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Fraud Probe into NRI Township in Bengal

By Vinay Jain Subscribe to RSS | July 26th 2012 | Views:

Private property owners of the apartments seemed to have got into an illegal pact with the earlier Left Front govt. Last month, Kolkata Criminal Investigation Department asked to probe the operations of Bengal NRI Complex Ltd a joint sector firm developing one among the foremost asked for condominiums in Kolkata unfold across sixty seven acres for supposed fraud leading to substantial loss to the exchequer.

A probe is on, however declined to not indulge in any detail. The government has an impression that the Left Front government that demitted workplace last year after a 34-year unbroken rule, had got into an felonious agreement with the personal homeowners of Bengal NRI Complex six prime realty developers of Kolkata, who jointly own seventy four percent within the company, or 12.33% each according to a home department official, who didn't wish to be named. The state government owns twenty six percent within the company.

Bengal NRI Complex is not about to be the sole joint sector realty firm to be probed by CID. The operations of just about all others, even practically inanimate ones, are being reconsidered. But in terms of size of the residential project and revenue potential, Urbana (the township that Bengal NRI advanced is developing) is that the largest to date.

Though the CID didn’t clearly indicate the offence it absolutely was investigating, it said during a letter written last month to Bengal NRI Complex’s management that the administration was prima facie of the view that the previous government had got into an “illegal agreement” that is tantamount to “criminal breach of trust” by “omission and (by) commission”.

The move has caused a good deal of consternation among Kolkata’s realty developers, a number of whom had appealed to the state government a year ago to land up by mutual consent joint sector realty corporations in view of chief minister Mamata Banerjee’s call to not acquire land for business exploitation. Joint sector realty corporations weren’t wound up if the state government had agreed to try and do thus, it might are tough for it to launch the probe that CID has been tasked with.

The Communist government of the state had launched housing corporations in partnership with just about all key realty developers within the state most of them currently face investigation. Under current rules, township projects, like Urbana, wouldn't have materialized attributable to restrictions on land owner. Earlier this year, the state, through a change law, removed townships from the list of residential property in Kolkata that exemption may well be granted from the edge on land ownership.

The private companies of Urbana, where flats are currently priced from Rs. 1 crore onwards by Kolkata standards had got into hassle over land possession with the previous government likewise, however the dispute was settled in 1994 once a short legal battle. Two Kolkata-based businessman, Mr. Vinay Maloo and Mr. Surendra Nahata, had in 1988 bought two hundred bighas or around sixty seven acres from Ms. Protiva Chandra Roy on the south-eastern fringes of Kolkata.

Four years once they finalized the land deal, the state ordered legal proceedings to seize it under land-ceiling laws. For 2 years, they fought a legal battle in the Calcutta high court, until in 1994, the Kolkata government nodded to an out-of-court settlement. The state seized the plot however agreed to lease it back to a joint sector firm with Maloo and Nahata as shareholders to develop a township largely for non-resident Indians.

The 1994 agreement said the state would own twenty six percent within the envisaged joint sector firm and therefore the private partners along, 25%. The remaining forty nine percent was to be distributed among the general public and monetary establishments. This, though, wasn’t laid down as a “pre-inception condition”. However, the import of the agreement, consistent with land department officers acquainted with the problem, was that the economic interest or share of profit of the personal shareholders within the residential property in Kolkata was to be capped at twenty five percent. These officers, too, declined to be named.

It took the state and therefore the private developers twelve years to evict squatters. Eventually, in year 2006, once the Left Front was voted back to power for the last term, Bengal NRI advanced was founded and therefore the state leased the 67-acre plot to it in instalments. However, in credible departure in ninety's, agreement with the state, the private developers expanded their equity interest within the project to seventy four percent as against the twenty five percent stipulated earlier.

A spokesperson for Bengal NRI Complex had earlier said it wasn’t “immediately viable” in year 2006 for the joint sector firm to divest a forty nine percent stake to the general public and monetary establishments. We would do so at an applicable time when there's a chance to try and do so. The land department officers cited higher than additionally said it isn’t clear whether or not under the 1994 agreement the initial patrons of the 67-acre plot may herald alternative partners. The six personal shareholders of Bengal NRI Complex are the Bachawat, Emami Group, Sureka, Todi, Jalan and Nahata families. Maloo has exited. The pact said the state’s stake within the firm couldn’t be diluted from twenty six percent.

In view of the varied restrictions, compliance with the 1994 agreement is tough at this stage. And if the 1994 agreement itself is ready aside as illegal by the present government, the project are in great problem. Deviation, if any, from the guiding joint venture pact at Bengal NRI Complex is of a distinct nature from alternative joint sector realty corporations. To comply, private developers usually offered to create various residential property in Kolkata at their own price for folks from the low- and middle-income category, however the state didn’t perpetually enforce that such commitments were eventually honoured.

Vinay Jain - About Author:
PropTiger is an independent real estate advisor with a pan-India presence. We aspire to be your first port of call if you want to buy a property in Kolkata.

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