Despite paying Rs 11.85 crore for a 70 acre land to set up its National Institute of Securities Market (NISM), the Security Exchange Board of India (Sebi) failed to get possession of the land till February 2011, which was due to the failure on Sebi's part to check the status of land.
"Sebi failed to check the status of the land proposed to be acquired for setting up of NISM before making payment to Maharashtra Industrial Development Corporation (MIDC) and due to the land being encroached, irregular payment of compensation of Rs 90 lakh to MIDC was made by Sebi," the Comptroller and Auditor General (CAG) in its report tabled in the Parliament today said.
"Even after payment of Rs 11.85 crore the possession of land was yet to be received, even after a delay of 39 months" the report said.
Sebi decided to acquire a 70 acre plot of land from MIDC in February 2006 for setting up of NISM for teaching ad training intermediaries in the securities markets and promoting research.
"Audit noted that Rs 11.85 crore had been paid by Sebi to MIDC between February 2006 and April 2010 for 70 acres of land without any formal agreement," the report said.
Possession of the plot of 60 acres was to be handed over to Sebi in June 2007, but MIDC informed Sebi that handing over of possession would not be possible due to various reasons including encroachment by locals for seasonal cultivation. It was mutually decided in 2009 that Sebi would pay a compensation of Rs 90 lakh to adivasi occupant families.
"Sebi paid Rs 90 lakh as compensation to MIDC in August 2009 to remove encroachment and the decision was irregular as the legal responsibility of providing land free from encroachment rested with MIDC," the CAG report stated.
The auditor further observed that even after being aware of the encroachments of the plots, the Sebi went ahead and made payment of Rs 50.88 lakh to MIDC in November 2007 towards earnest money for the additional plot of 10 acres of land.
There was an inordinate delay in setting up of NISM, which was envisaged by the Finance Minister in his budget speech in 2005.
"The fact remains that Sebi failed to articulate the terms of agreement with MIDC before making payments and this allowed MIDC to be free of any obligation to provide the plot without any adverse possession to Sebi," the CAG report remarked.