Citizens' Issues
Lease land fraud: Shailesh Gandhi sends notices to revenue secretary, collectors of Mumbai and suburbs

Maharashtra has decided to offer lands to the lessees at about 20% to 30% of the market value. Some lessors are even allowed to continue at the old rates. That too when the state government could earn Rs25,000 crore annually just from the lease rents

Seeking correct price determination while giving the government lands on lease and asking the Maharashtra government to stop the “75% discount sale”, Shailesh Gandhi, former Central Information Commissioner, has sent notices to the authorities.

In the notices sent to the state revenue secretary, collector of Mumbai and collector for Mumbai Suburban, he said, “I had raised this issue in 2005 and I have been given a large file showing how my letter titled “Arbitrariness and huge loss of Public money in Public lands given on Lease” led to an eight year confabulation. At the end of this, it appears that the revenue department has come up with a bizarre policy to give away public lands to lessees at 20% to 30% of the Ready Reckoner values. It pains me that the revenue department appears to have done no calculations of revenue potentials and has arbitrarily decided to put up the lands on a 75% discounted sale, limited to the buyer being an existing lessee.”

The former CIC learnt, through Right to Information (RTI), that the land was given away by the Maharashtra government at throwaway prices instead of market prices. The Maharashtra government had leased out land at 20%-30% discounts rather than market rates. This will have ramifications on how the State intends to services its people in the future.

Mr Gandhi estimates that the government’s decision to mindlessly give away land will lead to an annual loss of about Rs5,600 crore, collectively from each of the three  departments mentioned above. The basis of the legal notice was on the incrimination information found in the RTI. Read  RTI exposes a revenue loss of Rs25,000 crore in Maharashtra

Mr Gandhi stated, in his legal notice, “The revenue department has informed me that a bizarre policy has been evolved to give away public lands to lessees at 20% to 30% of the Ready Reckoner values. This is arbitrary, since it decides to give largesse only to people who were given leases earlier, and has no rational basis.”

Basically, when any individual or institution gives land or a property on lease and the lease expires, a fresh lease is drawn up at the prevailing market rates if the lessee wants to continue. This simple principle has not been followed in Mumbai and possibly in the state of Maharashtra, according to Mr Gandhi.

Given that real estate values are higher today than many years back, the Maharashtra government ought to lease land at prevailing market rates. Instead, it is being disposed off at a discount. Moreover, the leased land is being given away only for a one-time fee and not on a recurring basis (i.e. lease revenue). This means, the state is devoid of steady and regular income that it needs so badly to service its gargantuan debt of over Rs2.5 lakh crore! Instead, the taxpayers are being made to pay for it.

He stated in an earlier piece, “This is a revenue stream (i.e. lease revenue) which is partial hedge against inflation, saving future generations from having to pay ever higher taxes.” It is estimated that Rs25,000 crore could be generated if lease revenue model is adopted instead of one-time fee.

In the legal notice, Mr Gandhi cited precedents from previous court cases where it was ruled that state governments not only must act rationally but also in a fair and transparent manner. One such precedent, quoted from Sachidanand Pandey Vs State of West Bengal (1987) 2 SCC 295, stated, “State-owned or public-owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles have to be observed. Public interest is the paramount consideration. One of the methods of securing the public interest, when it is considered necessary to dispose of a property, is to sell the property by public auction or by inviting tenders.”

Another precedent, Mr Gandhi quotes the Supreme Court Judgement in the case of Kasturi Lal Krishna Reddy Vs State Jammu & Kashmir (1980), was quoted: “Every action taken by the government must be in public interest; the government cannot act arbitrarily and without reason and if it does, its action would  be liable to be invalidated. If the government awards a contract or leases out or otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touch-stone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid”

Through the notices, Mr Gandhi expects the revenue secretary, Suburban Collector and the Mumbai Collector, to justify their action and method for disposing off lands at cheap rates. “You are a Public servant representing the poorest man in Vidarbha who may be starving, and is an equal and rightful owner of this land. It is necessary that the appropriate revenue is obtained for him, and his land and interest are safeguarded,” he said in the notices.



