Noida Land Allotment Rip-off: CAG Uncovers Shady Offers


As much as 79% of commercial land in Noida was allotted to only 3 real-estate developers between 2005 and 2018, as per CAG's audit of Noida Authority's land-acquisition and allotement process
As a lot as 79% of economic land in Noida was allotted to solely 3 real-estate builders between 2005 and 2018, as per CAG’s audit of Noida Authority’s land-acquisition and allotement course of

How realtors Logix, 3C and Wave teams grew to become the middle of multi-crore rip-off

Within the first Efficiency Audit Report on the functioning of Noida Authority, the Comptroller and Auditor Normal (C&AG) of India has highlighted the dismal efficiency of the authority within the land acquisition and allotment of properties in Noida metropolis submitted to the Authorities of UP in November 2021. That is the first audit report of the C&AG for the reason that jurisdiction of the audit of Noida and different growth authorities was entrusted to the C&AG in July 2017.



In his complete report, the C&AG has invited the consideration of the stakeholders to the widespread corruption, undue favoritism to non-public corporations, arbitrariness, and collusion between officers and builders within the functioning of the Authority within the allotment of plots in the course of the interval 2005-2018 resulting in loss of tens of 1000’s of crores of rupees to the Authority/ Authorities, moreover inflicting untold sufferings, misery, and despair amongst tens of 1000’s of households of the homebuyers. The C&AG has identified rigging in bids by a number of builders/ builders in collusion with the officers, main irregularities within the processing of functions & allotment, allotment to ineligible events, leveraging net-worth of an entity for a number of allotments, unlawful sub-division of plots/ switch of possession of allottees with out guaranteeing fee of excellent dues/ well timed completion of tasks, and so on.

The interval of the audit lined 2005-06 to 2017-18 i.e, the regime of 4 chief Ministers- Sri Mulayam Singh Yadav (2005-2007), Ms. Mayawati (2007-2012), Sri Akhilesh Yadav (2012-2017), and Sri Yogi Adityanath (2017-2018). There have been 24 CEOs of the Noida Authority throughout this era. Of them, three CEOs – Rama Raman, Mohinder Singh, and Sanjeev Sharan had occupied the CEO place of Noida Authority for greater than two years every.

Throughout the interval 2005-06 to 2017-18, NOIDA Authority allotted 2,761 properties measuring 188.34 lakh sqm below group housing (GH)- 37.72 p.c, commercial-8.94 p.c, sports activities city-17.07 p.c, Institutional-8.14 p.c, farmhouse (FH)- 9.75 p.c and industrial-18.38 p.c classes on the premium (value) of Rs.39,443.41 crore excluding industrial plots value. The C&AG has said that in the course of the audit interval, the Authority acquired 80 p.c of land below the Land Acquisition Act, 1894 relevant as much as December 2013, offering a regular justification of commercial growth for invoking the urgency clause, which enabled the Collector to dispense with the rights of landowners in respect of listening to on objections to proposed land acquisition.

53.34% plots had been allotted on sponsored/ administrative charges

The authority allotted the plots for GH, industrial, and Sports activities metropolis on a aggressive bid foundation (63.73% of allotments) to the very best bidders towards a hard and fast Reserve Worth (RP). In distinction, Institutional, FH, and Industrial plots had been allotted at mounted administrative costs primarily based on the interviews performed by Plot Allotment Committee (PAC). Additional, the RP of plots for Sports activities metropolis and glued value for FH, institutional and industrial functions was stored considerably decrease than the RPs stored for GH or industrial plots, i.e., after excluding many sorts of prices which the authority themselves incur. Thus, the Noida Authority in impact allotted solely 46.66% of plots via aggressive bidding primarily based on market charges whereas 53.34 % of plots had been allotted on sponsored/ administrative charges to non-public corporations/ corporations.

Group housing (GH) tasks

NOIDA Authority allotted 67 GH plots1 measuring 71.03 lakh sqm primarily throughout 2005-2018 at the price of Rs.14,050.73 crore, which was subdivided into 113 plots by the allottees with the approval of the authority. Of those, 71 tasks (63%) had been both incomplete or partially accomplished even after ten years of allotment as of 31.3.2020. The excellent dues of builders/ builders have elevated to Rs.18,633.21 crore as of thirty first March 2020, together with Rs.7281.89 crores of Unitech Ltd, Rs.2276.67 crore from Amrapali group, and so on after ten years of allotment of plots.

Industrial properties

Throughout the audit interval, NOIDA Authority made 320 allotments within the industrial properties class admeasuring 48,98,440.47 sqm at the price of Rs.25,264 crore via 41 closed-ended schemes. It consists of an allotment of 4 plots for the event of sports activities cities in prime sectors of 78, 79, 150 & 152 for 33,44,193 sqm (826.34 acres) on the lease premium of Rs.5597.92 crores.

