Brazen abuse of SEZ land by ‘First City’-HITAVADA

Brazen abuse of SEZ land by ‘First City’-HITAVADA

Staff Reporter-5^th August 2010

1) Why was the 31-acre land given at a subsidised rate to M/s Reatox and who is responsible for the huge loss to the state exchequer ?

2) Why were another 10 acres given free of cost to M/s Reatox?

3) Why is the MADC turning a Nelson’s eye towards open sale of flats to  general public by M/s Reatox in violation of BoA approvals and its own affidavit ?

The land allotment to M/s Reatox Builders (promoters of ‘First City’ project) at a highly subsidised rate by Maharashtra Airport Development Company (MADC) within MIHAN-Special Economic Zone (SEZ) and brazen act of the builder to sell flats to general public, has raised a serious question mark over legal permissibility of the entire act. The very action of MADC to allot to a builder the agricultural land acquired from farmers for peanuts, and subsequently to allow the builder to sell the same to general public at market rate and earn mind-boggling profit, is nothing but a massive abuse of public property for the benefit of private few, apparently with the blessings of MADC top bosses, who are now maintaining a conspicuous silence.

M/s Reatox Builders bagged 31 acres of land for Rs 72 lakh per acre when a nearby land owned by the Patel family fetched a whopping Rs 2.55 crore per acre in one of the most expensive land deals in the region. If that is a market bench-mark, then the MADC could have earned close to Rs 75 crore from promoters of ‘First City’ project. Instead, the Government company received only Rs 22 crore. Who is responsible for this loss of Rs 53 crore? Several social workers of repute have alleged that MADC Vice-Chairman and Managing Director R C Sinha needs to come clean on this issue, since he has been the virtual face of MADC and MIHAN-SEZ all along.

The land was acquired from protesting farmers who were offered a pittance for Meghdoot project of CIDCO and later handed over to MADC with an intention to create integrated MIHAN-SEZ. However, to the shock of everybody, the land was offered to realty majors who, in turn, are allowed to encash the current realty boom on land offered to them at a highly subsidised price and in many cases without inviting tenders. Several organisations fighting against such acquisitions have charged MADC with arbitrariness and lack of transparency and undue favours to a select few with the blessings of MADC top brass and their powerful mentors.

MADC had permitted M/s Reatox to consume 2.5 FSI for ‘First City’ project within the SEZ to construct houses for “persons directly connected with SEZ.” M/s Reatox Builders had planned 18-storeyed towers, but the Airports Authority of India (AAI) curtailed the height since it was in aircraft landing funnel area.

Ostensibly to compensate for this loss of five floors in each of the proposed twelve towers, the MADC then showed utmost generosity towards M/s Reatox and awarded an additional tract of 10 acres of land free of cost. Going by the then prevailing market rate on Wardha Road, this land was worth Rs 25 crore. This land was given to the builder (co-developer) in lieu of the AAI curtailment of the tower-height.

Was there any clause to such effect in the MADC-Reatox agreement, and what is legal sanction to such an agreement? -- is the main question.

Sources claim that the MADC Board of Directors had permitted 2.5 FSI to the developers and it was the responsibility of the builder to construct its building within permissible parameters. If the AAI directive has forced an alteration in the original building plans, it was obvious that the builders had not adhered to the parameters. In such a case, how does the MADC find itself responsible for that lapse, so much so as to offer the builder an additional tract of land free of cost? Was this done for reasons of someone’s hidden agenda?

Apparently, the collusion between MADC and promoters of ‘First City’ is crystal clear as the Special Purpose Vehicle appeared to have bent the rules and looked elsewhere to allow illegal action of builder in selling flats to general public. What is legal sanction behind this bail-out of ‘First City’ when the BoA clearly states that the approval to the project is absolutely restricted to selling the property only to people employed in various units that would be coming in SEZ?

If the land was to be used to house workers/officers and others working in SEZ units, the subsidised land rate could have been justified. But violating the original permission granted by Board of Approvals (BoA) and MADC’s own affidavit before the High Court, the builder is openly selling these flats to general public as per prevailing market rate and in the process earning huge profit at public cost-since MADC had spend huge public money to create basic infrastructure within SEZ and the builder is not required to spend a single penny from his pocket on this count.

Interestingly, ‘First City’ promoters always maintained that flats are meant for general public, clearly suppressing that they had a mandate to construct housing facilities for employees working within SEZ. This wilful breach of condition and regulatory permissions naturally has civil and criminal consequences and the MADC and M/s Reatox Builder may have to face the music.

The expose by ‘The Hitavada’ has put the developer - MADC - and co-developer - M/s Reatox Builders - in a tight spot. Unable to justify the brazen violation of SEZ Act/rules and open sale to general public, the builder issued misleading statements explaining nothing. However, the non-denial seems aimed at skirting the main issue as to how subsidised land offered for housing projects exclusively for SEZ employees can be sold to outside public ignoring BoA directive. Incidentally the MADC, too, has adopted a very ambigious stance claiming that project was approved by BoA - a fact nobody has questioned.

But this has raised a disturbing question about conduct of the MADC and its nexus with builders about misusing subsidised land for profiteering.

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