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Political Malfeasance in Allottment of Government of India's Lands

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Traces the unbridled gratis handover of India's President's estates.

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Political Malfeasance in Allottment of Government of India's Lands

  1. 1. Lucre of Allotment of the President’s Estates in India - I Shantanu Basu Memorial creation comes with authority and to sustain memory, comes patronage, also the lucre of the greenback. Several thousand acres of prime Govt. of India (GoI) land was gifted away in New Delhi/Delhi by successive governments at rates way below then prevailing market rates. Isn’t it a travesty that GoI lands in prime areas are being leased at rents way below those of modest Delhi Development Authority (DDA) flats in less exclusive areas today, provided one has the political clout and money muscle? The instrumentality of State involved is the Land & Development Office (L&DO) of the Ministry of Urban Development (MUD) that is the custodian of giant tracts of land all over India, on behalf of the President of India. The AICC, operating through its Jawahar Bhavan Trust was allotted 4736.10 sq metres of land on RP Road on Sep 8, 1975 and a further 4583.32 sq. mts. at an adjoining site on Dec 21, 1976. On Nov 19, 2007 (Mrs. Indira Gandhi’s birthday) another plot (9-A) on Kotla Road of 8093 sq. mts. was allotted to AICC for its own office building. The DPCC was allotted Rouse Avenue Plot no. 2 on May 15, 1987. No small wonder that the Congress is now attempting to create a database of the innumerable properties it owns, directly and through fronts and other trust, etc. in a baid to encash them to fill depleting party coffers. Likewise, the NDA govt. allotted 8095.80 sq. mt. plot in Pocket- 6-A DDU Marg (Rouse Ave.) on Aug. 14, 2014 for BJP’s national HQ and 809 sq. mts. for its state unit in Pocket -5 DDU Marg on Nov. 27, 2014. On Dec. 31, 2001, the then NDA govt. even allotted two plots of land on MB Road to the Sri Math Guru Gorakhnath Trust, i.e. BJP MP Adityanath’s trust with its HQ in Gorakhpur. The BJP was also gifted Plot No. 1 on Rouse Ave. on Apr. 25, 2001. More largesse was given to the BJP with two plots between RP and Raisina Road on Mar. 8, 2001 for a total area of 3.74 acres. Even the ICS-IAS Wives’ Association (I have never heard of it) was allotted a 1913.28 sq. mt. plot in Sector-VII, RK Puram on Sep. 13, 2000. The VHP too was obliged with a plot of 3753.40 sq. mts each in Hanuman Mandir area and RK Puram on Jul 26, 1999. This site has details of innumerable trusts, religious and charitable, elite schools, etc. that have benefitted from this largesse. Surprisingly, the site lists only 814 allotments made from 1930-2002, a highly improbable figure. Although L&DO land was allotted to several national and regional newspapers (including National Herald) along Delhi’s Fleet Street, the L&DO’s list shows only The Pioneer as a beneficiary of 2147.21 sq. metres in RK Puram on Apr. 24, 1999. Even National Herald House does not figure in this list, least of all, inter alia, the Times of India and Indian Express buildings. Since DDA came into existence only in 1957, all lands in Delhi were vested in the L&DO or the erstwhile Municipal Corporation of Delhi (MCD). Yet L&DO seems to have no idea of its real holdings, and consequently lease rents due to it, at current MCD circle rates. What is more intriguing is the fact that L&DO’s published list ends in 2002, and has not been updated over the last 13 years, of which an entire decade was under the UPA regime. Where are major private luxury hotels and exclusive clubs in and around the CBD and Chanakyapuri and innumerable religious institutions that dot Lodi Estate and Lodi Road, on this list? What are the antecedents of innumerable private bodies that have been allotted plots on Delhi’s Deen Dayal Upadhyay Marg (Rouse Avenue), academic institutions in Chanakyapuri with established links to successive ruling majority parties in the Govt. of India? Has the L&DO ever carried out on-site inspections to ascertain the bona fide use and unauthorized changes in lease holder of the lands it allotted? If so, why are their reports not available in the public domain? How were their lease rents determined and have they been paid regularly? How many allottments are being used for unauthorized commercial operations? Has the L&DO ever received any share of such profits? Has L&DO resumed any allotment on grounds of mala fide use or for illegal transfer of lease? Now, let us come to the rates at which these lands were given away. Residential market rates per sq. yd. from 1972-79 for Connaught Place varied from Rs. 200-300/sq. yd and Rs. 400-1000/sq. yd. The figures for Diplomatic Enclave varied from Rs. 175-450 depending upon use. Defence Colony was cheap at Rs. 150-
