July 28, 2020
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Soaking In The Acres

A letter from Khemka lays bare the outline of a plot by which DLF may have benefited

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Soaking In The Acres
Jitender Gupta
Soaking In The Acres
outlookindia.com
-0001-11-30T00:00:00+0553

Deal Or No Deal

  • As the Haryana govt notified a commission of inquiry to look at the allotment of licences in Sector 83, Gurgaon, including to Robert Vadra’s Skylight Hospitality, IAS officer Khemka draws attention to possible quid pro quo to DLF
  • Khemka had in Nov 2014 made an expose on the basis of RTI documents that showed “undue favours” worth Rs 1,000 crore to to DLF in allotment of 350 acres in Waziarabad (Sectors 42, 53, 54), Gurgaon. The allotment had been quashed by the high court.
  • Khemka asked the government to launch independent probe and put complete facts before the SC. The Haryana government did neither. Powerful bureaucrats who took the controversial decisions are resisting scrutiny that could implicate them.
  • Alleged favours to DLF include huge concessions during auction. Were concessions to DLF in Wazirabad allotment related to DLF’s sweetheart deal with Vadra?

***

A day after the Haryana government notified the Justice (Retd) S.N. Dhingra commission of inquiry to probe the Vadra land deals, Ashok Khemka, the IAS officer who had cancelled the deal despite political pressure, tweeted: “Imagine F1 champion obtaining his driving licence by transfer from some other driver and that too at several times its official price.” The F1 champion he is referring to is DLF and the other driver is Robert Vadra, son-in-law of Congress president Sonia Gandhi. Why should DLF, best qualified in the region in terms of financial and technical capacity to obtain a colony licence dir­ectly from the town and country planning department, choose to buy it from Vadra at seven times the price? The core question is: did it involve quid pro quo? Did DLF get something from the then Congress government of Haryana for involving Vadra in the deal as a middleman and buying a licence from him, all­owing him to reap a huge profit?

It turns out that on November 24 last year, a month after the Manohar Lal Khattar government was sworn in, Khe­mka had in a letter to the government detailed an expose about a possible quid pro quo in the form of the huge concessions given to DLF Ltd by the Haryana State Industrial and Infra­structure Development Corpora­tion (HSIIDC) while allotting it a controversial 350 acres (Sectors 42, 53, 54) in Wazirabad (Gurgaon) in 2009 and 2010. Around the same time, it was engaged in a deal with Vadra. Khemka’s letter says the “deal between M/s DLF and M/s Skylight Hospitality could be one of the motives for bestowing huge favours (amounting to more than Rs 1,000 crore) upon M/s DLF in the present case. This needs to be probed by an independent agency.”

The Punjab and Haryana High Court had on September 3 quashed the allotment of the same plot on a technicality and, significantly, the court noted that  “possible undertones of the entire process being initiated to favour DLF may be discernible”. It ordered reauction of the land through international bidding, but this was stayed by the Supreme Court on appeal by DLF and HSIIDC. Though Khemka’s letter had suggested that the entire process of granting huge favours to DLF be brought before the Supreme Court, the HSIIDC  on Novem­ber 28 quietly withdrew its appeal  before the court without giving any reasons. The decision was taken at a meeting headed by the chief minister on November 27, where it recorded that while the government will comply with the orders of the high court (which quashed the allotment), it will try to “set aside the remarks of the court which cast aspersions on the government and HSIIDC”. As for the alleged favours shown to DLF, which enabled the realty giant to receive most favoured builder treatment from the political executive, as detailed in Khemka’s note, it was decided that “other concerns which have come to our notice regarding bidding process and award of project will be addressed while inviting fresh bids”.

Clearly, there are many powerful people in government and the top bur­eaucracy who would rather keep the focus of the Vadra probe away from the favours granted to DLF at that time, bec­ause if proved, or even if the Dhingra commission chooses to scrutinise it, it will turn the scanner on top officers who took those decisions in their capacity as heads of committees. The unusually strong terms of reference set for the commission empowers it to look at the role of public servants and consider any other matter on the subject. DLF had effectively paid a price of Rs 50,50,00,000 to Skylight Hospitality for the commercial Licence granting it FAR of 175 on 2.701 acres of land in Sector 83, Gurgaon, when the company could have obtained the same commercial licence directly from the Town and Country Planning Department by paying Rs 7,41,30,000.

Here’s what Khemka has exposed with the help of  documents procured through RTI applications. His letter details  relaxations given to the real estate giant in the pre-bid, bid and post-bid stages of the Wazirabad allotment between May 2009 and January 2010. After the first tender in April 2009—for which reserve price of Rs 1,700 crore was fixed—did not fructify, a second tender was floated in August 2009, in which the land utilisation plan was changed, allowing for an additional area of 54.6 acres for residential use in an area meant for forest land. It was also specified that in case the additional 54.6 acres could not be utilised due to land use restrictions by the Supreme Court, the successful bidder could utilise the unutilisable balance in any urbanisable pocket within the Gurgaon-Manesar Development Area. But there was no re-computing of the Rs 1,700 crore reserve price to account for additional allowance of residential area. Khemka’s letter states that the omission was by design in order to keep the bid rate low to benefit DLF, and was “grossly underestimated by Rs 516 crore”.

The second tender included another condition in which the successful bidder was insured that in case any Floor Area Ratio (FAR)—175 in this case—was not utilised due to land use restrictions for environmental reasons, the balance unutilisable area could be utilised in any urbanisable area within the Gurgaon-Manesar Development Area. The letter points out, “The condition was tailormade to give an unfair pre-bid advantage to M/s DLF....as any non-clearance of land use by the Supreme Court would actually turn into a gold mine for the company because it could use an additional FAR of 175 on balance area in the better valued areas of Gurgaon commanding market rate of Rs 50 crore and above.” And then adds: “The condition was by itself not bidder-neutral, greatly favouring the realtor company with the largest land bank in the area.”

DLF was then given a post-bid interest waiver that effectively reduced the allotment price by 30 per cent. After winning the bid, DLF was to pay the balance 75 per cent of the bid amount, that is Rs 12,775.5 crore in ten half-yearly instalments with 11 per cent interest on reducing balance from the third to seventh year.

Khemka’s letter states that a clause was inserted in the allotment letter iss­ued to DLF on February 9, 2010, that the effective zero date for computing interest on the balance will start from the date approval for land use restrictions is received, with the result no interest has been paid on the balance 75 per cent by DLF till date. This “effectively reduced the original allotment price by 30 per cent...to Rs 1,203 crore  from Rs 1,703.2 crore on paper.”

As the BJP government that has taken charge in Haryana turns the heat on Vadra in what is clearly an attempt to deflect the sharp attacks on Modi from Rahul Gandhi, the question is whether it will look into all aspects of la affaire Vadra, especially the alleged favours that DLF received in Wazirabad (Gurgaon) or stop short at the process of giving colony licences to Vadra and others in Sector 83? As Khemka points out, “The favours to DLF in this particular case would not have come without consideration.” Powerful bureaucrats who took those decisions are straining to ensure that this doesn’t happen.


By Chander Suta Dogra in Chandigarh

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