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Sunday , December 2 , 2012
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CMC flip-flop on Bypass land change

- Council balks at permission to widen housing coverage after AG declines to comment on decision already taken

Calcutta, Dec. 1: The Calcutta Municipal Corporation (CMC) has overturned a decision to allow a realtor to build houses on 80 per cent of a prized EM Bypass plot originally bagged by DLF for a hospitality project.

The corporation was forced to execute the somersault after the state’s advocate-general declined to offer comment apparently because the mayor-in-council (the civic cabinet) took the decision first and then sought his opinion.

Mayor and Trinamul leader Sovan Chatterjee told The Telegraph today: “Since the advocate-general did not give any opinion, we have decided not to honour the prayer for allowing housing on 80 per cent of the plot. We have already adopted this decision at a mayoral council meeting on Friday.”

The flip-flop sheds light on a string of problems plaguing the corporation and Bengal.

One, ad hoc decisions are being taken in the absence of clear-cut policy.

Two, the decisions themselves may reflect the reality but their discretionary nature has led to inevitable charges of foul play and stripped the civic body of any cogent case to defend itself.

Three, clumsy attempts to push through decisions and then get them rubber-stamped backfire and make pragmatic policy-making even more difficult because the aftertaste of earlier fiascos linger.

Four, the acrobatics cannot hide a grim truth. In the absence of increased economic activity, Bengal is no longer viable for hospitality investment that is already groaning under a downturn. In short, one of the few activities moving apace in Bengal is real estate development — which ensures faster returns than the hotel business.

The CMC is now saddled with a mess in a test case that is being watched by other investors sitting on tracts of land and looking to change the proportion of use.

In this particular case, the original developer was DLF, which outbid others and won the lease for the 5.59-acre plot for Rs 155.55 crore in 2006. But the rights were transferred this year to the Avani Group, which said an Anil Ambani group firm had also invested in the project that aimed to focus more on housing than the hospitality business. Avani secured the rights for Rs 430 crore.

The land was given to DLF for the hotel and hospitality industry and other uses. In 2007, the Hilton group joined hands with DLF but by then the land war in Bengal had vitiated the economic climate and the global downturn had started to bite. For unexplained reasons, DLF and Hilton parted ways.

In 2010, following an application, DLF was permitted to build housing on 49 per cent and a hotel on 51 per cent of the plot.

In November 2011, DLF informed the CMC that Avani would look after the project. On May 17 this year, the mayor-in-council, headed by the mayor, decided to accept the formula of housing on 80 per cent of the plot and the hotel on 20 per cent against a payment of Rs 35.36 crore to the corporation. Avani felt that 20 per cent was sufficient to build a hotel.

The residential project has already been soft-launched with an initial offer. An Avani official said foundation work had started and bookings for several flats had been taken.

However, yesterday’s decision means Avani is now left with the 49-51 formula agreed between the Left-run CMC and DLF.

Anirudh Daga, director of the Avani Group, accused the CMC of going back on its word. “I decided to take over the property for Rs 430 crore only after the mayor-in-council approved the 80:20 ratio. Reliance Capital has invested around Rs 200 crore in the project, too. If the CMC goes back on its own decision, it will create uncertainty among investors,” Daga said.

Daga, however, added that the CMC had neither communicated its May 17 decision to Avani nor notified the group formally that a fee of Rs 35.36 crore should be paid for the change of proportion. Daga said he had taken the opinion of legal experts in Calcutta and they had felt that the CMC could sanction the new plan.

Alteration of the original terms after paying a fee is not unusual but the problem in Calcutta is that there is no stated policy.

This has spread confusion and suggestions of unfairness. “The land was auctioned for a specific purpose in 2006. Many players had then refrained from participating after internally working out the business prospect of developing a hotel there. If it were known that the authorities would allow a residential project, more players could have joined with higher bids, which would have made the CMC richer,” a developer said.