Powai land scam: Hiranandani, senior IAS officer under ACB scanner
Moneylife Digital Team 04 July 2012

Out of the government-sanctioned built-up area for development of Powai land, Hiranandani utilised only a part, while the rest was converted into luxury apartments and sold at a premium price

A special court has asked the Maharashtra Anti-Corruption Bureau (ACB) to inquire into a criminal complaint filed against real estate developer Niranjan Hiranandani and a senior IAS officer in connection with the alleged irregularities in a housing project at Powai in Mumbai.

Special court judge VA Daulatabadkar asked the ACB to investigate under the provisions of Section 156(3) of the Code of Criminal Procedures, 1973, and register a first information report (FIR) against Thomas Benjamin, additional chief secretary, Urban Development Department, Maharashtra and Niranjan Hiranandani, the founder of Hirco and co-founder of the Hiranandani Group.

The complaint was filed by activist Santosh Daundkar, who alleged that the developer cheated the state government by using government land for his own benefit.

On 30 June 2011, Mr Daundkar filed the complaint with the ACB. However the Bureau, instead of registering an FIR, referred to matter to the government. Mr Daundkar, then in April 2012 filed a criminal complaint with Special Court for Anti-Corruption under the provisions of Code of Criminal Procedure, 1973.

Former IPS officer and lawyer YP Singh, who argued the case before the court on behalf of Mr Daundkar, said, "As the investigation of this case would unfold, what may be witnessed could be the largest and the biggest land scam of modern India, where several politicians and bureaucrats were bribed as this fraud and game of corruption went on openly in the last 20 years. It is suspected that hundreds of flats were doled out as bribes to many politicians and bureaucrats to facilitate the fraud. Time will indeed unravel the truth if the investigation goes on honestly, efficiently and on the desired lines."

The case relates to 344 acres land at Powai. In January 1977, the Mumbai Metropolitan Region Development Authority (MMRDA), prepared and approved a scheme, "Powai Area Development Scheme", to develop the 344 acres. This land became the subject matter of acquisition under the Urban Land (Ceiling and Regulation) Act, 1976, (ULC Act) so that this scheme for massing housing could be implemented.

Since during the contemporary period, the ULC Act was in force, and the acquired land could be used only for mass housing, it was then thought expedient by the Government of Maharashtra that in case the said land was returned to the landowners and the said landowners undertake to use the land for mass housing, which was also the purpose of ULC Act, in that eventuality, the said land could be returned to the landowners.
The state government then decided to return the land to its erstwhile owners so that it can be used for mass housing. However, Mr Hiranandani, who was holding power of attorney (PoA) from the land owners, ended up getting the land at Re1 per hectare. Here are the main conditions of the said tripartite agreement...

1. The entire land admeasuring 341 acres shall be returned to the land owners, whose Power of Attorney was held by Mr Hiranandani @ Re1/- per hectare.
2. The land owners would be given this land for the lease of 80 years commencing from 19th November, 1986.
3. The entire land was to be exempted from the provisions of Urban Land (Ceiling and Regulation) Act, 1976, by the MMRDA so that the land owners could hold and develop the property in excess of ceiling limit of 500 sq metres.
4. The land had to be developed as per Powai Area Development Scheme for mass housing. Any type of buildings having flats, apartments, tenements, units, premises, houses, bungalows, had to be of the following sizes:
            (a) 50% of the units shall be less than 40 sq m.
            (b) The rest of 50% of units shall be less than 80 sq m. The entire infrastructure shall be prepared in 10 years.

After getting possession of the land, the developer with help and support from the statutory officials, built a township, which became a landmark of Mumbai in terms of luxury and opulence, Mr Daundkar alleged in his complaint.

He said, "Barring the tenements compulsorily required to be surrendered to the government, there was not a single tenement in the entire complex, except the free tenements surrendered to the government, several kilometres long and broad, which was of the size of 40 sq m. In this way, the rule of law got completely shattered for the reason of machination of accused Mr Hiranandani with public servants."

An inquiry conducted in 2009 revealed that out of the government-sanctioned built-up area, the developer had utilised only a part, while the rest was converted into luxury apartments, which were sold at a premium price, the complaint said.

Mr Daundkar cited a comment by the then MMRDA commissioner Ratnakar Gaikwad from the inquiry report, which says, "Powai Area Development Scheme has been made with the intention of making affordable housing available to the people and to make this objective successful such conditions had been stipulated. However, as per what has been shown above and after going through all the papers, Niranjan Hiranandani, the Power of Attorney holder on behalf of land owners, has violated the Tripartite Agreement condition No 7(3) and the Exemption Order granted under the ULC act, 1976 on 12.2.1987. Therefore, Niranjan Hiranandani, holding the Power of Attorney on behalf of land owners, the Exemption Order issued to him under the Urban Land (Ceiling and Regulation) Act, 1976 on 12.2.1987 be cancelled, the lease agreement executed on 19.11.1986 be cancelled, and in that situation the possession of the land be taken."

