In the previous story of the series on Ejipura housing project for Economically Weaker Sections, critical issues in the project implementation and how the developer considers all those issues as trivial were covered. This story will tell you how the BBMP has goofed up with the concession agreement of the project and why it might lead to a conflict between the two parties.
In 2012, soon after the BBMP and Maverick’s plan to build EWS quarters in Ejipura under public-private partnership (PPP) model gained focus, several individuals and organisations opposed the arrangement of using the land meant for EWS families for commercial purpose.
Following the eviction of 900 families from the EWS site, Housing and Land Rights Network (Delhi) and People’s Union of Civil Liberties (Karnataka) came out with a fact finding report on the forced eviction and demolition of homes. This report was highly critical of the public-private partnership model.
The report observed: “The agreement is marred by numerous illegalities and irregularities, and betrays a collusion of vested interests between BBMP and Maverick Holdings.”
The main criticism against any PPP model in India is the poorly drafted contracts and lack of sufficient understanding of the contracts which seems to be the case in Ejipura EWS quarters project too. During the course of working on this series as I spoke to several officials and the Garuda Group head, I found out that the way in which the agreement is understood and interpreted by the BBMP officials and the developer is totally contradicting to each other.
As per the concession agreement signed between BBMP and Maverick Holdings on January 2, 2012, the number of flats to be constructed for the original owners of the property is 1,640. However, it was revised and reduced to 1,512 as per the court ruling.
In the 15.64 acres of BBMP land available in Ejipura, Maverick is supposed to construct EWS quarters in an area not exceeding 8 acres, and the remaining 7.64 acres is to be used as commercial space shared between Maverick and the BBMP.
This aspect of “sharing” the commercial space is quite tricky.
Developer eyes land
According to the agreement, half of the area of additional facilities (the commercial space) i.e 3.82 acres of land is to be transferred to the developer after the completion of the project. The developer can further concession, license, rent, lease and even sell this property to third parties either before or after the title is transferred to him.
Along with maintaining the EWS facility and the BBMP’s share of additional facilities for a period of 30 years i.e during the concession period, the developer is also entitled to enter into an agreement with BBMP to lease, license, franchise etc its (BBMP’s) share of property.
Uday Garudachar claims that he will be the owner of the 3.82 acre of land once the title is transferred to him and he would lease out the BBMP’s portion to make profit. “I will pay BBMP an annual sum of Rs 8 crore for their share of property that will be leased out to me,” he says.
He believes that the agreement period of leased out BBMP’s share is extendable after 30 years and he can retain the property with him.
However, there is no evidence to corroborate his claims of paying an annual lease amount of Rs 8 crore to the BBMP after getting its share of property on lease. The agreement does not mention it in clear terms, but it only says the market value of the land of subject matter of the agreement is Rs 300 per square feet. This was the market value when the agreement was signed and the current market value is Rs 1,500 per sq ft according to Uday Garudachar. But the land value in Ejipura and Koramangala area listed on property websites ranges from Rs 5,500 to 20,000 per square feet.
BBMP says no land transfer
On the other hand, the BBMP officials are interpreting the agreement differently. When I called the BBMP Engineer-in-Chief M V Venkatesh asking him about the agreement, he directed me to talk to the Chief Engineer of BBMP (East) as the project area falls under his jurisdiction ever since the decentralisation of administration took place. When I called Prasad, Chief Engineer of BBMP (East), he in turn asked me to talk to Assistant Engineer Ravindranath.
When I asked Ravindranath about their understanding of the rights of the developer and the BBMP according to the concession agreement, he said transfer of ownership of 3.8 acre land to the developer will not happen.
“There is no provision under PPP model to transfer the property ownership to the private individual. He (the developer) has to make profit using his share of land in 30 years of lease period and hand over the property to the BBMP when the agreement period ends. The agreement was run through the legal cell and in no way the developer gets absolute ownership of the property,” he says.
Talking about the BBMP’s share in the commercial area, the officer tells the land will remain with the BBMP and the civic body can further lease or rent it out to third parties.
A BBMP Town Planning officer who knows about the project, on the condition of anonymity, too says that the developer has to return his share of property to the BBMP after 30 years. “There is no such provision in the agreement to transfer the land to him,” he affirms. When I showed him the agreement copy, he refused to comment.
Vatsala Dhananjay, a city-based lawyer specialised in property laws, upon reading the concession agreement, clarified that the Garudachar’s claim is valid going by the words used in the agreement. “The sale of 3.82 acre land is absolute. It is not a lease,” she observes.
Land cannot be sold under PPP, but MoU mentions sale
However, BBMP official’s claim that there is no provision under PPP model to hand over the property ownership to the private person holds true.
The World Bank article on PPP model reads: “Asset ownership typically rests with the awarding authority and all rights in respect to those assets revert to the awarding authority at the end of the concession. A concession is typically for a period of 25 to 30 years (i.e., long enough at least to fully amortize major initial investments).”
The Government of India defines PPP as “a partnership between a public sector entity (sponsoring authority) and a private sector entity (a legal entity in which 51% or more of equity is with the private partner/s) for the creation and/or management of infrastructure for public purpose for a specified period of time (concession period) on commercial terms and in which the private partner has been procured through a transparent and open procurement system.”
Thus, the above two paragraphs specifically emphasise that the PPP agreement is for a specific period of time and the asset is reverted to the awarding authority at the end of concession. It is not clear how and why did those at the helm of city administration entered into a real estate deal and agreed to hand over 3.8 acre to Maverick Holdings, without considering the fundamental rules of PPP.
And going by the kind of interpretation that the BBMP officials are making now, in all likelihood, this project will lead to yet another conflict, and perhaps even litigation between the city administration and Maverick Holdings in future.
It could be recalled that the BBMP and Maverick Holdings were in a tug-of-war over profit sharing in Garuda mall case too. Garuda mall was built by Maverick Holdings in an area owned by the BBMP. There were scuffles between two parties over profit sharing and also the BBMP had conducted an enquiry and revealed major building bylaw violations in the construction of the mall in 2011. But the BBMP did not seem to take the conflict-ridden past into account, while going ahead with Ejipura EWS housing project.
Even as there is lack of clarity on several aspects of the project and the agreement, the excavation work has started in the project site and heavy earth movers and trucks are making noise in the fenced property.
The next part in the series will track the life of a family that was evicted for the project and has struggled ever since they were thrown out of the project site. How has their life been on the streets in last four years?