The state government and the Mumbai Metropolitan Region Development Authority (MMR-DA) plan to challenge the decision by an arbitrator to absolve developer Niranjan Hiranandani, managing director of Hiranandani Group, from paying a fine of Rs89.75 crore imposed for violating an agreement to construct low-cost homes in Powai.
“We are consulting our legal advisor on what to do next. But, we will definitely challenge the decision,” said a senior MMRDA official. The state has called for a report from the authority and it plans to file an appeal in the high court, said a government official.
The MMRDA had put forth an Rs89.75 crore damage claim on the builder, which was rejected by the arbitrator - former Kerala high court judge Arvind Sawant. He had, however, ruled that Hiranandani couldn't seek refund of the Rs3 crore deposited with the MMRDA in 2008 for allow the builder to undertake construction at Powai.
In the 1970s, the state government and the MMRDA had acquired 230 acres from private ownes to build affordable housing under the Powai Area Development Scheme.
Subsequently, the government returned the land to the original landlowners for development. The land was granted benefits under the Urban Land Ceiling Regulation Act.
In an effort to create affordable housing stock, the government put a disclaimer: half the houses would be 430 sq ft in size; the rest would be 830 sq ft.
Hiranandani was roped in by the landowners, and an agreement was signed in 1986 by the land owners, Hiranandani, and the state government.
As work on the project took off, several PILs were filed stating that the developer had violated the affordable housing clause.
The state government asked the MMRDA to conduct an inquiry in October 2007.
In his inquiry report in December 2008, the MMRDA Commissioner Ratnakar Gaikwad, who is now Maharashtra's chief secretary, said there were violations: only 15% of the flats built were less than 430 square feet in size.
Most of the flats were 2000 to 5000 square feet. Besides, the MMRDA found commercial complexes had been built against the rules.
The agreement stipulated that only 15% of the houses could be amalgamated. The report found that the builder had amalgamated 36% of the flats: 2469 of 6739.
Gaikwad refused to comment on the issue on Friday. “I don’t want to say anything about this order,” he said.
In January 2009, the MMRDA recommended a fine based on the prevalent market rates for all flats over the prescribed limit.
The fine was pegged at Rs1,993.22 crore.
The MMRDA then sent this report to the State Urban Development Department (UDD).
The UDD, after evaluating the report, said in December 2009 that the assumptions made were wrong.
It reduced the fine to Rs 86.75 crore.
Hiranandani had refused to pay the reduced fine and the case had gone into arbitration.