Wave, 3C and Logix Group did not even meet eligibility conditions. Yet, they secured the lion’s share of allotment of land and today have overdues running up to Rs 14,958 crore and left homebuyers in the lurch.
Of nearly 50 lakh square metres of commercial area allotted between 2008 and 2014— equivalent of 121 of Amazon’s Hyderabad campus, said to be the largest in India, or 240 Rashtrapati Bhavans roughly—officials of the Noida Authority allotted 79.83% to three real estate groups named Wave, Logix and Three C Group, the national auditor found in a caustic assessment of the urban planning body.
All the three companies are saddled with dues of more than Rs 14,958.45 crore as of March 31, 2020, the Comptroller and Auditor General (CAG) said in its performance audit of the Noida Authority
How did this happen?
Examination by Audit reveals that these three entities violated terms and conditions with acquiescence of NOIDA’s (the authority) officials. The systematic failure to take action therein despite repeated violations combined with the instances of non-payment involving outstanding dues of over Rs 14,000 crore suggests that the prime objective of NOIDA appeared to be allocation of land to them and enable them to further benefit rather than for purposes of commercial development,” the CAG said.
These companies were “extended every possible favour in contravention of the rules and regulations and neither the plot was cancelled nor the allotment money was forfeited despite non-payment of dues”, said the report.
Scores of people who bought residences in projects launched by these companies have not received possession. All the three companies are battling a litany of cases in courts.
Moneycontrol reached out to the three companies for comment. The article will be updated once they respond.
Companies did not fulfil the eligibility criteria.
The CAG report highlights a blatant disregard for rules in the allocation of commercial space to the three companies. It noted that properties were transferred to entities that did not fulfil the eligibility criteria due to which projects were not completed on time, adding that NOIDA’s failures in due diligence and lacunae in policies led to transfer of commercial properties to ineligible entities.
Allotments were made to entities which did not fulfil the technical eligibility criteria, exit of key members from consortiums resulted in ownership of properties in hands of otherwise ineligible members and properties were also transferred through changes of shareholding. These factors resulted in transfer of properties to entities which failed to execute the projects,” it observed.
Only entities that had turnover from real estate activities should have been eligible for allocation of plots. All the three companies then did not, observed the CAG. With no turnover from real estate activities, these entities should have been disqualified at the technical bid stage itself but on account of undue favour in evaluation, they were allotted plots, it said.
NOIDA had not prescribed any criteria to assess the capability of the promoters of the allottee companies to complete the projects within the prescribed time while making multiple allotment of plots to the same group. As a result, 12 projects of the 164 allotted plots could not be completed so far (November 2020) despite lapse of the prescribed period, CAG noted in the report.
The CAG report found that lease deeds were executed in favour of consortium members instead of in favour of Special Purpose Company (SPC) and that facilitated stamp duty evasion. It noted that NOIDA, in order to facilitate the allottee to avoid payment of stamp duty, kept condoning the non-payment and also failed to take punitive action against the allottee, thereby granting it an undue favour.The audit report said allotment was made by NOIDA in disregard of all established procedures. Special dispensation was made as for contiguous allotment, two sectors were merged and the two parks and green belt was included in plot area. The compliance of post allotment conditions was also not ensured by NOIDA. The above facts clearly point to undue favour being granted to the allottee.
