Noida Land Scam, a throwback - Part III

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Noida Land Scam, a throwback - Part III

Saturday, 30 April 2022 | R B Sinha

Noida Land Scam,  a throwback - Part III

The Authority kept on relaxing the terms of allotments of plots on the pretext of severe economic crisis but kept on increasing the size of plots from 50,000 sqm to 13,00,000 sqm

The C&AG has found that in 12 cases the allotted plots had been sub-divided into 32 sub-plots. Of these sub-plots, in only eight cases the value of plot was commensurate to the net worth of the sub-lessee and in 24 cases the value of the sub-divided plot exceeded the net worth of the sub-lessee. In these 24 cases the sub-lessee obtained plots ranging from 1.16 to 14 times of their net worth. In eight of these cases, the net worth of the sub-lessee was less than Rupees one crore and yet they were permitted sub-lease of plots worth Rs 501.62 crore in aggregate. It is thus, evident that NOIDA’s decision to allow sub-division without any regulatory mechanism in place served effectively as a backdoor entry for transfer of valuable property into the hands of ineligible builders.

The payment schedule of plots was not kept in sync with the completion schedule of theproject. The decision of Noida Authority to increase the repayment schedule for the plots to ten years from the date of allotment was also not in sync with the tenure of completion of the projects by the promoters. Thus, the promoters obtained a significant cost (75-80 percent) of the flats including the plot cost from the homebuyers within 2-3 years of launch of the projects while they were required to pay land cost to the Authority over 10 years. Resultantly, they diverted the funds elsewhere, leading to consequential delays in completion of the projects. The Builders in turn garnered more allotments as they enjoyed greater leverage to obtain bigger plots and to take loans from banks on the back of deposit of smaller amount of down-payment.

The Authority also did not follow up the relaxations by having close monitoring of the progress of the projects on the allotted plots or payment of premium/cost of the plots by the allottees. Instead, the Authority kept on granting further reschedulements to the developers, which made matters worse as there was no incentive for timely payment of instalments, causing havoc among the home-buyers.

Thus, these rebates and relaxations didn’t help homebuyers finally as small firms like Logix group, 3C group, Supertech, etc., took advantage of the relaxations and garnered multiple/bigger plots and sub-divided them through their subsidiaries and sold the plots on premium to the companies which had not participated in the bidding and didn’t meet the even the relaxed technical eligibility criterion. There was therefore complete collapse of the governance in the Authority/ Government as on one hand, the Authority kept on relaxing the terms and condition of allotment of plots on the pretext of severe economic crisis but on the other, they kept on increasing the size of plots from 50,000 sqm to 13,00,000 sqm and created a new class of neo-Zamindars who in turn divided and sub-divided those plots through their newly created subsidiaries and sold/transferred them to third parties.

Undue Benefit to Builders by allowing exit of key member of consortium: In utter disregard of the terms and conditions, NOIDA Authority allowed exit of the key consortium members having substantial net worth which was considered for allotment of the plots/projects in 11 cases (five cases within one year of allotment), leaving the land/project to companies who by themselves were incapable of qualifying for allotment. In five cases viz, Prateek Realtors, MegitechInfradevelopers, Perfect Propbuild, Panchsheel Exotica and AIMS Max Gardenia, percentage of networth of exiting consortium member was more than 80 percent of the consortium whereas in the case of Logix Group (Two Cases), MagitechInfradevelopers, Sunshine Infrawell and Imperial Housing, key consortium members exited within a year of allotment of plots. 

Thus, builders came together for a transitory period and helped otherwise ineligible entities to qualify for allotment and after the allotment was in place, exited the consortium, which indicates a total lack of regulatory control by Authority. This resulted in huge distress to home buyers as 10,769 flats out of 27,370 flats sanctioned in six of the above projects have not been completed till 31 March 2020, besides accumulation of dues of thousands of crores of rupees amongst the allottees of the plots. The elusive sports city of Noida: 826 Acres of the prime land grabbed by builder mafia without constructing sports Infrastructure. With a vision to hold marquee sports events like Commonwealth games, Asiad games, etc., on the strength of international level sports infrastructure in Noida, the Authority allotted 4 Sports City plots admeasuring 33,44,193 sqm (826.34 acre) during May 2011-July 2015 at the lease premium of Rs 5597.92 crores to consortiums of Logix group (Plot No : SC-01/150 in May 2011), 3C group (SC-01/78&79 in May 2011 and SC -02/150 in September 2014) and ATS Home Pvt Ltd promoted by  Geetamber Anand and Poonam  Anand (SC-01/152 in July 2015). In each plot, 70 per cent (578 acres in all) land was reserved for development of integrated sports infrastructure including golf course (nine holes) in Plot numbers - SC-01/150, SC-01/78&79 and SC -02/150, an international level cricket stadium along with sitting arrangement of 50,000 spectators, parking facilities, etc., in Plot no SC-01/152, tennis courts, swimming pools and other sports facilities. The terms and conditions of the allotment prescribed that sports infrastructure would be completed on priority within three/five years and residential and commercial projects in the remaining 30% plot would be completed in phases in seven years.

Under the first sports city scheme launched in December 2010, the Authority envisaged the development of Sport City in 150 acres in sectors 101 & 104 through construction of integrated sport infrastructure in 105 acres (70% of the land) at the cost of Rs 410 cores by the allottee. The Authority however didn’t apply its mind in the subsequent schemes and continued to keep the cost of sport infrastructure at Rs 410 crores only though the plots of sport cities increased to 174 acres in the Plot no SC-01/78-79, 224 acres in the Plot no SC-01/150 and 329 acres in plot no SC-01/152. Keeping in view, the bigger size of the plot leading to increased area for development of sport infrastructure and higher cost, the cost of development of sport infrastructure should have been increased to Rs 475 crore in Plot no-SC-01/78-79, Rs 612 crore in Plot no-SC-01/150 and Rs 1475 crores in Plot no-SC-02/150.

In the Plot SC-01/152 for development of International level Cricket Stadium cum Sport City in NOIDA, the cost of construction of Cricket Stadium cum Sport City was not provided in the brochure altogether, though based on prescribed parameters in previous schemes, the cost of sport infrastructure ought to have been Rs 620 crores on 70 acres of plot. Thus there was total collapse of governance system at every level in the Top- Heavy Authority where nobody applied his/her mind while approving the brochure for the 4 schemes of Sport City and didn’t update the cost of sport Infrastructure in Annexure 2 of the brochures, commensurate with increase in size of the plot, higher cost of construction etc and thereby abdicated their responsibility giving undue benefits of Rs 1732 crore to three allottees at the cost of public exchequer. (To be continued)

(The writer is a retired DG of the C&AG of India and a member of RERA, Bihar between April 2018-December, 2021. The views expressed are personal.)

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