Inside information may well have helped realtors make big land purchases in key sectors prior to change in land use

Haryana Chief Minister Bhupinder Singh Hooda, who has made a staggering 54,000 acres of land available for residential, commercial and industrial use through the notification of three successive master plans for Gurgaon in a span of six years, has often been criticised for customising the land development policies of this fast-growing Delhi suburb for realtors. However, fresh evidence with The Hindu suggests that inside information about crucial changes in land use may have played just as important a role in the remarkable land-to-gold story of many real estate companies.

The downside of the State government’s favourable attitude towards a large group of roughly 400 builders — many of them first-generation entrants in the profession — is that all other stakeholders have found their interests squeezed. Farmers have been unable to cash in on the land boom, while first-generation middle class homeowners have been deprived of affordable housing and basic amenities.

Hooda’s master plan

In most urban areas, a master plan is usually designed for a 10 to 20-year period. The State administration released its first draft Master Plan 2021 on July 11, 2006. The final master plan, notified on February 5, 2007 reflected a dramatic shift from the draft plan, with the land use of as many as 11 sectors changed from public and semi-public/ public utility/ open space/ industrial to residential and commercial. The government did not offer any explanation for the substantial overhaul of this draft plan in the final master plan.

Within four years, on October 4, 2010, the draft Master Plan 2025 was released and eventually notified on May 24, 2011. Between MP2021 and MP2025, the State government converted sectors 63A and 67A, accounting for roughly 500 acres of agricultural land, to residential land use.

In a little over a year, on November 15, 2012, the draft Master Plan 2031 was released and finally notified on September 4, 2012 after the conversion of roughly 2,200 acres of Special Economic Zone (SEZ) land into residential/commercial use, and parts of sector 115 accounting for roughly 81.57 acres — which was earlier earmarked for public and semi-public use — to commercial use.

The State governments’ explanation for rushing into MP2031 was that, “The scenario regarding setting up of SEZs has undergone sea change since notification of these plans and virtually there are no more takers for SEZs now. Even the already notified SEZs are not being implemented and resultantly, the landowners of such land were demanding replanning of their land so that they are able to utilise the same for some other purpose.” The government went ahead and cancelled the notification of the entire 25,000 acres earmarked for SEZs. But instead of allowing the original landowners to benefit, it permitted failed SEZ developers to obtain licences to develop industrial colonies on the same land. Overall, despite its stated mandate to increase industrial development, land allocated for industrial use was actually reduced by 2020 acres in MP2031.

The SEZ land issue remains controversial. Despite the State government’s projection that SEZs would create five lakh jobs, with a guarantee that at least one member of each family that gives up its land for the project would be given employment, farmers remained unconvinced and unwilling to cooperate. This led to forcible possession of their land by the State with the intervention of the Haryana police force. Litigation involving hundreds of acres is pending in the Punjab and Haryana High Court since 2007.

Inside information?

Even before the draft Master Plan of 2021, builders were actively engaged in purchasing land from farmers. There was an over 30-fold surge in the purchase of land after Mr. Hooda took office in May 2005. Information pertaining to just five builders — Ramprastha, Chintel, DLF, Bestech and M3M — reflects an over Rs. 40,000 crore escalation in the value of roughly 1,000 acres of land through MP2021 alone.

The Hindu has in its possession the sale deeds of properties purchased between the draft MP 2021 and the final MP2021, which reveal that builders like Ramprastha and Bestech, Jubilant Software Services, Nayef Estate, Maria Bella Builders, Sagar Dutt Builders, NCC Urban Infra Ltd, Excellent Advertising & Marketing, Generous Realtors, ALM Infotech, Akina Builders & Developers and others were buying land in just those sectors — 37C, 37D, 95, and 107 — in which land use was eventually changed from SEZ/public & semi-public/industrial use to residential use in the final Master Plan.

Ramprastha Builders, for example, purchased roughly 500 acres of land at an average rate of Rs 1 crore/acre in sectors 37D and 95 through its subsidiary firms Ramprastha Infotech, Ramprastha Towers, Ramprastha Greens and others, precisely in those areas which were later changed into residential use in MP2021. The value of this huge acreage immediately escalated 10 times upon notification of the Plan, jumping further to roughly Rs. 40 crore/acre, after these were licensed in phases into plotted and group housing projects from 2008 — an overall escalation of roughly Rs. 19,500 crore. For some reason, Ramprastha’s director, Arvind Walia, purchased land in Hayatpur in his own name, later selling these properties to his own company at a substantially discounted rate of Rs. 27 lakh/acre.

