UP land mine is set to blow up in Mayawati's face

This is one tight spot Mayawati will find it difficult to wriggle out of. Reason: the Noida land scam, in which the Greater Noida Industrial Authority swiped huge tracts of land on the pretext of setting up industry and then quietly converted it to residential use, relates directly to the Industrial Development Ministry which she heads. The Greater Noida Industrial Authority is a creation under the State Industry Act.

While the Allahabad High Court has already cancelled land acquisitions in two villages, forcing builders to compensate people who had booked flats in these areas, a Firstpost investigation shows that there are several unique dimensions to the scam that make it a potential landmine for Mayawati.

Among these: the area acquired was 2,500-and-odd hectares, enough to create an entire township; the bids received from builders for the land were probably the result of cartelisation and collusion; the builders started marketing and booking properties even before they were formally allotted the land; and the land was sold by the Authority at rock-bottom prices on which the builders added a huge markup.

[caption id=“attachment_48925” align=“alignleft” width=“380” caption=“This is one tight spot Mayawati will find it difficult to wriggle out of. The Noida land scam, in which the Greater Noida Industrial Authority swiped huge tracts of land on the pretext of setting up industry and then quietly converted it to residential use.Tanushree Punwani/Reuters.”] [/caption]

Insiders say that over 73.35 lakh square metres (sq m) of land was sold off to builders for around Rs 7,300 crore. The builders then sold it to final buyers for around Rs 22,000 crore at market prices. Somewhere between the sale price to builders and the final price to home buyers lurks a huge political payoff.

A few simple numbers should give anyone a whiff of serious scam: the Greater Noida Authority had set Rs 10,000 per sq m as the reserve price for the land. All bids came in between Rs 10,019-10,050 per sq m for plots advertised in January 2010. In essence, no builder valued the land at more than the cost price! What a meeting of minds on the valuation of prime land.

To top it all, the entire operation was put into motion without the one key permission needed to build residential properties in and around the National Capital Region (NCR) - that of the NCR Planning Board, which functions under the Union Urban Development Ministry.

Just as A Raja sold off spectrum at throwaway prices to favour specific businessmen, Mayawati’s officials practically gifted land away at near cost prices. So who made the margins? Builders or politicians? The builders Firstpost talked to mentioned the true value of money changing hands (beyond the agreement prices) could be anywhere between Rs 3,000-3,500 crore based on the sums being charged per square metre by the go-betweens.

The newspapers have so far written on the travails of flat buyers in Noida Extension following the Allahabad High Court’s decision to order the restoration of the land to its former owners, but the real story lies in the skullduggery and conspiracy of Mayawati’s officials, who sold off hundreds of hectares of industrial land to a score of builders for constructing residential buildings without first changing the “land use”. In other words, the land deals were struck without legally getting it designated as residential land.

The Allahabad High Court has cancelled land acquisition in two villages of Greater Noida so far - Shahberi and Patwari- which have 752 hectares of land. These lands were acquired by the Greater Noida Authority under the ‘urgency clause’ (Section 17(1) of the Land Acquisition Act) for the construction of industry. The urgency clause allows government to take over land at nominal compensation in public interest.

Sources at the NCR Planning Board wonder how the Greater Noida Authority converted 2,500 hectares from industrial use to residential when the whole residential area in Noida Extension under the NCR Master Plan involved the development of 3,000 hectares." This is unprecedented. What is left in the Master Plan, if you change land use of 2,500 hectares (each hectare is 10,000 square metres). The name Noida Extension doesn’t exist in our NCR regional plan," the NCR Board sources said.

Greater Noida Authority’s Chief Executive Officer (CEO) Rama Raman confirmed the change in land use, but claims the 2,500 hectares removed from industrial use was compensated elsewhere in the Master Plan. His logic for the change in use: “There was a recession in industrial development and lesser demand for industrial land. And this land (Noida Extension) marked for industry was close to Noida. We realised its demand is more due to proximity to Noida. So we decided to change the land use and put it for auction for residential purposes, before the land went into the wrong hands.”

Rama Raman has been CEO for the past one year and is not directly responsible for the change in land use as it happened before his watch.

While there is little doubt that residential land has better value in an around Delhi and the National Capital Region, the real scam lies in the way builders and officials colluded to benefit one another. The auction of the land was apparently rigged, as the builders knew beforehand about its allotment.

