CAG raps govt, state agencies for undue benefits to corporate houses for prime Mumbai plots

The CAG has rapped the Chief Minister-led MMRDA for failing to take requisite steps to recover lease dues and additional premium and penalties for three leased lands in the Bandra Kurla Complex.

| Mumbai | Published: March 29, 2018 4:48:43 am
CAG raps govt, state agencies for undue benefits to corporate houses for prime Mumbai plots CAG raps govt, state agencies for undue benefits to corporate houses for prime Mumbai plots

The Comptroller and Auditor General of India (CAG) on Wednesday rapped the Maharashtra government and its agencies, the Mumbai Metropolitan Region Development Authority (MMRDA), and the Slum Rehabilitation Authority, for showing undue benefits to top corporate houses and leading developers for prime land in Mumbai.

According to the CAG report, tabled before the state legislature on Wednesday, the beneficiary groups included Reliance Industries Limited (RIL), Starlight Systems Pvt Limited (SSPL) and the Housing Development and Infrastructure Limited (HDIL), among others. The CAG has rapped the Chief Minister-led MMRDA for failing to take requisite steps to recover lease dues and additional premium and penalties for three leased lands in the Bandra Kurla Complex’s G-block, which included two plots allotted to RIL and one to SSPL, accusing the authority of “showing undue benefit to the allottees”.

This is not the first time the CAG has slammed the government and the MMRDA over the failure to recover premiums and penalties from two RIL plots. In August 2013, when the Congress-NCP were in power, the CAG had passed similar strictures.

According to CAG, the MMRDA had allocated a 10,183 square-meter plot in BKC’s G Block on an 80-year lease to RIL in December 2007 for a multi-storeyed parking lot and a commercial complex with a built-up area of 30,550 sqm.

According to the terms and conditions in the lease, RIL was required to pay an additional premium equal to 10 per cent of the original lease premium (Rs 918 crore) if they failed to complete the construction within four years of allotment. The additional lease premium rate would further increase to 15 per cent if the delay went beyond three years. The lease agreement, the CAG observed, had provisions attracting an interest penalty of 14 per cent for failure to pay such a premium.

While observing the MMRDA was “regularly collecting additional premium from other allottees”, the CAG observed that until July 2017, the agency had not “recovered the additional premium in RIL’s case “despite a delay of over three years and a month….”

The MMRDA had in August 2014 issued RIL a notice, cautioning it that the “commencement certificate for the construction will be revoked if the firm failed to pay up the dues”. It also cautioned that the MMRDA would resume the land and recover the dues as arrears of land revenue. The RIL’s argument contesting the levy was shot down by the agency in September, 2014, the the CAG has observed that the agency granted part occupation certificate to the construction on May 29, 2015 and December 21, 2015, despite the pendency of the arrears. While the MMRDA has contended that the dues would be recovered before grant of full OC and that the provision of taking over the built-up property was available with the agency, the CAG has classified it as “undue benefit.” The auditor has also faulted the MMRDA over its failure to recover lease premiums for additional built up space allotted to RIL in the same G-block in March 2012, while making similar observations for a land allotted in the same block to SSPL. The shortfall of recovery in the land allotments was Rs 1,284 crore, the CAG said.

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