The previous part of the article can be accessed here Part 1. This is the Part 2
Undue benefit to builders by allowing exit of a key member of the consortium
In utter disregard of the terms and conditions, Noida Authority allowed the 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, Megitech Infradevelopers, Perfect Propbuild, Panchsheel Exotica, and AIMS Max Gardenia, the percentage of the net worth of exiting consortium member was more than 80 percent of the consortium whereas, in the case of Logix group (two cases), Magitech Infradevelopers, Sunshine Infrawell, and Imperial Housing, key consortium members exited within a year of allotment of plots.[1]
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 the 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 the accumulation of dues of thousands of crores of rupees amongst the allottees of the plots.
Elusive sports cities of Noida
826 acres of the prime land grabbed by the builder mafia without constructing sports Infrastructure
With a vision to hold marquee sports events like Commonwealth games, Asian 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 acres) 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 percent (578 acres in all) of land was reserved for the development of integrated sports infrastructure including a golf course (nine holes) in plot nos – SC-01/150, SC-01/78&79, and SC -02/150, an international level cricket stadium along with the 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.
Collapse of governance system at every level
Under the first sports city scheme launched in December 2010, the authority envisaged the development of a sports city on 150 acres in sectors 101 & 104 through the construction of integrated sports infrastructure on 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 sports infrastructure at Rs.410 crores only though the plots of sports 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 the increased area for development of sports infrastructure and higher cost, the cost of development of sports 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.[2]
In the plot SC-01/152 for the development of an international level cricket stadium cum sports city in Noida, the cost of construction of cricket stadium cum sports city was not provided in the brochure altogether, though based on prescribed parameters in previous schemes, the cost of sports infrastructure ought to have been Rs.620 crores on 70 acres of the plot. Thus there was a total collapse of the 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 sports city and didn’t update the cost of sports infrastructure in Annexure 2 of the brochures, commensurate with the increase in the 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. Further, though the authority had committed to monitor the progress of the project in the brochure, none of the envisaged sports infrastructure projects has been completed as yet. Neither has the authority encashed the indemnity bond of the allottees for failure to complete the project within the stipulated time.
In case of allotments in SC 01 in Sectors 78/ 79 (allotted in May 2011), SC 01 in Sector 150 (allotted in May 2011), and SC 02 in Sector 150 (allotted in September 2014), the allottees were required to complete the project in phases within five years from the date of execution of lease deed. In the case of SC-01 in Sector 152 (allotted in July 2015), the allottee was required to complete the construction of the international level cricket stadium in the first phase within three years and the remaining residential and commercial projects within five years from the date of execution of the lease deed.
The C&AG has pointed out that plots for sports cities were allotted without preliminary consultation with national/ international bodies like BCCI, and ICC and without fixing and prescribing the technical specifications, etc, required for different sports infrastructure – a golf course, international level cricket stadium, Tennis center, multi-purpose sports hall for gymnasium, Volleyball, TT, Basket Ball, etc. They also didn’t do any due diligence and analyzed the reasonableness of the rates/ bids quoted by the allottees. It was therefore no wonder that none of the envisioned sports infrastructures have been completed in the last ten years though the construction of sports infrastructure was to be given priority in sports city and completed first and only afterward, other residential and commercial projects were to be taken up. However, the allottees took up the GH projects first and two residential projects have not only been taken up but completed or partially completed.
Though the terms and conditions prescribed in the brochures permitted sub-division of the plots meant for only residential and commercial use (30% of the sport city plots), the authority allowed sub-division of the entire plot (826 acres) of the 4 sport city projects into 81 sub-plots thereby destroying the entire concept of development of integrated sports city. The 578 acres of land earmarked for sports infrastructure in 4 sport cities was too sub-divided into 34 subplots, thereby making the objectives of integrated sports infrastructure like a nine-hole golf course in three sports cities in sectors-78/79 and 150, international cricket stadium in plot SC-02 in sector 150, unachievable. The work on the cricket stadium has not even commenced though it was to be completed by the end of 2018. The authority has not yet encashed the indemnity bond of the allottee.
RERA failed to detect limitations on 70% of sports city plots, endangering the interests of home-buyers
It is also observed that UP RERA has registered residential and commercial projects 2 of the allottees/ sub-allottees without noting the limitations on the use of 70 percent of the plot of land for sports infrastructure as mentioned in the lease agreement executed by the authority. As none of the major sports infrastructures has been undertaken to date and none of the 9-hole golf courses and international level cricket stadium is likely to be completed in near future, the home-buyers of those residential projects being constructed are likely to face issues in getting their flats registered. Incidentally, most directors of all 4 SPCs at the time of allotment have since resigned and left. The decision of the Noida Authority to approve the use of increased FAR of the entire area of the sports city in residential/ commercial projects of allottees/ sub-allottees without ensuring the construction of integrated sports infrastructure in 70% area of each sports city project is injudicious and highly improper. It would affect the future prospects of the home buyers of these residential projects as their flats can not be registered unless envisioned integrated sports infrastructure in 70% area of each sports city project.