  2. 2. 400, Jantar Mantar Road at Rs. 200-500, Prithviraj Road at Rs. 175-500 while Amrita Shergil Marg (Ratendon Rd.) ranged from Rs. 150-500 and Sunder Nagar Rs. 150-400. Even when these were raised from Apr 1, 1998 (to date presumably owing to no updation on site), it was pegged in a range of Rs. 18480-57960 for Connaught Place, Rs. 13860-28980 for Amrita Shergill Marg and vicinity while Defence Colony and Vasant Vihar brushed shoulders with Sewa Nagar at Rs. 11550-24150 per sq. mt. Institutional rates were similarly unbelievable. From Apr 1, 1998 (the web site shows no revision), the current institutional rates remain at Rs. 88 lakh/acre for Central and South Zones, having risen from a paltry Rs. 52 and 39 lakh /acre respectively from Apr 1, 1989 –Mar 31, 1998, i.e. nine fiscals. For movie halls the current rates are perhaps even lower at Rs. 2250/- per Sq. Yd. with 250 FAR (i.e. FAR of 100 and 1000 seats for cinema and with permission to let out the balance of constructions on the remaining 150 FAR for shops and commercial establishments in the Connaught Place and its extension areas. Therefore, 2000 sqm. of L&DO land on Ratendon Road (Amrita Shergill Marg) may have been sold in the block 1998-date for any price ranging from Rs. 3 lakh – 3 crore for residential purpose, whereas media reports suggest prices, upon resale, of Rs. 150-200 crore and upward each. Similarly, an acre plot for an institution in Connaught Place would have been sold in the unbelievable range of Rs. 5 – 88 lakh. The use of the term ‘allotted’ used by L&DO on its web site is equally intriguing. Were these allotted on long leases and subject to the purpose for which they were given? Were these given the benefit of conversion from lease to free hold? If so, how many converted and how much was recovered from them as conversion charges? At the time of conversion what was the actual market price (not the L&DO version) and what was the differential between the market price and conversion charges? Did the GoI obtain any premium on such conversion? These are questions that would strike any voter of common prudence. Now let us turn to Ferozeshah Kotla (FSK) to illustrate the magnitude of political patronage in full perspective. My information is primarily based upon an order of the Central Information Commission (CIC) of mid-2015 on an appeal filed by the noted RTI activist, Subhash Agarwal, against the Delhi District Cricket Association (DDCA) that is available in the public domain. FSK measures 14.281 acres and was allotted to DDCA on temporary basis in 1986 and extended in 2002 for a period of 33 years (the L&DO site records no pre-1986 history). DDCA was required to pay license fee @ Rs. 5,500/- per acre per annum for the open space and at the rate of 5% per annum @ Rs. 88 lacs per acre for built up area, revisable after every 11 years on the basis of land rates prevailing at that time. DDCA presently pays a measly Rs 24.64 lakh as license fee annually. Since 2002, no lease has been executed by MUD with DDCA, for want of compliance with various requirements listed by L&DO. DDCA has brazenly defied all attempts of L&DO to complete the requisite formalities to date. In view of non-execution of the lease deed, the state continues to hold all sorts of controls over the land, which was allotted to DDCA, which has the license to use and nothing more than that. This gives all powers of control such as putting conditions on usage of land, collecting damages for misuse or abuse of the land, seeking share in the commercial proceeds of the land, besides having representation in the management also. The control the Government wields over the DDCA is thus deep and all pervasive. This control was reflected in the efforts of L&DO to collect damage charges of Rs. 24.33 crore from the DDCA. In her reply to Lok Sabha unstarred question no. 6964 (of Shri Kirti Azad, MP) on May 8, 2015, Ms. Nirmala Seetharaman, Union Minister of State for Corporate Affairs, admitted serious infractions of the Companies Act, 2013 and the dubious role of the DDCA’s auditor. The reply remained content with a statement that legal action had been initiated against the auditor and that relevant information from the inspection report (of SFIO) u/s 209A of Companies Act, 1956, had been ‘shared’ with the Income Tax Department, the Ministry of Urban Development and the Ministry of Youth Affairs and Sports. Evidently, nothing has come of these actions. Otherwise, why would the Govt. of India not use the findings to defend its beleaguered Finance Minister? Incidentally, the Union Finance Minister also wears the Corporate Affairs cabinet hat. As if this were not enough, in Sep, 2014, DDA admitted to the CIC that the lowest market rate for the North Zone (including FSK) was Rs. 99608/- per sq. metre. By this yardstick, the total value of FSK (57,789 sq.mtr.) was Rs. 575.62 crores with annual lease rental, calculated at 5% of the above value, at Rs. 28.78
