Real-estate giants Hiranandani Group may soon be beneficiaries of a benevolent government which has decided to substantially reduce a penalty imposed on the firm for violations in the Powai land-development agreement.
Sources in the Democratic Front (DF) told Mumbai Mirror that a decision has been taken to reduce the penalty of Rs 1,993 crore – which was recommended by the Mumbai Metropolitan Region Development Authority (MMRDA) – to Rs 218 crore.
This resolve would soon be communicated – as part of the action-taken report – to the Bombay High Court where at least three petitions are pending against the firm.

On September 2, last year, this newspaper had reported how the MMRDA had uncovered large-scale violations by the group in the villages of Powai, Kopri and Tirandaz.
The 230-acre land was leased to the group in 1986 to create “affordable housing” through a tripartite agreement between the Government of Maharashtra, MMRDA (who drafted the Powai Area Development Scheme) and the Hiranandani Group.
The developers – MMRDA says – have instead turned the land into a complex of high-end apartments.
Citing a number of violations, the MMRDA had recommended immediate stoppage of construction work, and the withdrawal of all concessions given to the builders. It also demanded that the land be taken back as is.
The DF government, instead, directed the MMRDA to calculate the complete nature of the violations.
Therefore – after scrutinising all the records available with the BMC – the MMRDA submitted its report in January 2009, and recommended a penalty of Rs 1,993 crore on the builder.
This penalty was based on three alleged violations: differential areas of the flats, construction of commercial complexes and the usage of TDR (Transfer of Development Rights).
While permission was granted for only 40 and 80 sq-metre flats, the developer had constructed apartments measuring 200 to 400 sq metres. The penalty proposed for this violation itself was pegged at Rs 946 crore.
A further penalty of Rs 597 crore was imposed on the developer for constructing commercial complexes when no such permission was given under the agreement.
And finally, a ‘penal premium’ of Rs 448 crore was to be levied on the developers for the usage of TDR.
The Hiranandani Group, however, has always denied any violations and has adopted a stand that it was armed with all the necessary permissions by the government.
When contacted, T C Benjamin, principal secretary of the Urban Development Department, said: "The Hiranandani Group had made a representation to the government after MMRDA submitted its report, and requested that it take into consideration the various permissions that were subsequently given to it. The builder also pointed out the clause that allows for 15 per cent commercial use of the land, permissible under the government rules."
Benjamin, however, refused to divulge any details about how the Rs 218-crore penalty was arrived at.
230 acres in a nutshell!
In a bid to provide “affordable” housing, the State Government and MMRDA acquired 230 acres of land from the villages of Powai, Kopri and Tirandaz at 40 paise per acre in the ‘70s, and set up the Powai Area Development Scheme.
In 1986, the government and MMRDA signed an agreement with the original 19 land holders to develop it on the condition that 50 per cent of the residential units built would admeasure around 430 sq ft, while the remaining 50 per cent units would extend to roughly 860 sq ft. Out of the 230 acres thus available for development, Niranjan Hiranandani, who was given the power of attorney by the original land owners, undertook the development.
Over the last two decades, the Hiranandani Group has built a sprawling complex with over 3,000 flats. The complex also boasts a five-star hotel.
Interestingly, less that 15 per cent of the flats in the complex adhere to the prescribed low costing housing norms. The land which was acquired at 40 paisa per acre to build affordable housing today goes at Rs 10,000 per sq ft.

Copyright 2008 Bennett Coleman & Co. Ltd. . All rights reserved.

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