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HindustanTimes Thu,02 Oct 2014

CAG questions costing of 350-acre Gurgaon land sold to DLF

Navneet Sharma, Hindustan Times  Chandigarh, March 07, 2013
First Published: 09:58 IST(7/3/2013) | Last Updated: 14:02 IST(7/3/2013)

In what seems set to provide fresh ammo to its political rivals, the comptroller and auditor general (CAG) is learnt to have raised questions about the valuation of 350 acres given by the Haryana government to realty major DLF Limited in Gurgaon through competitive bidding for setting up a recreation-cum-leisure project.

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The CAG, which examined the procedures and the competitive bidding route taken by the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC), found that the state-owned corporation had extended "undue favour" to DLF by transferring the forest land and selling the land below its market value and suffered a loss of Rs. 438 crore, besides allowing benefit of extra floor area ratio (FAR).

FAR is the ratio of the total floor area of buildings to the size of the land or the limit imposed on such a ratio.

'Wrong valuation'
The reserve price of the land was fixed on the lower side due to "wrong costing", according to the findings conveyed by the auditors to HSIIDC in December 2012. Aam Aadmi Party convener Arvind Kejriwal and the opposition Indian National Lok Dal (INLD) have accused the Hooda Government in the past of "favouring" the developer in this deal. The state government and DLF had both vehemently denied the allegations at that time.

However, the auditors are learnt to have pointed out now that ILFS Infrastructure Development Corporation Limited, consultant for assessment of land cost and preparation of handholding documents, had valued the land cost by using a mixed approach - multiplying average market rate of land with average district collector (DC) rate. The CAG report, according to sources, noted that the market rate for residential plots was 2.79 times more of average DC rate and average market rate for commercial plots was 3.105 times more of average DC rate, but the consultant ignored the actual market rates and took the factor of 1.8 times of average DC rates for reasons not available on record for valuation of residential land and factor of 3.12 times for valuation of commercial plots.

"The value of property considering factors adopted by the valuers worked out to Rs. 1,683 crore, whereas the valuation of property by considering correct average factors for residential area and commercial plots works out to Rs. 2,142 crore. However, the corporation in April 2008 approved the reserved price of the land at Rs. 1,700 crore on the basis of valuations without looking at the calculations," sources said, quoting the auditors' findings.

Sole bidder left
The corporation had floated the scheme in January 2009 for sale of the land and only one bid was received from DLF in April 2009. The bidder was found to be technically qualified and its bid of Rs. 12,000 per square metre was opened. However, it made certain suggestions to make the project "financially viable". The project parameters were re-examined and modified, allowing additional FAR at the rate of 20% of area to the successful bidder as per the decision taken by the then principal secretary, town and country planning, in July 2009. The project was re-advertised on July 20, 2009, and two additional bids from Country Heights Holdings, Berhad (Malayisa) and consortium led by Unitech Limited were received.

While the technical bids were opened on August 12, 2009, HSIIDC rejected the bids submitted by Country Heights Holdings and Unitech Limited on the ground of their being "technically non-responsive" due to not fulfilling the minimum criteria and decided not to open their financial bids. The financial bid of DLF, which was the sole bidder left in the process, of Rs. 1,703 crore was accepted and subsequently approved by the state government. In February 2010, the developer was issued the regular letter of allotment for the land.

In addition, the CAG is learnt to have examined the release of land from the acquisition process by the state government in favour of private developers and its licensing policy by way of a special audit of the town and country planning department, finding instances of "undue favour" and insufficient planning in some cases.

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