Further, the C&AG has determined that Noida Authority had given significant incentives of Rs.8,643.61 crore in terms of reduced pricing of plots and allowance of extra floor area ratio (FAR) and ground coverage (GC) to the 3 real estate developers for the development of sporting infrastructure as against the payment of Rs.5598 crores made for 33, 44, 193 sqm (826 acres) of land. Keeping in view the ongoing development of group housing projects vis-vis little progress observed in the development of sports infrastructure in these projects in the last ten years, it would be tantamount to providing the undue benefit of Rs.8,643.61 crore to these three developers. Noida Authority, while allowing the builders to pursue group housing projects, abdicated its total responsibility toward the completion of envisioned sports infrastructure.
Thus, the world-class sports infrastructure envisioned by the Board in 2007 for holding national and international sports events failed to materialize even after a decade. Though the main objectives of the establishment of the sports city have not been achieved, these developers appeared to have grabbed nearly 825 acres of prime land in the city at one-third of the market rate with the aid and abetment of senior officials of the authority. Incidentally, there was a single CEO of the authority who dealt with the allotment of sports city plots in 2010-11 and 2014- 2015.
Discretionary allotment of farmhouses at prime locations on throwaway prices
From 2009 to 2011, Noida Authority allotted 157 plots for farmhouses of 10,000 sqm each aggregating 18,37,340 sqm in prime sectors of Noida at one-fifth of market rates in an arbitrary and discretionary manner mostly to big business houses, influential real estate developers/ builders, politicians, prominent lawyers, and their family members without following any transparent bidding process under schemes which did not have any objective criterion for selection of the beneficiaries. Many companies, their directors, family members, etc, cornered multiple plots at throwaway prices. There was no bidding and the selection of allottees was done based on an “interview” by a committee.[3]
The C&AG has pointed out the following cases of multiple allotments:
- Allotment of 11 plots (FH -3 & FH-19/164, FH-4 & FH-18/164, FH-2 & Fh-20/164, FH-5/164, FH-6/164, FH-17/164 and FH-1 & FH-20/165) was made on 30 March 2011, to the companies/ entities of the same group (Anil Kumar and Company).
- Allotment of four plots (FH-2, 3, 4, 5 Sector 131) was made on 27 July 2009, to a group of companies with the same promoter/ director (Rajiv Kumar).
- Allotment of seven plots (FH-15 & FH-18/128, FH-25 & FH-26/128, FH-27, FH-28 & FH-29/128) was made on 30 October 2009, to four companies of the same promoters (Sanjeev J Aeren and Sunita S Aeren).
- Allotment of seven plots ( FH-16 & FH-17/128, FH-11 & FH 22/128, FH-23, FH-24 & FH-33/128 was made (two on 26 March 2010 and five on 30 October 2009) to three companies (Meadows Infradevelopers Pvt. Ltd., Glory Infrabuild Pvt. Ltd. and Handful Infra Developers Pvt.Ltd.) of same promoters (Ankur Chadha and Geetu Arora).
- In two cases it was observed that four plots (FH-11 & FH-22/128, FH-12 & FH-21/128) of Sector 128 of two companies (Meadow Infradevelopers Pvt. Ltd and Snerea realtors Pvt. Ltd.) allotted on 30 October 2009, were transferred to the same individual, Smt. Vichitra Lata, on 28 September 2010.
The C&AG has stated that multiple allotments to applicants on a single date were given and front companies were used for the allotment of plots through different applications. There is evidence of dereliction of duty by the members of the PAC whereby fraudulent actions have been permitted by the officials of Noida.[4]
A national newspaper has also reported based on RTI documents that 3C Universal Developers Pvt Ltd’s promoters, directors, and shareholders, and their companies took eight plots. Dharampal Satyapal Sons Pvt Ltd, makers of Rajnigandha pan masala, and its promoters and directors together got six plots.
Businessman Late Gurdeep Singh Chadha, better known as Ponty Chadha, bagged a plot along with Rajinder Singh Chadha and Javed Ahmed as promoter-cum-director of Brilliant Builders Pvt Ltd. His wife Jatinder Kaur was allotted another plot as promoter-cum-director of Jagat Guru Real Estate Developers Pvt Ltd. Ajay Rastogi, an official in Ponty Chadha’s liquor business, too got a plot.
Among the other beneficiaries of the scheme, prominent lawyers Shanti Bhushan and his son Jayant Bhushan, former ASG Vikas Singh, HCL CEO Vineet Nayar, etc, were also included.[5]
Thus, the land of farmers acquired at a lower rate, invoking the urgency clause for industrial development was allotted on a discretionary basis to affluent and influential individuals/ companies for their personal/ leisure use at a highly subsidized rate.