R Balakrishnan

3 years ago

I think every citizen of Bombay should join this petition. Hats off to Mr Shailesh Gandhi. Please let us know, Sir, if we could join in and strengthen the cause. I think every reader of Moneylife should.

Coal India consolidated Q4 net up 35% at Rs 5,414 crore
The consolidated net profit of the PSU for the year ended 31 March 2013 also went up to Rs17,356 crore against Rs14,788 crore in the previous fiscal
State-owned Coal India (CIL) today reported almost 35% rise in the consolidated net profit at Rs5,413.9 crore for the fourth quarter ended 31 March 2013on the back of lower expenses.
The company’s net profit in January-March quarter last fiscal stood at Rs4,013 crore, the company said in a filing with the exchanges.
The consolidated net sales of the PSU during the quarter also went up from Rs19,904 crore to Rs19,418 crore over the corresponding period of FY12, the statement added.
Total expenses of the company during the period came down to Rs14,225 crore from Rs16,021 crore in Q4 FY12, it said.
Employee benefit expenses of CIL during the quarter reduced to Rs7,469 crore over Rs9,465 crore over the same quarter in FY 2011-12.
The consolidated net profit of the PSU for the year ended 31 March 2013 also went up to Rs17,356 crore against Rs14,788 crore in the previous fiscal.
The income from operations of the company rose to Rs68,302 crore for the year ended 31 March 2013 from Rs62,415 crore in the year-ago period.
The company produced 452.2 million tonnes (MT) of coal in FY13 against 435.8 MT in the FY 2011-12.
CIL’s offtake also went up to 465 MT in the year ended March 31, 2013 against 433 MT in the year-ago period.



Gopalakrishnan T V

3 years ago

The company like other well run PSUs do not share the profit with share holders. The IPO was priced very high and investors have not been benefited so far. The rating of any company should also include inter-alia as to how the share holders have been rewarded by the Company on an year to year basis. SEBI has to ensure that Companies do reward the retail shareholders well to attract them to capital market.



In Reply to Gopalakrishnan T V 3 years ago

The company is paying dividend regularly.i invested during iPo and getting 13.8 rupee dividend at iPo price of 233 which is more than 5% dividend yield.Even at present price it's equivalent to 4.5% dividend yield.It never went ever around IPO price.

Sensex, Nifty at present directionless: Monday Closing Report
Unless the Nifty breaches the high of 6,229, the trend on the index cannot be determined. In fact, there is a strong chance of a decline, despite today’s strong rally

The benchmarks settled 1.66% higher on support from heavyweights in the oil &gas, consumer durables and healthcare sectors. Unless the Nifty breaches the high of 6,229, the trend on the index cannot be determined. In fact, there is a strong chance of a decline, despite today’s strong rally. The National Stock Exchange (NSE) reported a lower volume of 43.01 crore shares and advance-decline ratio of 862:522.


The market opened in the positive on support from Reliance Industries which on Friday announced a huge gas find in its KG-D6 block on the east coast of India. Asian markets were mixed as a strengthening yen weighed on Japanese investors and the Chinese president hinted that the country was prepared for slower economic growth.


The Nifty opened five points higher at 5,989 and the Sensex started the day at 19,751, a rise of 47 points over its previous close. However, profit taking at the open saw the benchmarks falling to their lows in initial trade. At this point the Nifty touched 5,976 and the Sensex slipped to 19,678.


Buying in oil & gas, healthcare and consumer durables stocks soon saw the market brushing aside the early hiccups and move higher. The indices continued to trade firm in the morning session and were steady as trade progressed.


The benchmarks extended their gains in the late session as sectors like consumer durables, oil & gas, healthcare, IT and metal witnessed good buying demand. The gains helped the market its intraday high in the last half of trade. The Nifty went up to 6,100 and the Sensex touched 20,083 at their respective highs, both crossing their psychological levels of 6,100 and 20,000.


