes two situations: an agreement, action, omission, practice or procedure that has an appreciable prevention, restriction or distortion of competition in connection with developing a project, or one that has the effect of market power or a monopoly situation being abused to affect allottees adversely.
Can a builder charge any amount for maintenance before handover?
Section 11(4)(d) of the RERA Act says the promoter is responsible for providing and maintaining essential services on reasonable charges until the association of allottees takes over maintenance of the project. If charges look unreasonable, raise it in writing and, if needed, through a complaint under Section 31.
Last updated 2026-10-21. PropNewz Team.
Contact Us
Stay updated with latest news and new projects!
Tell us what you want, We'll do the rest.
Share your budget and where you're looking. An advisor who has actually walked the sites will shortlist a handful of RERA-registered projects and tell you which to skip.