Undue favour to private firms
Noida Authority allotted 134 plots ranging from 1000-5000 sqm each, covering an area of 2,41,072 sqm at the rate of Rs.7800 per sqm for the corporate offices of the private companies/ firms in 2008-09 treating them as institutions rather than commercial profit-making firms. As these companies run on a commercial basis and earn profits, they should pay for the plot of land at the commercial rate. Even, the authority used to charge commercial rates from them earlier. However, the authority changed the status of these commercial companies to institutional in October 2008 thereby giving undue benefit of Rs.6600 per sqm to these private companies. Therefore, the decision by the authority to change the status of private companies to the institutional category was injudicious, selective, and without basis. Thus, the land of farmers acquired at a lower rate, invoking the urgency clause for industrial development was allotted at a highly subsidized rate on a discretionary basis, thereby affording undue benefits of Rs.161.75 crore to 134 private companies.
Undue favour in allotment of industrial plot to CBS International Projects Ltd.
Noida Authority allotted an industrial plot (No. 01/90) measuring 1,02,949 sqm on 03 September 2007, CBS International Projects Ltd at a premium of Rs.52.77 crore for the establishment of IT Park. The allottee claimed to be a consortium of three companies (Burchill VDM, Carnoustie Management, and RS Resource Management Consulting). However, on verification, it was found that the CBS was actually owned by Carnoustie Management and RS Resource Management Consulting only on the date of the application (06 August 2007). The name of Burchill VDM, an overseas company was added to present a rosy picture of its financial health in order to qualify for allotment of the plot. These wrong facts were not verified and were accepted by Noida without any documentary evidence. This has resulted in allotment to an ineligible applicant of a plot worth Rs.52.77 crore. Further, the authority failed to restrict the sale of commercial and residential portions for non-captive use in the plot as ‘Bhutani group’, the promoter advertised the projects ‘Alphathum’ and Noida World One in Sector 90 wherein residential studio apartments and commercial spaces were being sold to non-IT/ ITES units, which has resulted in undue benefit to the allottee to the extent of Rs.745.56 crore.
The C&AG has therefore raised a serious question of probity, integrity, and governance failure at every level in the functioning of the Noida Authority[6]. The authority appeared to have abdicated its responsibility to protect its own as well as public interests. Senior officials had acted in clear breach of public trust and in complete disregard for the interest of the authority and the homebuyers. There was little monitoring of the projects and negligible compliance with the terms and conditions which has put the interests of stakeholders in peril. In spite of the clear evidence of breaches, the authority failed to act against builders/ allottees and take action against its own officials for their dereliction of duty and collusive role in permitting/ abetting the continuing infractions. As Noida is a subset of NCR and also an important part of UP which contributes to about 10 percent of the GDP of India, it is necessary that Yogi 2.0, as well as GOI, take immediate action to stem the rot and hold the culprits accountable.
Way forward
- The government should immediately order an investigation by an SIT including a senior official of C&AG, IT, and MCA or CBI, and punish all such officials who have colluded with the developers/ builders in the illegal/ irregular transactions over the years, as pointed out by the C&AG of India.
- All allotments of plots where full premium/ cost have not been paid should forthwith be cancelled and the possession of the plots of land be taken back. The indemnity bonds of each allottee should be encashed.
- All allottees who have illegally sold/ transferred the plots/ sub-plots to third parties in violations of the terms and conditions of the schemes should be prosecuted and proceeded against.
- The name of the New Okhla Industrial Development Authority is a misnomer. It should be changed to the Noida Development Authority.
- All allotments of plots whether for GH or commercial or institutional purposes to private companies/ firms should be done on a competitive bidding basis in the future.
- RERA should take immediate action to protect the interests of homebuyers of each residential project being developed in 4 sports city projects encompassing 826 acres of land in Sectors 78,79, 150, and 152.
- RERA should also take a considered view on the registration of such residential projects where there are specified conditions on the use of land.
- Discretionary allotments of multiple farmhouses at throwaway prices to affluent and influential persons/ companies should be cancelled forthwith. In the future, all such allotments should be done transparently at the market rate after following objective criteria.
- The Board of the Authority should be mandated to monitor the progress of projects every quarter and to take corrective/ remedial actions in time so that the prime objectives of the schemes are achieved.
Note:
1. Text in Blue points to additional data on the topic.
2. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.
Reference:
[1] Noida land allotment scam: Massive irregularities that ran through successive governments – Apr 6, 2022, The Probe
[2] CHAPTER–V (5.2) – Allotment of Sports City – CAG.Gov
[3] NOIDA allotted farmhouses in ‘questionable’ manner, loss of Rs 2,833 crore to exchequer: CAG – Dec 18, 2021, ET
[4] ₹2,800 crore ‘scam’ in allotment of plots for farmhouses in Noida: CAG report – Dec 18, 2021, HT
[5] Express Exclusive: Many Noida plots for select few – Jul 11, 2012, Indian Express
[6] CAG report tears into Noida authority: ‘Lapses of probity, integrity and ethics’ – Dec 18, 2021, Indian Express
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of India, He was a member of RERA,
Bihar during April 2018-December, 2021.
This is an excellent post I saw thanks to sharing it. It is what I wanted to read. I hope in the future you will continue to share such high quality content.
Very detailed and through research. I like that the way you have raised this serious concern.
Anuj