State bars sale of realty located on govt-leased land

State bars sale of realty located on govt-leased land
SHAILESH GAIKWAD

MUMBAI, OCT 25: In a decision that could have a far-reaching impact on the real estate business in Mumbai, the state revenue department today ordered collectors of Mumbai city and suburban districts to warn the public against entering into realty transactions involving sale of premises located on government land and leased out to private institutions,

The decision may affect among other major transactions, ICICI's Rs 73-crore sale of a part of its Backbay Reclamation premises to Triumph International Finance India, a company owned by Ketan Parekh, a bulge-bracket stock broker.

Revenue Minister Ashok Chavan said the revenue department has told ICICI not to go ahead with the sale of seven floors of its building constructed on a leasehold plot. Curiously enough, Chavan said the ICICI has informed the government that it had not finalised the deal to sell seven floors of its building.

"I have ordered the collectors to issue public notices preventing people from buying premises constructed on government plots," D K Shankaran, Principal Secretary (Revenue) told this paper. "Prospective buyers will be warned of legal action if they purchase premises on leasehold plots," he said.

The decision to issue public notices warning against such deals was taken at a meeting attended by Chief Minister Vilasrao Deshmukh, Deputy Chief Minister Chhagan Bhujbal, the Revenue Minister, Shankaran and other officials on Tuesday.

There are about 1,250 plots in the two revenue districts of Mumbai, which have been leased out to different institutions for periods ranging from 99 years to 999 years. The commercial worth of such properties would run into hundreds of crores.

The government has entered into leasehold agreements with lessees and the latter are not allowed to sell the plots or premises constructed on it without the permission of the government, said the Revenue Secretary today. "This amounts to breach of trust as specified in the agreement," Shankaran pointed out.

Last week, Chavan had ordered Collector of Mumbai city Debashish Chakravarty to conduct an inquiry into the ICICI deal.

Chavan said Chakravarty had submitted an interim report to the government saying that the leasehold agreement with the ICICI included conditions which could prevent the latter from selling a part of its premises.

Significantly, Kalpana Morparia, senior general manager of the ICICI denied that the institution had communicated with the government over the deal. "We are selling part of our building and not that of the government plot. The deed does not prevent us from doing so," she claimed. She added that she had not received any letter from the government on the issue. "Our deal is on. We are going ahead with the proposal," she said.

According to news reports which appeared a fortnight ago, the ICICI and Triumph International Finance India had entered into a deal whereby the former had agreed to sell seven floors of its main building at Backbay Reclamation for Rs 73.10 crore. The leasehold plot in question, bearing survey no 163, is situated on block no 2 of the upmarket Backbay Reclamation area.