80 p.c allotment of economic plots to a few teams

The C&AG has reported that about 80 p.c of complete allotments in industrial class plots measuring 39,10,376 sqm had been made to solely three teams viz. Wave group of corporations, 3C group of corporations, and Logix group of corporations throughout 2008-2015.

Wave (Late Ponty Chadha) group of corporations – Wave Infratech Ltd and Flora & Fauna Land Improvement Pvt Ltd had been allotted prime industrial properties/ builders plots of 6,63,104 sqm (42 p.c builder plots of all industrial allotments) at the price of Rs.6570 crores in coronary heart of Noida (Sector 25A/32 sectors) in 2010-2011. Nevertheless, as a result of adjustments in authorities in March 2012 and the dying of Ponty Chadha in November 2012, most of those tasks had been not accomplished as a result of one or the opposite causes. they usually have both surrendered the land (454131.63 sqm) in December 2016 or the authority has cancelled (108421.13 sqm) the allotment (February 2021) as a result of non-payment of the dues/ installments. Wave Group of corporations had dues of Rs.4425 crore as of thirty first March 2020.

Logix Group of corporations promoted by Shakti Nath and his relations below the holding firm of Logix Mushy Tel Pvt Ltd (Turnover- Rs.12.25 crores in 2009-2010) had been allotted 2 GH plots, 3 Industrial builders plots, and a Sports activities metropolis plot (224 acres in sector 150) on the value Rs.3246.50 crore throughout 2010-2011. Logix group had excellent dues of Rs.5840 crores as of thirty first March 2020.

Three C (3C) Group of corporations promoted by Vidur Bharadwaj, Nirmal Singh, and Surpreet Singh Suri, had been allotted 3 GH plots, 4 Industrial builders plots, and a couple of Sport metropolis plots (502 acres in Sectors 78, 79 & 150) on the value Rs.6384.69 crore throughout 2010-2014.

Rigging of bids via the collusion of the bidders

49 out of 67 allotments (73 p.c) of GH plots had been made in the course of the interval 2008-09 to 2010-11. In 42 out of 49 allotments, solely two bids had been obtained, of which in 15 pairs of candidates (for 15 plots valuing Rs.2611.36 crore), the collaborating bidders had been the identical or of the identical group. In 9 of those instances, one allotment was made to every bidder whereas within the remaining instances the allotments had been made to at least one bidder. The C&AG has discovered that the bid costs in all instances had been very shut to the RP and in 12 instances, the winner had bid lower than two p.c increased than the RP mounted for the plots. The C&AG said that collusion between the collaborating bidders couldn’t be dominated out, extra so in these instances the place alternate allotments had been made to every of the collaborating bidders. Furthermore, these allottees didn’t pay the premium well timed and have dues of Rs.1625 crores after ten years of allotment.

The C&AG has additional suspected rigging of competitors via using group corporations as rivals by Assotech Restricted and Supertech Restricted, for 3 plots (GH-93/137 of 51000sqm, GH-04/78 of 61430 sqm, and GH-01/74 of 249410 sqm and felt that the sanctity of the tender course of was vitiated and compromised in these instances and therefore liable to be summarily rejected.

Allotments to ineligible corporations

The C&AG has noticed that allotment of two plots (GH 01 & 02, Sector-143) of greater than two lakh sqm price Rs.471.57 crore was made to Logix group of corporations promoted by Shakti Nath in 2011, who didn’t even qualify the technical eligibility standards of a turnover of Rs.200 crore from actual property growth and building actions. In each instances, the bids ought to have been outright rejected. The authority additionally failed to look at whether or not the Logix group consortium had the requisite combination internet price to qualify for allotment of a number of plots.

It was additional famous that the authority had already earlier been allotted 3 industrial builder’s plots (A-1/124, C-03/105, and CC-04/32) of 143250 sqm to ineligible Logix group consortiums at the price of Rs.1680.93 crore a couple of months in the past in 2010-2011 even once they failed to fulfill the necessary technical eligibility criterion of a minimal turnover of Rs.200 crore from actual property growth and building actions and aggregated internet price required for the plots. As well as, the authority allotted one other a lot greater plot of Sports activities metropolis of 224 acres (907988 sqm) in Sector 150 in Could 2011 to the ineligible Logix group consortium at the price of Rs.1094 crores, overlooking the necessary technical eligibility criterion of a minimal turnover of Rs.200 crores from actual property actions in the course of the earlier three years (2007-2010). The lead member of every Logix group consortium was a software program growth firm particularly Logix Mushy Tel Pvt Ltd. It has paid-up capital of Rs.14 crores and a turnover of Rs.9.70 crores in 2009-10. Thus, the authority allowed the Logix group consortiums led by a small software program firm to seize six massive plots aggregating greater than 300 acres valuing Rs.3246 crores in 2010-11.

