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Monday, June 25, 2018

Water sports centre: Contractor takes state to court over licence delay

Firm offered state 49% of revenue, MTDC rejected offer fearing company will default on rent.

Written by Rohit Alok | Mumbai | Published: May 28, 2017 2:32:05 am

A PROSPECTIVE contractor for the state’s proposed full-fledged water sports centre at Girgaum Chowpatty has taken the Maharashtra government to court alleging that it has been dragging its feet on giving the former the licence to operate. The contractor, G B Jain & Sons, is a Nanded-based amusement park equipment manufacturing company. The firm has offered to give the state 49 per cent of revenue earnings from the water sports venture, an offer that the Maharashtra Tourism Development Corporation (MTDC) has rejected, fearing that the company would default on rent payments for land and water sports equipment, officials said.

In October last year, after years of litigation, the state government took back the stretch on Girgaum Chowpatty from water sports company H2O. The stretch was then opened for new tenders with new contracts. The area, popularly referred to as Chhoti Chowpatty, next to Mafatlal swimming pool, was originally leased by the collector’s office to the MTDC in 1994 at an annual rent of Re 1 to promote water sports.

The MTDC sub-let the facility to H2O. Although tendering concluded months ago, the state has not yet given permission to G B Jain & Sons to start operations. “After taking the land back, we put out a tender and three companies were in the running. G B Jain & Sons had won that tender. But we have our doubts related to how they will manage their finances. We were expecting a 15 per cent share of revenue but they are offering 49 per cent. We have told them that it is not a financially viable deal but they insist on giving us 49 per cent and have taken us to court,” said a senior government official privy to the deal with G B Jain & Sons.

According to officials, so far, the state has lost out on a possible revenue earning of Rs 15 crore from Chhoti Chowpatty because of the dispute with G B Jain & Sons.

“Unlike our arrangement with Drishtii Adventure Sports Pvt Ltd, who paid us a premium each month for using our space with the new tenders, we will be charging them Rs 3 lakh per month for using our land and Rs 11 lakh for our water sports equipment. Our argument is that if they (G B Jain & Sons) will give us 49 per cent of their revenue share then they will definitely default on their payments as there will be barely any profit margin for them,” claimed a senior state tourism official.

Besides being an amusement park equipment manufacturing company, G B Jain & Sons also manufacturers boats and runs boat services across rivers in the state’s hinterlands.

The company also builds water scooters, children’s play equipment and holds water screen laser shows, according to the company profile.

One of the partners of G B Jain & Sons, Arvind Jain, spoke to The Indian Express and said “great injustice” has been done. “We won the tender fairly but then why is the government finding ways of not giving us the work order … we wrote to all the departments concerned and even the chief minister but got no response, hence, we moved the Bombay High Court to seek relief. The court has already put a stay on MTDC’s decision on not holding any more tenders for the disputed spot,” Jain said.

According to officials, it was the revenue share offer that led to the company winning the bid. “There were three companies who had bid. While one offered 5 per cent revenue share, the other offered 15 per cent share to the state government. G B Jain & Sons won the tender as they offered 49 per cent revenue share of their earnings,” said an official.

Arvind Jain added that the government, post the tendering process has formally communicated with them saying that their “calculations” were not feasible. “They wanted to give the tender to some other company but we won it because we are offering the government 49 per cent revenue. This has probably never happened before then why does the government have an issue of earning more revenue … this is childish of the government … I can manage the expenditures and I am satisfied with the finance to operate a water sports company with only 51 per cent share of the revenue. Now, let the honorable court decide, the matter is sub-judice,” Jain told The Indian Express over the phone.

The next hearing is expected to be on June 22. Earlier, the MTDC had sublet the disputed stretch to Drishtii Adventure Sports Pvt Ltd, which managed H2O. But since 2013, the land has been back with the state.

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