National Capital Territory of Delhi
In the HUDCO Place Andrews Ganj Land Scam book Alborz covers the many fly-by-night fraud operators concealing various facts regarding the title and approval of building plans. The boom in the hotel industry and the appreciation for land in India brought these fraudsters to light, more particularly in the National Capital Territory of Delhi; where every property dealer became a builder.
As HUDCO defrauded the investor out of a five-star hotel land deal without the sanction of a revised layout plan and land use of the hotel with 363 rooms, 9 restaurants, and 25 shops at Andrews Ganj. The prospective investor turned out to be MS Shoes East Limited. In this fraud, the Ministry of Urban Development was involved, which per law could be termed as a conspirator. It was naïve for MS Shoes because justice for fraud victims is a long drawn and uncertain process. The complex nature of disputes takes nearly half a century to get justice from courts as per the litigation policy of the Government.
Andrews Ganj, HUDCO, and the Ministry of Urban Development have left wringing hands in despair after paying 40% of the total consideration of Rs. 177.10 crores (US Dollars 56.45 million) towards these properties which turned out to be unauthorized buildings. All of which was concealed by HUDCO in conspiracy with the Government and its officials. HUDCO’s demand of another 40% without regularizations of the buildings besides several other sanctions for utilities like electricity connection, water connection, etc. was still pending. Issues like plot in unauthorized layout or without land use, buildings constructed with land use violation, setback violations, floor area violations, etc. all were detected by MS Shoes after issue of allotment letters by HUDCO. However, HUDCO continued to demand another 40% threatening to forfeit the amount of Rs. 68.68 crores (US Dollars 21.89 million) paid by MS Shoes, which was illegally forfeited by HUDCO with the connivance of the then Government and its officials.
HUDCO being a Government owned company and the lessor being the Government of India, MS Shoes could have not doubted their background, no such research should have been required to check the Government’s credibility. Brochures circulated by HUDCO and pre-bid meetings called further proving their reputation as being a Government-owned company. However, they were quick to circumvent any negative opinion about Andrews Ganj Land projects offered by HUDCO taking the Ministry of Urban Development name in the brochure. HUDCO was directed by the Congress Government that they must somehow get the money by selling the properties, as prices of lands had boomed to the maximum.
Leela Hotels were careful meeting with Pavan Sachdeva before bidding; during which Pavan explained the problems with the land. Mr. Vivek Nair, Managing Director of Leela Hotels Ltd. was very careful as there were media reports regarding the fraud committed by HUDCO. Mr. Vivek Nair met the Commissioner, Municipal Corporation of Delhi, he did all the surveys and search reports of the five-star hotel land after which he did the bid. Leela Hotels Ltd. had been allotted in March 1997 the five-star hotel land subject to the outcome of pending litigation of MS Shoes.
Leela Hotels Ltd. was cheated by HUDCO and its officers, but Leela Hotels Ltd. finally succeeded in the refund of their money with compounded interest. They struggled for two years to get the building plans sanctioned for hotel construction. Because of the revised layout plans and land use regularization, hotel building plans could not be sanctioned. All the plans of the buildings constructed by HUDCO including the completion certificates, revised layout plans, regularization of land use and approval of service plans, storm or water drainage plans were sanctioned by 7th September 1999. All compounding charges were approved reluctantly since the case was being fait accompli.
HUDCO lured to sell the properties by concealing its title, not disclosing unauthorized constructions. Finally, they chalked out a plan with the ministry, HUDCO met the funding to lend money to various corporates earning 14 percent to 18 percent monthly compounded interest. Advertisements were issued with false promises which are part of the brochure under which bids were invited.
Under the circumstances, MS Shoes as an investor continues to suffer the monies paid in July 1994 till February 1995 while HUDCO and Government continue to enjoy the possession of properties, as well as, appreciation of the value of the properties from Rs. 177 Crores (US Dollars 56.42 million) to Rs. 5000 Crores (US Dollars 1593.87 million). Besides earning interest in Rs. 68.68 Crores (US Dollars 21.89 million) got fraudulently, misrepresenting various facts and concealing the truth which has led HUDCO to earn Rs. 4000 crores (US Dollars 1275.10 million) in the last 25 years. These profits were made on monies received from MS Shoes by lending the same amount to borrowers on 18% interest compounded quarterly. The scam includes 51,000 shareholders all over India who still suffer alongside MS Shoes.