By: Vivek Gupta
Thanks to value appreciation in the property, the Chandigarh Administration is not likely to go for appeal even as the arbitrator appointed by the Supreme Court imposed Rs 50 crore interest liability on the local administration along with other financial implications in its latest order on controversial nine-year-old residential project Prideasia in the IT Park.
As the arbitrator in this case directed the New Delhi-based private realtor Parsvnath Developers Ltd to return 123 acres of government land in its possession, the local administration seems more concerned to get back the possession of the land. The decision seems wise since the price of the land has appreciated manifold in last several years.
The project goes back to 2005 when Parsvnath Developers and the Chandigarh Housing Board launched a scheme to develop costly flats and villas at IT Park but due to controversies between the parties on approval issues, the project did not take off following which both the parties went in for arbitration in 2009, judgment of which has come out now A senior official said that the local administration sold 123 acres of prime land to Parsvnath at that time, when there was hardly any development in and around IT park.
The land was sold for Rs 831 crore, out of which Rs. 517 was immediately paid by developer. But now in 2015, current market price of the land is above Rs. 2,000 crore “Even as the administration will be liable for some financial implication by virtue of the arbitration judgment, the major fact is that we are getting back the possession of prime government land, which is a major victory for the administration after lengthy arbitration battle,” said a senior official of the administration.
As per the 300-page judgment delivered on January 9 by retired judge of the Supreme Court, Justice RV Raveendran, the administration is under legal compulsion to refund over Rs 567 crore to Parsvnath which include Rs 517 crore of its principal deposit and Rs 50 crore additional interest liability.
As an outcome of the arbitration, the UT administration has been directed to refund the amount immediately, which means that the interest on the payable amount is being accrued on the total refund amount on daily basis since the day of the judgment.
Talking to UT Adviser to Administration, Vijay Dev, he said that the administration was concerned about the daily financial implication of the judgment and that is the reason, the Chandigarh Housing Board has been directed to table before them all the financial and legal status of the project after arbitrator’s order.
He however said that the judgment was in favour of the administration and “we would be taking final decision on coming Monday in a meeting which will be headed by UT administrator Shivraj Patil.
On the other hand, Parsvnath’s spokesperson refused to make any statement saying that they were studying the report. The arbitrator has ordered Parsvnath to remove all its belonging on the project land with in one month and return the possession of vacant land to the administration at the earliest along with Rs. 20 crore compensation Further, the arbitrator also directed the developer to immediately clear the mortgage on 4.7 acres of project land on which it had raised Rs. 175 crore of bank loan to start the project.
Further, all approvals, clearances, lease hold agreements, entitlement, privilege benefits, agreed between Chandigarh administration and Parsvnath Developers Ltd on this project stand cancelled, as stated in the judgment.
The arbitrator further cancelled all the contracts which Parsvnath entered with any third party for this project. On the other hand, the administration, apart from total refund, is also liable to return Ts. 75 crore of bank guarantee to Parsvnath.