Pvt builder benefits from Society land

Sobha Developers subsidiary pledges 10 acres of land belonging to NIT HBCS to raise money

This seems to be another episode of misdeeds in the City’s house building co-operative societies. It has come to light that land measuring 10 acres at Byatarayanapura, acquired by the government on behalf of the National Institute of Technology House Building Co-operative Society (NIT HBCS) to benefit the needy, is being allegedly misused.

The said land is part of the 175 acres acquired and handed over to NIT HBCS on January 20, 2005, in violation of the Land Acquisition Act, 1894. The land was later sold to SBG Housing Private Limited for Rs 10.5 crore. Since it is agricultural land, its sale violates Section 79 (A), (B) of the Karnataka Land Revenue Act.

The Registrar of Co-operatives had, through his letter dated December 21, 2004, allowed the sale of land to SBG.

Following a complaint by K R Srinivas, CMC member in Byatarayanapura, the then principal secretary to the Revenue department held the transaction illegal.

Illegal transaction

In his order dated August 2, 2006, not only did he term the transaction illegal, he also ordered to strike down the entry in mutation register and record of tenancy and crops (RTC) extract by the deputy commissioner, Bangalore district.

SBG managed to get the Revenue department’s cancellation order quashed in the High Court, on the ground that it was denied an opportunity to give an explanation, a violation of the principles of natural justice.

It is interesting to note that the Society, while seeking permission for the sale of land, had claimed that it would not need the land to fulfil the demand from its members and that it was excess land. However, several sites in the ‘excess land’ were eventually registered, apart from provisional allotments, and sold to the members.

Notwithstanding the contention about the authority of the Registrar in allowing the sale of land, SBG, after having the cancellation order quashed - mortgaged the land to facilitate Sobha Developers to obtain a loan of Rs 50 crore from IL&FSL in 2006.

When questions were raised by several stakeholders about how SBG could mortgage the land so that Sobha could obtain a loan, it was revealed that SBG was a subsidiary of Sobha.

Further, after having re-paid the loan to IL&FSL, Sobha obtained another loan of Rs 50 crore from Corporation Bank. Later, in 2011, it obtained a loan of Rs 75 crore from Andhra Bank.

The said bank estimated the value of the property at Rs 120 crore on May 17, the same year.

The alleged illegal sale of the NIT HBCS land to SBG is part of the complaint to the Lokayukta against former minister D K Shivakumar (DKS). The Lokayukta police are probing the complaint.

Role of DKS?

A member of NIT HBCS said: “D K Shivakumar attended the 25th general body meeting of the Society as the chief guest and declared that he is purchasing the said land (10 acres).”

Shivakumar has close links with Sobha Developers and he (through Davanam Constructions) has entered into a joint development agreement with Sobha under the Global Mall project. He also holds shares worth Rs 2.34 crore in Sobha Developers.

SBG, Sobha’s subsidiary, has been taken over by Techno Builders, owned by directors of Sobha Developers, as per the records with Securities and Exchange Board of India (SEBI). Shivakumar has a liability of Rs 3.79 crore to Davanam Constructions Private Limited, besides shares in its subsidiary company, Kausthubha Projects.