News: Wave, 3C & Logix Group got 80% of business land in Noida, ran up Rs 14,000 crore dues: CAG-18-12-2021
Of the total allotments made in 2005-2018, 79.8% of commercial land was allotted to these three companies, the auditor found, adding an examination revealed violations of terms and conditions by them with the acquiescence of Noida officials.
NOIDA: : In its performance audit of the Noida Authority, the Comptroller and Auditor General (CAG) has found that three developers - Wave, 3C and the Logix Group - bagged the lion's share of commercial land allotments made between 2005 and 2018 and there was a "systematic failure to take action" even though the collective dues crossed Rs 14,000 crore by March 2020. "Multiple cases involving dereliction of duty by concerned officials calls for stringent action to be taken by the government," the central auditor observed in the report.
Of the total allotments made in 2005-2018, 79.8% of commercial land was allotted to these three companies, the auditor found, adding an examination revealed violations of terms and conditions by them with the acquiescence of Noida officials. In stinging observations, which echoed the Supreme Court's observations on collusion between Noida Authority officials and the developer in hearings into the legality of the Emerald Court twin towers earlier this year, the CGA report noted, "The systematic failure to take action therein despite repeated violations combined with instances of non-payment involving outstanding dues of over Rs 14,000 crore suggests that the prime objective of Noida appeared to be allocation of land to them and enable them to further benefit rather than for the purposes of commercial development." According to the auditor, Wave was allotted 6.63 lakh square metres between 2008 and 2010, Logix 10.76 lakh sqm between 2010 and 2011 and 3C 21.71 lakh sq metres between 2010 and 2014. Out of the total area of 48,98,440 sqm allotted in the commercial category during the period under audit, 39,10,376 sqm area was allotted to these three companies. Against allotments of Rs 15,694 crore, the dues stood at Rs 14,958.45 crore on March 31, 2020, the auditor said. Wave has already moved the National Company Law Tribunal, expressing its inability to develop the project. 3C and Logix have subleased most of their land to third parties for development. Noida had not prescribed any criteria to assess the capability of promoters to complete projects within the stipulated time, while making multiple allotment of plots to the same group, the report said. As a result, 12 projects among the 16 allotted plots could not be completed till November 2020. The Noida Authority failed to monitor the execution of projects, the CAG noted. The report also pointed out that during 2010-2013, Noida Authority's failures in due diligence and lacunae in policies led to transfer of commercial properties to ineligible entities. The audit found that plots worth Rs 1,680 crore (1.43 lakh sqm) were allotted to entities, which were prima facie ineligible, not meeting the technical criteria. Further, the relevant members on whose credentials a consortium qualified, exited within a short period (five days to 13 months) of the allotment. Thus, the land went into the hands of entities incapable of executing projects, the CAG noted. Plots were transferred without levying the requisite fees, leading not only to a loss of Rs 83.49 crore to the Noida Authority but also facilitating backdoor entry to entities not fulfilling the qualification criteria. This resulted in non-execution of projects while Noida facilitated allottees by continuously relaxing the conditions, the audit report observed.
The provision of reschedulement of payments was introduced to provide one-time relief to allottees but the CAG noticed that repeated reschedulements were permitted in seven cases even though no payments were made. As a result, dues of these seven allottees spiralled to Rs 4,257 crore against an allotment value of Rs 2,383 crore, the audit found, adding Noida had also failed to take any action against these seven defaulters.
