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CAG pulls up MMRDA for failure to recover Rs 770 crores from RIL

[ecis2016.org] The Comptroller and Auditor General of India has pulled up the MMRDA for non-recovery of Rs 770 crores, due from the Mukesh Ambani-owned Reliance Industries Limited

The Comptroller and Auditor General of India (CAG), in a report tabled in the Maharashtra legislature, on March 28, 2018, has said that the Mumbai Metropolitan Region Development Authority (MMRDA) is yet to recover Rs 855.59 crores from Reliance Industries Limited (RIL) and Starlight Systems Private Limited, as lease premium dues on additional built-up area allowed to the lessees in Mumbai’s Bandra-Kurla Complex. The report said MMRDA also gave ‘undue favour’ to RIL, by not recovering additional premium and interest to the tune of Rs 428 crores, for delay in construction, in contravention of the terms and conditions of the lease deed and the premium.

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It said the MMRDA has been regularly recovering full additional premium, including interest, in respect of other allottees, who had delayed construction of structures within the time specified in the lease deed. Therefore, the undue favour shown by the authority to Reliance Industries in this regard, is inexplicable, the CAG said. “The MMRDA allotted (December 2007) plot no. C-66 in G-block, Bandra-Kurla Complex measuring 10,183.18 sq metres on lease, for a period of 80 years. The total lease premium payable was Rs 918.03 crores. The stipulated period for construction of the complex was four years, i.e., by July 14, 2012,” CAG said. “The Metropolitan Commissioner, however, could permit extension of such time on payment of additional premium, worked out at prescribed rates of lease premium, i.e., 10 per cent per annum for delay in construction up to three years and 15 per cent beyond three years,” it said.

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Failure to pay the additional premium attracted penal interest of 14 per cent, the report said. “Scrutiny of records of the Metropolitan Commissioner, MMRDA revealed (March 2017) that the work was not completed within the stipulated period as per the terms of the lease deed,” it said. “The Authority issued (August 2014) a notice to the allottee to pay the dues as per lease agreement if they failed to pay the outstanding dues of Rs 312.98 crores by June 2014, towards the additional premium, along with interest on account of delay in construction. MMRDA had not recovered the requisite additional premium of Rs 273.56 crores till date (July 2017) towards the delay of three years and one month in completion of the construction. Besides interest of 14 per cent for non-payment of the above additional premium as of July 2017, which worked out to Rs 154.45 crores, was also recoverable. This resulted in undue benefit to the allottee,” the report said.

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The CAG pointed to various discrepancies in recovery of the amount by the MMRDA in other case. “MMRDA did not recover lease premium dues as per the prescribed schedule on additional built-up area allowed to the lessees, resulting in non-recovery of Rs 855.59 crores as of March 2017,” the report said. “MMRDA had allotted (March 2012) an additional built-up area of 67,000 sq metres for Rs 984.90 crores to RIL. The first installment of the 20 per cent of lease premium, was to be paid immediately and balance, in four equal annual installments, with simple interest of 10 per cent of lease premium and penal interest at 14 per cent for delayed payments. The lessee was required to pay Rs 1,181 crores by March 2016,” the report said.

“Considering simple interest and delayed interest, the allottee was required to pay Rs 1,339 crores. However, it paid Rs 696 crores and MMRDA did not demand payment of remaining Rs 643 crores. After a year, MMRDA issued a notice when the dues had increased to Rs 770 crores,” the report said. In a similar case, the MMRDA failed to recover Rs 85 crores from Starlight Systems Private Limited, the CAG report said.

Source: https://ecis2016.org/.
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Source: https://ecis2016.org
Category: Lifestyle

Debora Berti

Università degli Studi di Firenze, IT

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