A number of Allotments Made to Logix Group throughout 2010-11

Sorts of Plot Plot No/ Sector/ Space of the Plot Date of Allotment/ Value of the Plot Lead Member (LM) Title & DOI of Allottee Variety of Contributors** in Consortium
GH  GH-01/
143
100112 sqm
17.8.2011
Rs.236 Cr
Logix Mushy Tel Pvt Ltd Logix Infratech*
13.5.2010
4
GH GH-02/
143
100081 sqm
08.4.2011
Rs.236 Cr
Logix Mushy Tel Pvt Ltd Logix Metropolis
Builders*
7.3.2011
6
GH GH-02/
143
100081 sqm
08.4.2011
Rs.236 Cr
Logix Mushy Tel Pvt Ltd Logix
Realtech*
7.7.2010
5
Coml A-1/124
64550 sqm
21.12.2010
Rs.841 Cr
Logix Mushy Tel Pvt Ltd Logix
Realtech*
7.7.2010
5
Coml C-03/105
28720 sqm
23.6.2010
Rs.283 Cr
Logix Mushy Tel Pvt Ltd Logix Estates*
17.5.2010
5

Coml

CC-04/32
50000 sqm
28.3.2011
Rs.556 Cr
Logix Mushy Tel Pvt Ltd LogixBuildwel*
4.3.2011
6
Sport Metropolis SC-01/ 150
907988 sqm
04.5.2011
Rs.1094 Cr
Logix Mushy Tel Pvt Ltd Logix Infra
Builders*
7.3.2011
6

Observe : *The Firm had a paid-up capital of Rs.1.00 lakh.** Not one of the individuals in any consortiums had a turnover in actual property growth and building actions.

The filings of Logix Mushy Tel Pvt Ltd with MCA/ GOI claimed that they grew to become the holding firm of 22 newly integrated subsidiaries in 2010-2011. As per the audit report, the modus operandi adopted by the Logix group was to submit bids for every plot via a consortium (of 5-10 subsidiary/ affiliate corporations) and after allotment of the plot, the important thing members of the consortium would exit and plots can be divided into sub-plots and allotted to subsidiaries, who in flip would promote/ switch the sub-plots to third events. Mr. Shakti Nath had constituted greater than 50 subsidiary corporations throughout 2009-12 during which Meena Nath and/ or Vikram Nath had been additionally administrators. Shakti Nath is presently director in 33 corporations, Meena Nath in 43 corporations, and Vikram Nath in 16 corporations.

Three C (3C) group of corporations on the energy of Three C Common Builders Pvt Ltd, integrated in March 2007, had been allotted 3 GH plots of three,84,295 sqm of Rs.860.66 crore, 4 Industrial builder’s plots of 138286 sqm at the price of Rs.1548.27 crore and two sport metropolis plots of 20,32,747.72 sqm (502.29 acres) at the price of Rs.3428.58 crore. If this was not sufficient, a nationwide newspaper has reported that the administrators of the 3C group of corporations and their relations – Nirmal Singh, Surpreet Singh Suri, Vidur Bhardwaj, and spouse Richa Bhardwaj had been additionally allotted 8 farm homes plots of 10,000 sqm every in prime sectors of the Noida metropolis at throw-away costs in 2010-11. The 3C group had excellent dues of Rs.4694 crores as of thirty first March 2020.

In all biddings, 3C Group used the parameters of Three C Common Builders Pvt Ltd (DOI-Seventh March 2007, turnover- Rs.155.6 cr & net-profit-Rs.8.92 cr in 2009-10) to fulfill the technical eligibility criterion to seize a number of plots. The 3C group of corporations additionally adopted the identical route of bidding via a consortium of subsidiary corporations in grabbing the plots. The Administrators – Vidur Bhardwaj, Supreet Singh Suri, and Nirmal Singh had constituted numerous subsidiaries /affiliate corporations in the course of the interval 2008-2012, bid via consortiums led by totally different subsidiaries, and have since resigned from most of them. As per MCA data, Vidur Bharadwaj is presently a director in 4 energetic corporations solely however from 2008 to 2012, he was the director in additional than 100 corporations. Supreet Singh Suri and Nirmal Singh had been additionally administrators in additional than 100 corporations throughout this era.