The story begins in 2007 when Greater Noida officials initiated the process of acquiring land from 155 villages in Greater Noida, Hapur, Bulandshahr and Sikandrabad in the name of public interest. The Mayawati government first notified the village land to be acquired in public interest under Section 4 of the Land Acquisition Act. And instead of initiating public hearings on the proposed acquisition under Section 5 of the Land Act, it invoked the ‘urgency clause’ to cut short the process for industrial development.

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In 2009, the entire land was acquired without any public hearing. In November 2009, the Greater Noida Authority initiated a process for changing its use. This process necessitates the issue of ads in prominent newspapers and invitations to public hearings on the issue. The Greater Noida Authority Board then approves a change in the land use and puts it up for government approval.

“We followed the entire process, which took five months. The land use change was finally approved by the state government on 30 March 2010. It’s a misconception that we (the Greater Noida Authority) had not taken the permission of the state government,” said Rama Raman.

[caption id=“attachment_48772” align=“alignleft” width=“380” caption=“One of thebuildingswhere major construction has already been completed, despite the land being disputed. Images taken by Greater Noida Land Authorities, provided by Raman Kirpal/Firstpost”] [/caption]

But the Greater Noida Authority missed out on one important permission - that of the NCR Planning Board, which is mandatory. Clause 1.3.2 of the NCR Regional Plan 2021 makes it compulsory for the Uttar Pradesh government to take the board’s approval before notifying any change in the NCR plan. An Allahabad High Court judgement involving this clause, dated 1 October 1996, reads: “One stipulation is inescapable that unless the National Capital Region Planning Board gives the green signal nothing can go ahead. The necessary implication of this is also that at every stage in reference to the plans aforesaid, each constituent state, a part of the National Capital Region plan, has to keep a close consultation with the federal agency which is the board.”

Rama Raman’ response? “The Greater Noida Authority had sent a copy of land use changes made to the NCR Planning Board for their information, but we don’t need to take their approval.” Sources in the NCR Planning Board told Firstpost under condition of anonymity that Greater Noida officials had, in fact, come to the board’s office in Delhi a fortnight ago seeking its post-facto stamp of approval for the land use, but didn’t get it.

What is clear is that the Greater Noida Authority was in an ‘unusual’ hurry to sell the so-called Noida Extension land. Even when the process of land use change had not been completed in January 2010, the Authority advertised for it sale. It put over 18 lakh sq metres for sale in the first lot. A series of advertisements for land sale for residential purposes followed. Sample these:

• In February 2010, it advertised for 16,82,200 sq m of land for sale.

• In March 2010, it advertised the sale of 24,02,777 sq m of land.

• In April 2010, 9,42,226 sq m of land was offered for sale

• And in May, 2010, they advertised again for 4,77,859 sq m.

Rama Raman said the land use change was done between November 2009 and March 2010. “Land use of the entire 2,500 hectares of land was done in two installments. The first installment began some time in November 2009 and ended on 31 March 2010. The second exercise happened after 31 March.’’ He insisted that the conversion of industrial land to residential use was done by swapping other residential land earmarked in the Master Plan.

Documents which show the 1st and the 2nd bids made by builders and the no objection certificate issued by the Greater Noida Authority, which the builders deposited with banks for loans, saying that there is no litigation on the land title.

“In the Greater Noida Master Plan, 19.6 percent of the land goes to industrial use, 23.2 percent to residential, eight percent to commercial, 23 percent to green, 14 percent to institutional and 12 percent to transportation. We have only swapped industrial land with residential. There is not an inch of change in the ratio given in the Master Plan,” Rama Raman said.

The land use, however, was still substantially industrial when it was sold off as residential to the builders, including Supertech, Amrapali and Gaursons. Not only this. The builders had prior information that they would get the land in Noida Extension, even before it was formally allotted to them. For example, Supertech, advertised on 6 March 2010 in The Times of India: “Roti Kapada aur Eco Village in Noida Extension… Price starting Rs 9.85 lakh onwards.’’

How did Supertech manage this when the Greater Noida Authority allotted Supertech the land only two weeks later, on 19 March 2010?

Amrapali (whose poster boy was cricketer MS Dhoni) came out with a full page ad on 19 March: “Amrapali Smart City… Sapno ka ghar in Noida Extension… Sirf 9 lakh mein.’'

