March 15, 2010 2:30:52 am
Terms changed; Chandigarh Administration kept on losing stake in a planned manner,says Centre
The Chandigarh Administration clearly favoured DLF Developers,which was allotted prime land in the Rajiv Gandhi Chandigarh Technology Park (RGCTP). The DLF project,which was seen as a project of public interest at the time of its sanction,was in reality a commercial venture,where profitability appeared to be the only criteria for space allotment or running of the project, MHA has categorically stated in its report.
Exposing the administrations public interest venture with DLF in the IT park,the MHA came down heavily on the Administrations policies and remarked,Audit is of the firm opinion that this is a pure commercial venture,wherein the DLF group is now the sole owner of this prime property,which can only be classified as commercial and not as IT/ ITES.
Accusing UT Administration of outrightly favouring the DLF and exposing as to how the Chandigarh Administration,went on losing stake in the IT park in a stepwise and planned manner,eventually transferring the government property worth crores of rupees to a private developer for a meager amount.
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The second part of the project (DLF complex) is basically a commercial office complex where barring a few small IT companies,most companies who have taken the offices on lease belong to non-IT sectors like automotive,insurance,sugar,credit rating etc or are doing back-office business operations camouflaged as IT/ ITES activities like Taurus Agile,which is actually a manufacturer of industrial equipment,Talwar and Talwar,which is actually into patent prosecution/ litigation support etc. Such non-IT companies were found active at the time of conduct of audit despite the serving of notices to DLF as reported by the Chandigarh Administration, the MHA remarked in its 382-page report.
On the hotel site allotted in the IT park to a consortium of DLF Universal Limited and Kujjal Builders; the MHA has raised serious objections. Land measuring 3.94 acres with permissible ground coverage of 40 per cent was to be auctioned on December 3,2005. As only one bidder DLF Universal took part in that auction,auction date with modification/ deletion of terms and conditions was re-fixed on March 9,2006. The existing zoning condition of Floor-Area-Ratio (FAR) of the hotel site was increased from 1.25 to 1.50. The eligibility criteria allowing only three companies or consortia,which had set up five-star hotels was deleted. Further,from the records it was seen that five agencies had taken part in the open auction on March 9,2006 and highest bid from DLF/ Kujjal builders for Rs 75 crore was accepted by Board of Members. Land measuring 19781.975 square yards was allotted to Kujjal Builders. As per terms and conditions of the auction notice,entry into the auction premises shall be restricted to only such perons eligible to bid who deposit Rs. 25 lakhs as earnest money by demand draft. In this case,DLF deposited the money,whereas land was allotted to Kujjal Builders. Further DLF had also deposited 25 per cent of bid money (Rs 18.5 crore). It is not clear to audit team when the earnest money amounting to Rs 25 crore had been deposited by DLF Universal Limited,how land was allotted to Kujjal Builders. In the view of audit,allotment of land was irregular and needs investigation,the MHA remarked in its report.
The dark story
* Terms of tender changed after the acceptance,as per the suggestions of DLF group
* A majority of controlling equity shares in favour of developer and Chandigarh Administration continues to be a minority shareholder much below the reasonable stake of 40 per cent
* Issuing of unsecured debentures of Rs 22.62 crore increased the risk in the project for the Chandigarh Administration
* Issuing the unsecured debentures at a nominal rate of nine per cent was again a favour to developer,who would have otherwise got the same amount from a commercial bank at PLR 13.5 per cent,after the acceptance of a collateral security
* Faulty and biased calculation of buy-back of equity shares by chartered accountants cum-statutory auditors without a fair application of mind. The chartered accountants valued the land as per book value figures as on March 31,2006,and not as per the market value of the land as on the date of exercise of buy-back option in January,2008. Again a favour to the developer,resulting in huge loss to the exchequer.
* At the maturity of the project and its successful implementation,shares of Chandigarh Administration were bought back,debentures were repaid and DLF group became the sole owner of this prime commercial property against which funds can also be raised from banks/ foreign investments like the HDF (as evidenced through correspondence with the Chandigarh Administration/ Estate Office,DLF had planned to approach HDFC for a long term loan against this property). Thus,in a planned manner,this public property reached the hands of a private developer for a meager amount,which was actually received by the government at the end of almost five years.
* Thus no public purpose has been served by this project.
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