The Maharashtra government has scrapped a multi-crore land deal in Mumbai over which former Deputy Chief Minister Chhagan Bhujbal faces graft charges.
On September 19, just two days before the model code of conduct for the Assembly polls kicked in, the Devendra Fadnavis government issued orders for the revocation of the contract for the construction of the central library inside Mumbai University’s Kalina campus on public private partnership (PPP) basis.
But this exit option has come at a price. The government has agreed to pay Rs 137.07 crore to Indiabulls Real Estate Limited (IREL), the project’s developer, as compensation.
On February 19, 2009, a cabinet sub-committee on infrastructure under then Chief Minister Ashok Chavan had appointed the firm following a tendering process. But the deal got mired in a controversy after the state’s Anti-Corruption Bureau (ACB) accused Bhujbal, the then Public Works Department minister, and his kin of allegedly receiving a kickback of Rs 2.5 crore from Indiabulls in the form of donation for their NGO, Chhagan Bhujbal Charitable Trust, in Nashik in exchange of facilitating the land deal.
The deal had also come under the scanner of the Enforcement Directorate. After the BJP came to power, the ACB booked Bhujbal, his nephew Sameer, and some officials of PWD in December 2015, and later chargesheeted him. The former minister continues to face the charges in the case, and is currently out on bail.
While no one from Indiabulls has been booked, construction work for the library, spread over 16,188 sq m, has been stalled ever since the allegations first surfaced.
As per the original arrangement, the developer was leased a 7,000 sq m adjoining plot for 99 years at Rs 1 per sq m for commercial exploitation. Incidentally, the ACB had started probing the case following allegations that the developers were making a windfall in the deal. The state government’s latest order, issued by Public Works Department, states that “this lease agreement between the government and the developer will also be scrapped and the government will take back the possession of the leased land as well.” Ironically, at the start of the project in 2010, cost of the library project was estimated at Rs 88.90 crore.
The latest order was issued after the cabinet sub-committee on infrastructure under the CM approved the scrapping of the land deal. Denied permission for building on the vacant land, the IREL had, in July 2017, approached the government seeking cancellation of the contract and demanding compensation. Later, it approached Bombay High Court, which had directed both sides to arrive at an “amicable settlement.”
On the basis of court orders, the Public Works Department had appointed three valuation agencies to ascertain the extent of construction work that had been carried out on the plot and the compensation to be paid to the private firm. “The compensation amount finalised by the government has been arrived at taking the recommendations made by these valuation agencies into consideration,” said PWD’s Deputy Secretary (Buildings) Bapurao Salunkhe, who has signed the latest order. The compensation amount includes the principal cost incurred by the firm for construction work, the interest accrued on it, and the bank guarantee amount (Rs 98 crore) it had deposited with the government after getting the contract, he informed, adding that the “consents of all state departments concerned, including law, planning, revenue, urban development, and finance were taken before PWD submitted the proposal to the cabinet sub-committee.”
IREL had raised a total claim of Rs 229.60 crore. On Sunday, the firm hinted that it wasn’t totally satisfied with the government’s offer, but was willing to study it. “The High Court had ordered an amicable solution between the two parties. We will have to study the basis on which the government has altered the claim approved by the independent government agencies,” said an IREL spokesperson.
The firm had contended that valuation agencies had recommended the Rs 230 crore compensation. A government official has denied this contention. While the civil work of the library has been completed, work on the interiors and building of library-related infrastructure is pending. The government has now decided to complete this work on its own, with the PWD estimating that this would cost another Rs 34.45 crore.
Justifying the move to scrap the deal and compensate the firm, the government has argued that the “decision was in the interest of the government”. It has claimed that value of the land being taken back was Rs 285 crore, while the amount to be spent on the remaining capital expenditure and the compensation works out to be Rs 172 crore. “The idea is to complete the stalled projects and put the library to public use,” an official said. To bag the compensation, IREL will have to withdraw the case, give back possession of the plots, and submit a written undertaking that it won’t raise another claim on the property in future. The cabinet sub-committee has ruled that the “decision on how to dispose of the vacant plot” would be taken independently.