BMP loses Rs. 30 cr. in land deal

By Anil Sastry

BANGALORE, SEPT. 3. At a time when the Bangalore Mahanagara Palike (BMP) is reeling under a financial crisis, it has lost around Rs. 30 crores by selling its share of prime commercial property in the heart of the City to a builder and developer.

On November 29, 1995, the BMP entered into an agreement with Shyamaraju and Company Pvt. Ltd. for developing 88,660 sq.ft. of land (No. 61) near Akkithimmanahally tank bed at the junction of O'Shaugnessey Road and Langford Road in the heart of the City.

According to the agreement, the builder was to develop the land by constructing a building with two basement floors, ground floor and three floors. In return, he was entitled to 60 per cent of ``undivided right'' to the land and the building, while the BMP was entitled to the remainder.

On November 24, 2000, the BMP sold its interests in the land and the building, named ``Divyashree Chambers'', which has an area of 1,92,235.3 sq.ft., to the builder, for Rs. 25,87,78,460.

On June 15, 2001, the builder entered into an agreement to sell 40.47 per cent of the land and the building to the Housing Development Finance Corporation Ltd., (HDFC) for Rs. 55,07,86,256.

It is learnt that a formal ``deed of sale'' is yet to be executed by the builder in favour of the HDFC as the arbitration proceedings initiated by the BMP, demanding an additional Rs. 5 crores from the builder, are under way. The BMP has not issued an occupancy certificate for the part of the property held by it earlier.

Gross deviation: The original FAR proposed in the sanctioned plan was 1,54,639 sq.ft., with two basement floors, ground floor and three floors. The builder approached the BMP seeking permission to build four more floors. The Administrator, in August 1996, did not grant permission as that would have amounted to deviation from the sanctioned plan to an extent of more than 200 per cent. The building bylaws specify that a deviation of more than five per cent from a sanctioned plan cannot be permitted.

However, the Government, in an order on December 12, 1996, permitted the builder to construct four more floors. While doing so, the Government took into consideration the land surrounding the property -- 9.25 acres -- which belongs to the BMP (the hockey stadium and playgrounds are situated on the land), for calculating the FAR. Apparently, this was to limit the deviation to under five per cent, it is learnt.

The Government Order restrained the BMP from constructing a building on the land adjacent to the commercial complex.

HC order: On July 1, 1998, the Karnataka High Court struck down a Government Circular dated June 14, 1996, allowing regularisation of deviation of nearly 25 per cent from the sanctioned plan. The court ruled that a circular could not be issued to override the building bylaws.

As the sale of the building cannot be revoked, the perception in BMP circles is that the builder should be made to pay penalty for FAR based on 9.25 acres. If this is done, the BMP can limit its loss to an extent, they feel.

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