  3. 3. crore, i.e. 100-fold more! The L&DO’s information in 2015 sought to play down the DDA’s figure. Against the L&DO’s ‘institutional’ rate of Rs. 88 lakh, i.e. 2174.52/sq. metre, its market rate was a phenomenal Rs. 57960/sq. metre, i.e. about 28-fold more! Even then, the corresponding value ought to have been Rs. 334.94 crore and lease rent Rs. 16.74 crore/annum. The profit/loss accounts submitted by DDCA for the financial years ending on 31.3.2011, 31.3.2012 and 31.3.2013 showed profit of Rs. 5.65 crores, Rs. 4.71 crores and loss of Rs. 65.87 lakhs respectively. Hence, DDCA did not ostensibly have the means to pay such hefty lease rent. The author is a senior public policy analyst and commentator Lucre of Allotment of the President’s Estates in India - II Shantanu Basu When Subhash Agarwal’s petition went in second appeal before a full bench of the CIC, it appeared that the figures of market price, hence lease rent, quoted by both DDA and L&DO previously bore no resemblance to ground reality as of 2014-15. Basing itself upon MCD’s notified circle rate of land at Rs. 159840/sq. metre for Daryaganj ward (in which FSK falls), CIC derived the current market price of FSK in the range of Rs. Rs. 2310.91 crore (lease rent being Rs. 115.54 Crore) – Rs. Rs. 3888.77 Crore (lease rent being Rs. Rs 194.43 Crore). The Bench observed, “……….the State is subsidizing the activities of DDCA to the tune of Rs. 115 or 199 crores. If this difference is multiplied with number of years the DDCA in possession of the land, it comes to thousands of crores of rupees which legitimately should have added to public exchequer.” In effect, DDCA’s FSK was worth immeasurably over Rs. 4000 crore and lease rent would be a minimum of about Rs. 200 crore per annum. The CIC was also intrigued by the fact that FSK was assessed at MCD’s category ‘C’ rate of Rs. 1.59 lakh/sq. metre instead of category ‘A’ at Rs. 7.50 lakh/sq. metre for that area, i.e. five times less! Interestingly, the CIC observed, “Another major factor that is left uncertain is the exact commercial value of the land. This cannot be calculated because there is no commercial transaction of the land in this part of the capital city. Hence the actual value could be only a guess work, which could be far above than what anybody could have assessed.” What was even more intriguing was that the L&DO accepted that there was no scientific valuation of commercial properties in Delhi since 1994. Mocking arbitrarily low prices, hence lease rent, DDCA issues, on its official web site, a “welcome to the world of Corporate Hospitality” while boasting of a large and well-stocked bar, dining hall, card room, health club, indoor badminton court. It also organizes tambola evenings every Saturday for its members “with gifts being given away, apart from very attractive prize money”. Yet DDCA was unable to pay the market lease rent and therefore there was every reason for the Lessor (Govt. of India) to inquire into the financial decisions of the DDCA. Not surprisingly, DDCA was not a public authority under the RTI Act when institutions like India International Centre and Punjab Cricket Association were deemed to be one by high courts. Needless to add, FSK’s stadium had no approvals from statutory bodies like DUAC, ASI, MCD, Fire Services, etc. and for every cricket match temporary approvals were obtained from MCD, on purely extraneous considerations, endangering the lives of 45000 spectators. Although no Government property could be sub-leased, DDCA illegally constructed 10 Corporate Boxes and sub-leased these boxes, in an unauthorized manner, for 10 years to corporates such as ONGC and collected about Rs 36 crore, without seeking approval of the land owners i.e. L&DO. Nearly Rs 158 crore spent on building an unauthorized stadium had no credible accounts available. SFIO confirmed that no tenders were issued for work carried out/materials purchased even for non-routine items. Then why is it that DDCA’s audited accounts did not show such huge receipt and payment transactions? Why is that the Registrar of Companies, again under the Ministry of Corporate Affairs, maintained, and continues to do, its silence even as it is guilty of dereliction of duty by a public servant under S. 467 of the Indian Penal Code?
