Noida Land Scam,a throwback — Part I

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Noida Land Scam,a throwback — Part I

Thursday, 28 April 2022 | R B Sinha

Noida Land Scam,a throwback — Part I

C&AG noted rigging in bids by several developers/builders in collusion with officials, irregularities in application processing  and  allotment to ineligible parties

In the first Performance Audit Report on the functioning of Noida Authority, the Comptroller and Auditor General (C&AG) of India has highlighted the dismal performance of the Authority in the Land Acquisition and Allotment of Properties in NOIDA city submitted to the Government of UP in November 2021.This is the first Audit report of the C&AG since the jurisdiction of audit of Noida and other development authorities was entrusted to the C&AG in July 2017.

In his comprehensive report, the C&AG has invited the attention of the stake-holders to the wide-spread corruption, undue favoritism to private firms, arbitrariness, collusion between officials and builders in the functioning of Authority in allotment of plots during the period 2005-2018 leading to loss of tens of thousands of crores of rupees to the Authority/Government, besides causing untold sufferings, distress and despair among tens of thousands of families of the Homebuyers. The C&AG has pointed out rigging in bids by several developers/builders in collusion with the officials, major irregularities in processing of applications & allotment, allotment to ineligible parties, leveraging net-worth of an entity for multiple allotments, illegal sub-division of plots/transfer of ownership of allottees without ensuring payment of outstanding dues /timely completion of projects, etc.

The period of audit covered 2005-06 to 2017-18 i.e, the regime of four chief Ministers- Mulayam Singh Yadav (2005-2007), Mayawati (2007-2012), Akhilesh Yadav (2012-2017) and Yogi Aditya Nath (2017-2018). There were 24 CEOs of the Noida Authority during this period. Of them, three CEOs - Rama Raman, Mohinder Singh and Sanjeev Sharan had occupied the position of CEO of Noida Authority for more than two years each. 

During the period 2005-06 to 2017-18, NOIDA Authority allotted 2,761 properties measuring 188.34 lakh sqm under Group Housing (GH)- 37.72 per cent, Commercial-8.94 per cent, Sports City-17.07 per cent, Institutional-8.14 per cent, Farm House (FH)- 9.75 per cent and Industrial-18.38 per cent categories at the premium (cost) of Rs 39,443.41 crore excluding industrial plots cost. The C&AG has stated that during the audit period, the Authority acquired 80 per cent of land under the Land Acquisition Act, 1894 applicable upto December 2013, providing a standard justification of industrial development for invoking the urgency clause, which enabled the Collector to dispense with the rights of landowners in respect of hearing on objections to proposed land acquisition.

The Authority allotted the plots for GH, Commercial and Sports city on competitive bid basis (63.73% of allotments) to the highest bidders against fixed Reserve Price (RP) while Institutional, FH and Industrial plots were allotted at the fixed administrative prices based on the interviews conducted by Plot Allotment Committee (PAC). Further, RP of plots for Sports City and fixed price for FH, Institutional and Industrial purposes was kept significantly lower than the RPs kept for GH or Commercial plots, i.e., after excluding many types of costs which the Authority themselves incur. Thus, the Noida Authority in effect allotted only 46.66% plots through competitive bidding based on market rates whereas 53.34 % plots were allocated on subsidized or administrative rates to private companies/firms.

NOIDA Authority allotted 67 GH plots  measuring 71.03 lakh sqm primarily during 2005-2018 at the cost of Rs 14,050.73 crore, which were sub-divided into 113 plots by the allottees with the approval of the Authority. Of these, 71 projects (63 %) were either incomplete or partially completed even after ten years of allotment as on 31.3.2020. The outstanding dues of developers and builders have increased to Rs 18,633.21 crore as of 31st March 2020, including Rs 7281.89 crores of Unitech Ltd, Rs 2276.67 crore from Amrapali group, etc., after ten years of allotment of plots.

During the audit period, NOIDA Authority made 320 allotments in the commercial properties category admeasuring 48,98,440.47 sqm at the cost of Rs 25,264 crore through 41 closed ended schemes. It includes allotment of 4 plots for development of sport cities in prime sectors of 78, 79, 150 & 152 for 33,44,193 sqm (826.34 acre) at the lease premium of Rs 5597.92 crores.

The C&AG has reported that about 80 per cent of total allotments in commercial category plots measuring 39,10,376 sqm were made to only three groups viz. Wave group of companies, 3C group of companies and Logix Group of companies during 2008-2015.

Wave (Late Ponty Chadha) group of companies -Wave Infratech Ltd and Flora & Fauna Land Development Pvt Ltd were allotted prime commercial properties/builders plots of 6,63,104 sqm (42 percent Builder plots of all commercial allotments) at the cost of Rs 6570 crores in heart of Noida (Sector 25A/32 sectors) in 2010-2011. However, due to change in Government in March 2012 and death of Ponty Chadha in November 2012, most of these projects were not completed due to one or the other reasons. and they have either surrendered the land (454131.63 sqm) in December 2016 or the Authority has cancelled (108421.13 sqm) the allotment (February 2021) due to non-payment of the dues/installments. Wave Group of Companies had the dues of Rs 4425 crore as of 31st March 2020.

Logix group of companies promoted by Shakti Nath and his family members under the holding company of Logix Soft Tel Pvt Ltd (Turnover-12.25 crores in 2009-2010) were allotted 2 GH plots, 3 Commercial builders plots and a Sport city plot (224 acres in sector 150) at the cost Rs 3246.50 crore during 2010-2011. Logix group had the outstanding dues of Rs 5840 crores as on 31st March 2020.

Three C (3C) group of companies promoted by Vidur Bharadwaj, Nirmal Singh and Surpreet Singh Suri, were allotted 3 GH plots, 4 Commercial builders plots and 2 Sport city plots (502 acres in Sectors 78, 79 & 150) at the cost Rs 6384.69 crore during 2010-2014. 

Forty-nine out of 67 allotments (73 per cent) of GH plots were made during the period 2008-09 to 2010-11. In 42 out of 49 allotments, only two bids were received, of which in 15 pairs of applicants (for 15 plots valuing Rs 2611.36 crore), the participating bidders were the same or of the same group. In nine of these cases, one allotment was made to each bidder while in the remaining cases the allotments were made to one bidder. The C&AG has found that the bid prices in all cases were very close to the RP and in 12 cases, the winner had bid less than two percent higher than the RP fixed for the plots. The C&AG stated that collusion between the participating bidders could not be ruled out, more so in those cases where alternate allotments were made to each of the participating bidders. Moreover, these allottees did not pay the premium timely and have the dues of Rs 1625 crores after ten years of allotment.

The C&AG has further suspected Rigging of competition through use of group companies as competitors by Assotech Limited and Supertech Limited, for three plots (GH-93/137 of 51000sqm, GH-04/78 of 61430 sqm and GH-01/74 of 249410 sqm and felt that the sanctity of the tender process was vitiated and compromised in these cases and hence liable to be summarily rejected. (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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