CAG raps Haryana govt for showing undue favours to Vadra

"Undue favours" to builders, including Robert Vadra's Skylight Hospitality, by the Haryana Government during the Congress regime has come under attack from the Comptroller and Auditor General.

In its report for the year 2013-14, tabled in the Haryana Assembly today, the official auditor has come down heavily on the Town and Country Planning Department.

"....the department neither at the time of granting in-principle approval nor at the time of formal approval for transfer of licenses ensured that net profit beyond 15 per cent of the total cost accrues to public exchequer.

"This enabled the developers to earn huge profits merely by selling the land while the government had to forego sizeable amount," the CAG report said.

The BJP and other Congress rivals had trained their guns on the previous Bhupinder Singh Hooda government accusing it of showing favours to Robert Vadra, the son-in-law of
Congress president Sonia Gandhi, in his land deal with realty giant DLF.

Though the report did not name Vadra, his company, Skylight Hospitality, was named. Skylight Hospitality, the report noted, sold a prime 3.5 acre piece of land in Manesar in Gurgaon district to DLF in 2008 for Rs 58 Crore

Earlier, senior IAS officer Ashok Khemka had ordered the scrapping of the land deal, terming it as illegal. However, the previous Hooda government gave clean chit to Vadra in the land deal.

Pointing out irregularities in the development of internal circulating and approach road, CAG observed that as per existing practice the commercial sites should be approachable through internal roads.

In the case of Skylight hospitality private limited, the site was not approachable, the CAG noted.

The department, however, decided (March 2008) to waive this condition on the ground that the approach would be taken by the licensee through the plotted colony of Onkarshewar Properties Pvt Ltd and Mark Buildtech Private Limited in collaboration with Vatika Land base.

CAG further said that as per final development plan of Gurgaon-Manesar 2012, area falling under roads was not to be calculated towards net planned area and only benefit towards Floor Area Ratio (FAR) was to be given for transferring the land falling under roads.

"While this principle was applied in 12 cases, the net area indicated against each of these applicants was after deducted the area under sector roads etc, whole area including the area falling under roads has been indicated in respect of Skylight Hospitality.

"It was not clear as to why such a distinction had been made in respect of Skylight," the CAG report said.

The CAG in its audit observed that despite the area being under Consolidation, transactions of sale or transfer continued in Sheikhupur village between 2004 and 2008 and a total of 1,117 mutations were sanctioned.

Based on an affidavit filed in a court by the Consolidation department, the village of Sheikhupur was again notified (in August 2011) for Consolidation.

"It was observed that the court was never informed of the fact by the Consolidation department that out of total 2,333 acres of land falling in village Sheikhupur, 1,954 acres had been declared urbanised as per developmental plan 2021," the CAG said.

"It was observed that land was purchased by Skylight Hospitality Pvt Ltd (Feb 12, 2008) when the work of Consolidation was in progress and was sold (Sep 18, 2012) when Consolidation was re-notified in August 2011," it said.

As per the decision of Director General of Consolidation department, the mutation of land transaction between Skylight Hospitality and DLF Universal was cancelled (Oct 15, 2012) as the permission of the Consolidation Officer under section 30 of the Act was not taken (Oct 15, 2012), it said.

However, following the report submitted (Dec 2012) by the three member committee constituted by the state government to look into the cancellation order, the order of cancellation of mutation was not implemented, the CAG noted.

Further, the Town and Country Planning Department had written (Feb 2014) to Director General, Consolidation, to confirm the ownership status of licenses land of Skylight Hospitality so as to enable the department to proceed with the renewal of the licence.

"The matter was taken up by the audit with the Department of Consolidation and Town and Country Planning for confirmation and clarification of facts. There reply was awaited," the CAG report said.

"There were unresolved issues between Town and Country Planning department and Consolidation department in the matter of land use. These issues need to be resolved," the CAG said. 

Pointing out irregularities in profit on sale of land, the CAG said licencees sold the land for Rs 267.47 crore which they had purchased for Rs 52.26 crore and earned a profit of Rs 215.21 crore, thereby depriving the government of its share of net profit.

Out of the licence holders, as far as Skylight Hospitality is concerned, it made a profit of Rs 50.50 crore as the company had sold the land for Rs 58 crore against the purchase price of just Rs 7.5 crore.

"The land was purchased on Jan 28, 2008 and the land was sold on Sep 18, 2012 while the license was issued in December 15, 2008," the CAG said.

The CAG underlined the need for making the whole process more transparent and clear saying that licences should only be allotted to genuine developers after careful and proper scrutiny of applications.

"A proper mechanism needs to be placed to ensure that in case where the land has been sold without the completion of the project, the net profit beyond 15 per cent of the total cost on such sale should be deposited with the government," the CAG said.

"While appraising the license of Skylight Hospitality, it is observed that out of 3.531 acres applied area, 0.83 acres fell in residential zone and 1.35 acres fell in the 24 meter internal circulation plan road. After excluding these areas the net area for commercial license remained 1.351 acres. The coloniser was assessed to have fulfilled the minimum required area of 2 acres," the CAG said.

The auditor also said that it was observed that projects were sanctioned in Sector 83, Gurgaon, for area measuring less than two acres on the rational that if applied land was contiguous with the already licensed area, then the area of both the contiguous plots is to be taken into account. 

On profit on sale of land, the CAG also noted that in the case of Skylight Hospitality, the land was sold to its collaborator (DLF Universal Limited) at 7.73 times the original cost after the in-principle approval for transfer of license was granted in April 2012.

On the interpretation of provision of development plans, the CAG said the total commercial area of Sector 83, Gurgaon, was 126.8 acres out of which 63.4 acres were to be given to private developers.

While appraising the case of Skylight Hospitality, it was stated by District Town Planner that the application could not be considered by way of calculations being made to determine the area available for consideration of licence.

It was stated by the department that in case the application of Skylight Hospitality was considered on the basis of this rationale, the same would be applicable to all cases, the report said.

"As per development plan, the area under green belt and sector road should not be included under net planned area. Area under commercial belt and residential areas were inclusive of areas under internal circulating and service roads, the auditor said.

However Town and Country Planning Department has again added that area under 24 meter circulating and service road while computing net area falling under commercial belt. The decision to add that area falling under internal circulating roads and green belt, while considering the case of Skylight Hospitality, although the 50 per cent limit, as per earlier method of computation had already been exhausted, was not as per existing practice, it said.

"Thus in the absence of clearly spelt out procedures for computing area availability, lack of clarity and consistency, the possibility of extending undue benefits to particular applicants cannot be ruled out," the audit report said.

The CAG also observed lack of transparency and consistency in development of commercial areas of colonisers as it was noticed in processing applications of colonisers, deciding the compactness of the area to be developed, development of internal roads, fixing area norms for setting up of commercial colonies, assessing financial adequacy, interpretation of development plan and transfer of license.

On being asked what action would be taken, Haryana Chief Minister Manohar Lal Khattar said, "Law will take its own course."

"Be it Vadra or anybody else, law will act at an appropriate time," he said.