Undue favour to builders by utilizing internet price for a number of allotments

In course of processing the bids, Noida Authority evaluated the web price of the applicant corporations individually case-wise, overlooking the truth that the builders had utilized for a lot of plots in totally different schemes in the course of the audit interval. Consequently, the authority failed to find out the requirement of the web price in combination within the case of a number of functions of an applicant firm/ builder. Resultantly, a number of allottees/ corporations obtained a couple of allotment of the plot by leveraging their internet price a number of occasions. In a take a look at examine of GH plots, the C&AG discovered that 10 candidates had been allowed to make use of their internet price greater than as soon as to garner 26 (subdivided into 43 plots) allotments price Rs.4,293.35 crore. The beneficiaries had been: Supertech Ltd and Gaursons Ltd obtained 4 plots every, Extremely Properties and Gulshan HomZ bought 3 plots every, Prateek Buildtech, Amrapali Properties, Unitech Ltd, Ajnara India, Agrawal Associates, and Bihariji Ispat one every.

Repeated relaxations given to builders of no avail

Through the years, Noida Authority relaxed many vital phrases and situations like monetary {qualifications} criterion of internet price, solvency and complete turnover, provisions of the escrow account, financial institution assure, and so on. The authority additionally stored on decreasing the fee of upfront allotment cash from 40 p.c of the land premium in 2006-07 in phases to as little as 10 p.c in 2009-10. In 2009, Noida Authority took additional steps viz. re-shedulement of eight-year reimbursement time period with the two-year moratorium, sub-division of plots (above 40,000 sqm), switch of sub-plots, the deposit of 10 p.c of lease premium until the execution of lease deed, and so on., to supply aid to the allottees ostensibly to fight the 2008 recession/ financial situations. The authority nevertheless continued these rebates/ relaxations indefinitely. Consequently, the allottees had been required to make the fee of the lease premium/ value of the plots over a interval of ten years from the date of allotment. This discount considerably decreased the monetary dedication of the builders and enabled them to garner extra or greater plots and launch increasingly more tasks with out finishing the prevailing ones. Additional, these plots had been sub-divided and illegally transferred/ offered to 3rd events on premium via adjustments within the share-holding of the subsidiary corporations.

The C&AG has discovered that in 12 instances the allotted plots had been sub-divided into 32 sub-plots. Of those sub-plots, in solely eight instances the worth of the plot was commensurate to the web price of the sub-lessee and in 24 instances the worth of the sub-divided plot exceeded the web price of the sub-lessee. In these 24 instances, the sub-lessee obtained plots starting from 1.16 to 14 occasions their internet price. In eight of those instances, the web price of the sub-lessee was lower than Rupees one crore and but they had been permitted sub-lease of plots price Rs.501.62 crore in combination. It’s thus, evident that Noida’s determination to permit sub-division with none regulatory mechanism in place served successfully as a backdoor entry for the switch of invaluable property into the arms of ineligible builders.

Fee schedule of plots not stored in sync with completion schedule of a mission

The choice of the Noida Authority to extend the fee schedule of the plots to 10 years from the date of allotment was additionally not in sync with the tenure of completion of the tasks by the promoters. Thus, the promoters obtained the numerous (75-80 p.c) value of the flats together with the plot value from the homebuyers inside 2/3 years of the launch of the tasks whereas they had been required to pay the land value to the Authority over 10 years. Resultantly, they diverted the funds elsewhere, resulting in consequential delays within the completion of the tasks. The builders in flip garnered extra allotments as they loved better leverage to acquire greater plots and to take loans from banks on the again of deposits of the smaller quantities of down-payment.

The authority additionally didn’t observe up the relaxations by having shut monitoring of the progress of the tasks on the allotted plots or fee of premium/ value of the plots by the allottees. As an alternative, the authority stored on granting additional re-schedulements to the builders, which made the matter worse as there was no incentive for well timed fee of installments, inflicting havoc among the many home-buyers.

Thus, these rebates and relaxations didn’t assist homebuyers lastly as small corporations like Logix group, 3C group, Supertech, and so on., took benefit of the relaxations and garnered a number of/ greater plots and sub-divided them via their subsidiaries and offered the plots on premium to the businesses which had not participated within the bidding and didn’t meet the even the relaxed technical eligibility criterion. There was subsequently the whole collapse of the governance within the authority/ authorities as on one hand, the authority stored on enjoyable the phrases and situations of allotment of plots on the plea of extreme financial disaster whereas on the opposite, they stored on rising the scale of plots from 50,000 sqm to 13,00,000 sqm and created a brand new class of neo-Zamindars who in flip divided and sub-divided these plots via their newly created subsidiaries and offered/transferred them to 3rd events.

To be continued…

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1. Textual content in Blue factors to further information on the subject.
2. The views expressed listed here are these of the creator and don’t essentially signify or mirror the views of PGurus.

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R B Sinha

The creator is a retired DG of the C&AG
of India, He was a member of RERA,
Bihar throughout April 2018-December, 2021.

R B Sinha
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