This was prescient, since it was allotted a bit of land only on 19 March, and another plot in Sector 4 of Noida Extension more than a month later on 23 April 2010.

But even if the builders got astrological help to learn about the land they were about to be allotted, that did not entitle them to sell houses. For the lease deeds on these allotments were done much later in June or July, 2010. And their building plans were sanctioned only by November or December 2010.

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In short, these builders sold property on the land they had not yet been allotted, which they would get possession of only months down the year, and for which they had no approvals for building plans. If India worked at these levels of efficiency, maybe we would be a developed nation by now.

Rama Raman confirmed that no builder could sell houses before their building plans were sanctioned by the Greater Noida Authority. But Firstpost has established that most of the prominent builders did, in fact, sell their houses and advertised for it even before the land was allotted to them.

Firstpost asked Anil Sharma, proprietor of Amrapali Builders, how he could offer prospective buyers his Dhoni-backed “sapnon ka ghar…” without any of the above sanctions, and he said: “It was only a promotion of the product. I did not sell any flats on the day the advertisement appeared.''

Ravi Mohan Sethi, Chairman of Steller Group of Industries, said no builder could sell his product before building plans were sanctioned. He said his group didn’t do so. Its plans were sanctioned some time in November or December 2010.

Firspost called and sent SMSes to RK Arora of Supertech for his reactions, but he did not pick up the phone or reply to our messages.

The builders went one step further. Not only did they advertise before doing their homework, they also managed to get bank loans for their customers. Only State Bank of India and some other nationalised banks demurred because the builders had not paid the full amount to the Greater Noida Authority and thus their lease was provisional. And yet, the builders had set up shop and opened site offices on the basis of having paid only 10 percent of the land value. The rest was to be paid in 20 six-monthly instalments over 10 years. Such official benevolence is unheard of in land deals.

Rama Raman justified it by saying that the realtors too were hit by the recession. “So we relaxed the conditions and made it easier for the builders to pay money in 20 instalments.”

Significantly, even the auction of these plots seemed to be rigged. The Greater Noida Authority sold plots to builders through a two-bid auction system. The builders applying for the plots had to first clear a technical bid and then make their financial bids. For the January 2010 advertisements, the Greater Noida Authority had kept a reserve price of Rs 10,000 sq m. Seven builders were allotted land. On the reserved price of Rs 10,000 sq m, Amrapali Smart City got 1.68 lakh sq m at Rs 10,026 per sq m.

Here’s what the others paid for it: Supertech got 2.04 lakh sq m at Rs 10,044 per sq m; Stellar Constellation Projects Pvt Ltd got 72,600 sq m for Rs 10,019; Earth Towne Infrastructure Pvt Ltd 73,900 sq m for Rs 10,050; Universal Construction Company 65,800 sq m at Rs 10,035 per sq m; and Ajay Enterprises Pvt Ltd 99,330 sq m at Rs 10,025.

Asked how bids could be lumped so close together (the difference between seven qualifiers was only Rs 31) in a closed bid auction, Rama Raman said: “We usually sell land to people on a no-profit-no-loss basis. The same is done in the case of builders too.”

This begs the question: they why call bids? Give it to all bidders at fixed rates. The purpose of an auction is lost if everyone is going to pay the same (or similar) price for something.

Even if one were to buy the official line, it smacks of a huge scandal. For the builders didn’t sell on a no-profit-no-loss basis. The Greater Noida Authority more or less gave huge plots to builders on the cheap, who then sold houses on the same land at Rs 24,000-28,000 per sq m. A three-fold value-add?

Mayawati’s government is not going to find this easy to wriggle out of. She is already fighting a case involving disproportionate assets in the Supreme Court. After taking over as Chief Minister of Uttar Pradesh for the fourth time in May 2007, she declared that her personal income grew from Rs 52 crore to Rs 88 crore, an increase of Rs 35 crore. She has over Rs 12 crore in bank deposits and she owns five sprawling commercial properties and bungalows at prime locations in New Delhi (two in Connaught Place), Okhla and Lucknow.

With the next Assembly election due in 2012, sources allege, the Mayawati administration had hurriedly sold off prime land in Greater Noida to private builders - most of it on the edge of illegality since the land use was changed post-facto without the approval of the NCR Planning Board.

The lady has some serious questions coming her way.