According to Mr Daundkar, even after that Thomas Benjamin, principal secretary of the Urban Development Department issued a letter on 4 November 2009, in which he allegedly took following decisions...

(a) Land not to be taken back even though it was meant for mass housing.
(b) To permit 100% extra floor space index (FSI) to be used on account of transfer of development rights (TDR) without putting in the stipulation of mass housing even though the agreement condition stipulated that every form of FSI shall be used for mass housing.
(c) To not to insist on 15% of tenements to be surrendered to Government of Maharashtra on account of construction done by using TDR FSI. As per the agreement every form of FSI, including the TDR FSI had to be reckoned and 15% of gross FSI (i.e. of both normal FSI and TDR FSI) had to be given to Government of Maharashtra at stipulated concessional rates in the form of small tenements.
(d) To condone the infringement of making massive luxurious houses instead of making small houses for mass housing.
(e) Permitting the retention of illegally merged tenements so as to give them a shape of large luxurious houses.
(f) To use the liberal rules of 2007 even though the agreement for mass housing was signed in the year 1986 and that rules of 2007 could never have been applied for a land given for mass housing in the year 1986.
(g) To exclude lift, lobby and many other constructions from FSI computation by using the Development Control Regulations of 1991 whereas in the applicable rule during the year 1986 was Development Control Rules, 1967, which were not so much liberal.
(h) To permit construction of commercial areas in the complex whereas the agreement of 1986 did not make any such provision and was strictly meant for mass housing. It was for this illegal relaxation to the sacrosanct provisions of the agreement that commercial buildings of enormous sizes have come up in the place which was to be for mass housing.
(i) Creation of a legal fiction whereby the matter could be settled by imposing fine. Initially a fine of about Rs2,000 crore was proposed. Now it is learnt that the same has been brought down to about Rs200 crore or even less.
(j) To let off Accused No. 1 without facing prosecution for criminal breach of trust, and violation of the Urban Land (Ceiling and Regulation) Act, 1976 and also the Prevention of Corruption Act, 1988.
(k) To not to take any action against the public servants who allowed this fraud to take place right before their eyes for almost 20 years.
(l) To permit Accused No. 1 to not to dismantle the construction which was under way and half done and to convert the same into small tenements.

Even after completing four years, Mr Benjamin continues to be secretary at the Urban Development Department, notwithstanding the fact that as per Section 3 of the Maharashtra Government Servants Regulation of Transfer and Prevention of Delay in Discharge of Official Duties Act, 2005, the maximum tenure is just three years, Mr Daundkar said.

"This clearly indicates that he has got a support of political leadership who is according protection and even illegal extension in tenure in the Urban Development Department. A full and complete investigation into the case shall reveal his political nexus," he added.

According to YP Singh the scam is estimated to be more than Rs45,000 crore. "With a net FSI of about 3 crore sq ft (Super built-up area shall be about 40% more) and with the going rate of Rs15,000 per sq ft (leaving aside the gain from super built-up area) this fraud is estimated to be of more than Rs45,000 crore," the lawyer said.

"We blame poor slum-dwellers for encroachment, but what will they do when persons like Mr Hiranandani grab that land which is meant for the poor and for mass housing," he asked.

Rajkumar Singh
1 decade ago
It is a well known fact that such scams, scandals are being done to get help from the government in order to help the government in distress. Just like, give and take type of friendships.

These will go on in connivance with any government, that has been sent by any Team or the disunited people, for the simple reason that we have NO SAY in the election and selection of candidates and the laws (rules and regulations.

And, we simply transfer our SAY or POWER from one government (Team) to another government (Team), and continue to like and dislike each other to live a troublesome journey of selfish life!
Geogi Kuruvilla
1 decade ago
Hiranandani seems to be in trouble for all the frauds committed by them. Also COMPAT, the Competition Appellate Tribunal decided to send a notice to Hirco on 12 July 2012
1 decade ago
There should be no such thing as poor, low cost and mass housing. Sell the land as per demand and supply. Blame the government for subsidising and distorting the market. Powai is almost central Mumbai...why should poor people get housing there at low rates, which they will themselves sell and make money. Land should be sold for the correct price and the money should be used wisely towards the infrastructure and other aspects of the city.
1 decade ago
It is a real state scam..here is no doubt.
Now look at AUdacity of Niranjan Hiranandani. NH agreed at Supreme COurt that he will now make 40SqM & 80Sqm flats. His interview was published in Outlook Business recently. There NH states that Supreme court has only directed him to make 40 & 80 SqM flats but nowhere the judgement states at what price these flats are to be sold. So NH plans to make these flats & sell them at current Mkt rate of over 15000 psft.
Also BMC had stated to Bombay HC that the newly constructed buildings will not be given OC till the reqd flats are handed over to weaker section. But all teh buildings are now occupied - some wout OC - like Taurus, Richmond & so on. BMC is aware but as its palms are well greased, no action is being taken. This is a direct violation of court orders. But then who is going to bell the cat??
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