The Cochin Port Trust (CPT) chairman Paul Antony claimed here on Tuesday that 26 acres of land at the Bolgatty Island was leased out to the LuLu group through a transparent and legally sound process. But he could not explain why the land was valued at just Rs 2.1 crore per acre.

He defended the alleged undervaluation by merely insisting that the assessment was done by a valuer approved by the Tariff Authority for Major Ports.

Near the property leased out to the LuLu Group at the Bolgatty Island, land was sold at Rs 9 lakh a cent in 2005, about five years before the port put the value of land at Rs 2.1 lakh per cent. According to Mr. Antony, the land that fetched Rs 9 lakh per cent was for outright sale and it was used for constructing residential apartments. Whereas, the port was only leasing its land and the lessee was specifically barred from constructing residential apartments.

ALSO SEE: Port gets just Rs.71 crore for a deal to build flats worth Rs.1,000 crore

However, land use doesn’t necessarily define prices. The State government paid Rs 50 lakh a cent at MG Road to acquire land for the metro rail project. And the proposal to build 572 “service’’ apartments by the LuLu group and the provision to sub-lease all that is being built by the group on the leased land to third parties have raised questions that are still not answered fully. Nothing in the lease deed forecloses the option of sub-leasing of buildings constructed on the leased land by the LuLu group, which obviously include the “service’’ apartments.

Addressing the media, Mr. Antony said that the Port Trust would not allow residential units to be constructed on the leased land. He claimed that the 572 “service’’ apartments that the LuLu group is planning on the leased land are not residential units but part of its commercial activities. But he could not explain why one of the most important aspects of the project, the “service’’ apartments, was not even mentioned in the lease document signed between the Port Trust and the LuLu group.

In terms of built-up area, 572 apartments in four towers and ground plus eight floors could be as big as, or bigger than the hotel, the convention centre or the shopping arcade. But Mr. Antony insisted that these “service’’ apartments were just allied structures of the hotel.

He admitted that the LuLu group had shown him its plan to build these “service’’ structures, but had not formally applied for permission for construction. “The group said that it will formally submit the application at a later stage.’’

But when asked how the group approached the Kerala Coastal Zone Management Authority (KCZMA) for the Coastal Regulatory Zone approval for the apartments without informing the port, Mr. Antony said, “They might have sought the clearance for the project of hotel, convention centre, service apartments and allied structures at one go.’’ After the group had made its plans and submitted its application with the KCZMA for environmental clearance, Mr. Antony now says, “If the group applies for service apartments, which are part of the modern hotel concepts, the application will be placed before the board of trustees of the CPT for approval.’’ He explained, “Service apartments are part of modern hotel concepts and should be differentiated from residential apartments.

The service apartments will not be allowed to be leased out. Construction of residential complex is not permissible on the leased land. This was confirmed during the pre-bid meeting itself in writing. This was reiterated in writing recently. The group also confirmed in writing that they do not have any intention to construct residential apartments on the land.’’However, the lease deed allows the LuLu group to sub-lease buildings constructed on the leased land, which obviously include the 572 apartments. Mr. Antony said any sub-lease has to be approved by the CPT. “Sub-lease can be permitted only after examining each case separately. Only those proposals that will go along with the main purpose of the project will be permitted,’’ he said. However, Cyril C. George, secretary of the CPT who was present at the press conference, admitted there were no specific guidelines governing the sub-letting of the leased property. Going by the provisions of the lease agreement, the LuLu group will not get back the Rs. 71 crore paid if it walks out of the deal as the money paid was non-refundable, he said.

The port will not negotiate with the group, which had decided to walk out of the deal. Regarding the demand for returning of the upfront payment made by the group, the port will take a legal opinion on the issue as it was an unprecedented event, Mr. Antony said. Mr. Antony claimed that the CPT got the best price for its land. “The bidding process was approved by the High Court. It was also examined by the Central Vigilance Commission and the CBI. The price for the plot was fixed on the basis of the lease rates notified for the area by Tariff Authority of Major Ports, the port regulator. The price quoted by Yusuff Ali was 23 per cent higher than the price. The CPT received only one tender for the lease, which was from Mr. Ali. He offered Rs. 6.74 crore per hectare,’’ he said. But the valuation of the land was not examined by the HC or any probe agency. Questions are being raised primarily on the valuation of the land and the issue of 572 “service’’ apartments.

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