Unitech, Sun Media violates terms and conditions, wanted to sell JV assets | india | Hindustan Times
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Unitech, Sun Media violates terms and conditions, wanted to sell JV assets

india Updated: Jan 05, 2012 20:16 IST
Hitender Rao
Hitender Rao
Hindustan Times
Highlight Story

Mired in controversies over land allotment process and implementation delays, the decade long yet to be implemented Recreation Park project in Gurgaon’s Udyog Vihar has kicked up yet another storm.

In clear violation of terms and conditions of allotment of land, the promoter of the project -- M/s Gurgaon Recreation Park Limited (GRPL) signed a memorandum of understanding with a private entity M/s Arpit Projects Ltd (on April 27, 2009) for transfer of hotel block of the project and also accepted Rs 20 crore as part consideration without the approval of Haryana State Industrial and Infrastructure Corporation (HSIIDC), the joint venture partner in the project.

The HSIIDC on December 16, 2011 served a show cause notice to the collaborators in the project – M/s Unitech Limited and M/s Sun Media Pvt Ltd and GRPL, the special purpose vehicle (SPV) incorporated by the collaborators for implementing the project, asking them as to why the assisted sector agreement be not terminated and the plot allotted by HSIIDC not resumed forthwith in view of the violations of terms and conditions.

Haryana officials who did not want to be quoted said they came to know of the move to transfer the hotel block to a private entity after a dispute arose between the two parties. The promoter was earlier forced to stall construction activity after the bank had discontinued disbursement of loan. In June 2009, the collaborators had sought HSIIDC's permission to allow it to sell the hotel block so that the money earned could be used for completion of project. The permission however was denied by HSIIDC.

"It has been noticed that GRPL and collaborators – Unitech and Sun Media have violated term and conditions of the assisted sector agreement of 2004, the supplementary agreement of 2006, land transfer agreement of 2004 and deed of conveyance of 2007 executed in favour of GRPL," said the show cause notice.

Top officials said that despite repeated requests by the Corporation, the sweat equity equal to 15 % of the paid up capital (including loans from collaborators) either through initial public offer (IPO) or otherwise has not been issued in Corporation's favour by GRPL. "It is a violation of provisions of supplementary assisted sector agreement inked in 2006," the notice said.

Moreover, the project was not fully implemented within the stipulated period (upto August 31, 2010). "For considering further extension of one year (till August 31, 2011), the company was advised by HSIIDC to pay an extension fee of Rs 24.50 lakh but it failed to pay up. The company has thus also violated the land transfer agreement of 2004."

"On our part we have also engaged a consultant to realize the sweat equity as it was felt that an initial public offer will not be a feasible option for a such a small project," said a top official.

The project: Recreation park consisting of multiplex, food court, discotheque, multi-cuisine restaurant, snacks bar, motel, parking utility.
Location: Four acre prime land at Phase 3, Udyog Vihar, Gurgaon.
MoU signed in 2000 between HSIIDC and Leisure City India Pvt Ltd (comprising Unitech Group and others) after it was selected from amongst nine applicants by a government committee.
Letter of Intent issued to collaborators in November 2011
Assisted sector agreement between HSIIDC and collaborators signed in 2004.
Gurgaon Recreation Park Limited, an SPV for implementing the project created
Land transfer agreement between HSIIDC and SPV inked in June 2004
Project reviewed in 2005-06, terms of implementation revised, supplementary agreement executed in 2006
SPV fails to bring out initial public offer (IPO) as well as issue sweat equity in favour of HSIIDC.
Date for implementing the project extended to August 2010
SPV constructs hotel block and office block after availing part loan from HDFC.
Construction activity stalled after HDFC discontinued disbursement.
SPV seeks permission to sell hotel block in 2009. HSIIDC declines.
SPV signs MoU with Arpit projects Ltd for transfer of hotel block, accepts Rs 20 crore.
HSIIDC remains unaware of the development till a dispute arises between the two parties
Chief minister orders action for temination of assisted sector agreement in August 2011
Show cause notice served to GRPL in Dec 2011.