  4. 4. No member of DDCA can be paid any fees for doing any work for DDCA (S. 8 of Companies Act, 2013). Further, S. 8 enables DDCA to perpetuate power in its Governing Council members for years together by misusing the proxy system. Not surprisingly, the Executive Committee members on DDCA’s web site have no date of appointment mentioned against each, nor any date of re-election. Surprisingly, DDCA does not carry the list of its past Presidents on its web site, unless this has been recently removed. Nor is there any organogram that shows the relation and composition of it Governing Council/Body and its relationship with its Executive Committee. DDCA fought cases with Government departments contesting property tax, ESI. etc. and kept paying large amounts in legal fees to its legal retainer. DDCA also allegedly cheated on entertainment tax by pricing a large number of tickets at a mere Rs. 100 while paying spectators paid huge premium of Rs 10000-Rs 50000/per seat. Recent charges of fraud with non-existent contractors having been engaged, without any competitive bidding is only part of the same fabric. Although Ms. Sitharaman in her above reply said the SFIO’s report indicated violations of sections 36, 150, 166/210, 209(1), 209(3)(b), 211 read with Schedule VI, 217(3), 285, 299, 303, 309, 314 and 211(3A)/(3C) of the Companies Act, 1956 read with Accounting Standards- 5, 15, 18, 19, 22 and 29, all the offences were compoundable in nature and the Company and officers in default have compounded the same before the Hon’ble Company Law Board. What the Minister omitted to mention was that DDCA managed to wriggle out of the charges by paying a contemptible Rs. 1.33 lakh each by three office bearers (of 27) for compounding the infractions. This was when they ought to have been fined Rs. 50 lakh each (for all 27 bearers) for the malpractices. Interestingly, the most serious objection raised by the SFIO was regarding the lease of the FSK stadium and stadium erection/renovation work. The report perhaps also recommended an external audit. Evidently, the audit has not been carried out, which is why the Govt. of India is not able to produce the report with corrective/punitive action thereon, seven months after Ms. Sitharaman’s reply in the Lok Sabha. What does the above discussion mean to us lay persons? First, that several thousand acres, even hectares, of prime land owned by the Govt. of India, has been historically hugely undervalued while being allotted to private entities. Second, successive Govts. of India, irrespective of their political affiliation, persisted with these virtually gratis handovers. Third, such wilful undervaluation vastly understated lease rent that accrued to the Govt. of India. Fourth, there was no provision to relate lease rental to current market prices of that land. Fifth, there was deliberate omission in monitoring the end-use of the allotted lands by those allotted. Sixth, another wilful omission was the absence of any share for the Govt. of India from the current proceeds of commercial proceeds from such land that would have yielded large revenues from entities like DDCA. Seventh, even when the Companies Act, 2013 was promulgated, after several years of deliberations, the loophole of S. 8 – non-profit companies – was deliberately left unplugged to enable lifelong tenures for office bearers via proxy voting and unlawful receipts and payments, much of it off official accounts. In effect, this loophole made the hijacking of national resources much easier, all for the sharing. Eighth, even as this legal loophole remained intact, the reticence of the Govt. of India to take conclusive punitive action against malfeasance clearly pointed to its complicity in milking this loophole for its chosen few. Ninth, given the vast real estate controlled by sports bodies, politicians and sports brokers joined hands, again irrespective of political affiliations, with many continuing through regimes of different persuasion. Last, but not the least, in time an unholy nexus has emerged between leading politicians, across political divides, united in malfeasance, and sports brokers that have never held a cricket bat, hockey stick or badminton and tennis racquets. And that is at the heart of the ongoing controversy over the DDCA involving India’s Finance Minister. I covered GoI land in New Delhi/Delhi only, that too not in further detail. The patronage extended to the states as well, notably prime real estate in metros and Tier-II cities, in gargantuan proportion since immeasurably more land was available there than in Delhi. Malfeasance is apparent in all land deals involving the President of India’s countrywide real estate worth immeasurable lakh crore Rupees. The land and all natural resources belong to our citizens; it must be used for public purposes, not to feather the nests of a select few! The author is a senior public policy analyst and commentator

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