The market closed a tad below the highs of the day. The Nifty settled 100 points (1.66%) higher at 6,083 and the Sensex jumped 326 points (1.66%) to finish the session at 20,031.


Among the broader indices, the BSE Mid-cap index climbed 1.14% and the BSE Small-cap index gained 0.79%.


All sectoral gauges closed in the green today. The top gainers were BSE Consumer Durables (up 3%); BSE Oil & Gas (up 2.76%); BSE Metal (up 1.95%); BSE Healthcare (up 1.56%) and BSE TECk (up 1.55%).


Out of the 30 stocks on the Sensex, 27 settled higher. The major gainers were Reliance Industries (up 5.12%); Sun Pharmaceutical Industries (up 4.66%); Jindal Steel & Power (up 3.61%); Bharti Airtel (up 3.31%) and Hindalco Industries (up 3.17%). Cipla (down 1.70%); Mahindra & Mahindra (down 1.60%) and Maruti Suzuki (down 1.09%) were the losers on the index.


The top two A Group gainers on the BSE were—Britannia Industries (up 15.91%) and IndusInd Bank (up 5.99%).

The top two A Group losers on the BSE were—Jet Airways India (down 2.99%) and Prestige Estates (down 2.69%).


The top two B Group gainers on the BSE were—Rathi Steel & Power (up 20%) and Astec Lifesciences (up 19.79%).

The top two B Group losers on the BSE were—Smurthi Organics (down 19.97%) and Remi Metals Gujarat (down 19.94%).


Of the 50 stocks on the Nifty, 43 ended in the in the green. The main gainers were IndusInd Bank (up 6.26%); RIL (up 5.12%); Sun Pharma (up 4.45%); JSPL (up 3.98%) and Bharti Airtel (up 3.85%). The major losers were Cipla (down 1.90%); Maruti Suzuki (down 1.78%); Lupin (down 1.68%); M&M (down 1.66%) and Bank of Baroda (down 1.63%).


Markets in Asia closed mixed as Chinese investors were concerned about the government enhancing measures to curb property prices. The Japanese benchmark tumbled over 3% on uncertainty in the Japanese government bond market.


The Shanghai Composite rose 0.205; the Hang Seng gained 0.30%; the Seoul Composite advanced 0.335 and the Taiwan Weighted surged 0.86%. Among the losers, the Jakarta Composite tanked 1.365; the KLSE Composite declined 0.33%; the Nikkei tumbled 3.22% and the Straits Times lost 0.06%.


At the time of writing, the CAC 40 of France was 0.65% higher and the DAX of Germany was up 0.52% while UK’s FTSE 100 was closed for trade today. While the US markets are also closed for trade, US stocks futures were in the negative.


Back home, institutional investors—both foreign and domestic—were net sellers in the equities segment no Friday. Foreign institutional investors pulled out funds totalling Rs238.56 crore and domestic institutional investors withdrew Rs132.79 crore.


FMCG major Dabur India today announced expansion of its packaged food business with the launch of fruit juice-based drinking yoghurts under the Real Activ brand. The new Real Activ Drinking Yoghurt will be available in two delicious variants of Mango and Strawberry and be available in two stock keeping units of 1 litre and 200 ml priced at Rs105 and Rs25, respectively. The stock shed 0.03% to close at Rs158.10 on the NSE.


Vijay Mallya led-United Spirits today said its board has approved allotment of around 1.45 crore shares on a preferential basis to Relay BV, a subsidiary of Diageo Plc, for a total consideration of nearly Rs2,092 crore as part of the stake sale deal announced last year. The allotment of shares by USL to Relay BV has been according to the preferential allotment agreement inked by three parties—USL, Relay BV and Diageo Plc—on 9 November 2012, it said after its board meeting. United Spirits declined 2.57% to Rs2,502.15 on the NSE.


Gulf Oil Corporation has informed the exchanges that its board has decided to de-merge the lubricants business into a separate listed company. The detailed Scheme of Arrangement will be considered by the board at its next meeting. This move is pursuant to the recommendation of the committee of directors. The stock gained 2.69% to close at Rs66.90 on the NSE.


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