Though the benefit was directed at Ramprastha, the Department of Town & Country Planning (TCP), Haryana, justified the move to convert selective parts of SEZ land to residential as being prompted “primarily on the report received from HSIIDC,” after which “Sector 37C proposed in the Draft DP-2021 as industrial was re-designated as residential zone in Final DP 2021 … and … Sector 37D which formed part of SEZ in the Draft DP 2021 was carved out as residential zone.” Despite no benefit accruing to either HSIIDC or farmers/landowners, the Department, in an email response to a written questionnaire, further attributed the move to the fact that, “around 38 objections were also received from the villagers of Garauli Khurd, Basai, Mohammedpur Jharsa and Harsaru for either excluding their abadi areas from industrial/SEZ zone or for designating their land under residential land use zone.” DP, or Development Plan, is the term the TCP uses for Master Plan.

In some cases, for builders like M3M, DLF, Jubilant Software, Bestech, and the Chintel Group, which had already purchased land in Sectors 88, 91, 107 and 114, before it was designated for public & semi-public use in the draft MP 2021, the land use for their property holdings alone and not the entire sector (except for sector 88 whose land use was converted in total) was later changed to residential/commercial in the final MP2021. Bestech, which was licensed roughly 33 acres of commercial land in sector 88, became the beneficiary of a 50-fold escalation in land value from its average purchase price of Rs 1 crore/acre. DLF, with the largest landholding of roughly 150 acres in sectors 91/92 and M3M — which held the maximum holding in sector 107 (of which 19 acres has already been licensed) — went on to attract similar escalations.

On July 14, 2009, a meeting of State government officials held under the chairmanship of Mr Hooda, cleared the increase of sector density across Haryana from 80 PPA (Person Per Acre) to 100 PPA and from 100 PPA to 120 PPA, a move that was additionally of special benefit to realtors.

Soon after, the State administration felt the need for yet another Master Plan 2025, justifying the move as the need to provide for additional road links between Delhi and Gurgaon, storm water drains and SEZs. Apart from this, sector 63A was specially carved out of agricultural areas for residential use, of which the biggest contiguous stretch of 100.262 acres, was licensed to Anant Raj Industries for a plotted colony. The value of this land escalated 20 times after the notification of MP2025.

In MP2031, roughly 2,200 acres of land across new sectors — 36A, 36B, 88A, 88B, 89A, 89B, 95A, 95B, 99A and some parts of 88 — designated for the Reliance SEZ, and sector 115, which fell under public & semi-public use, were converted to residential/commercial use. The key beneficiaries of this move were the Ramprastha Group, Vatika Group, Pareena Group, Chintel Group and India Bulls, mainly through its subsidiary firms Corus and Hasta. However, the Haryana government has claimed that its “primary reason for initiating revision of the Final Development Plan of 2025 AD” was to accommodate demands from farmers for replanning of their land on already notified SEZs. On cue, land values appreciated 30 to 40-fold. Pareena Infrastructure, (in the name of Monex Infrastructure Pvt Ltd) which was the first to obtain a licence for 10.59 acres in sector 99A on March 12, 2013, is a telling example, presently selling its residential apartments at Rs. 5,000/sq ft, translating to a value of well over Rs. 40 crore/acre.

Pareena Infrastructure started selling its apartments in Sector 99A even before obtaining its license and subsequent approval of building plans. Receipt of any payment against sale/transfer of flats/plots is liable for suspension of licence. However, despite the evidence, TCP, Haryana says that investigation of a complaint regarding Pareena concluded that “the matter relates to Sector 99 Gurgaon … and not against any project in Sector 99A,” while conceding that “any attempt to advertise the sale of plots/flats without obtaining a license is considered an offence under Section 7 of the Haryana Development and Regulation of Urban Areas Act, 1975, and Penal action under Section 10 can be initiated against the offending parties in all such cases.”

The Chintel Group — owned by Ashok Solomon — which owns roughly 500 acres of prime land in sectors 106, 108, 109, 114, and 115, was not just a key beneficiary of MP2021, but also of MP2031, which changed the land use of half the public and semi-public zone in sector 115 to commercial, on the pretext that “it will fetch revenue to Government exchequer being its proximity to Delhi.” The value of this land immediately jumped 70-fold. The sector plan reveals that the Chintel Group will be the only builder to obtain a licence for commercial development in sector 115, as it owns 50 per cent of the converted land (81.57 acres), with the remaining 50 per cent under litigation, ensuring that there can be no other beneficiaries. TCP Haryana further admitted in its reply that the limited revenue through statutory fees and charges is still to accrue to the State exchequer, since even a single licence is yet to be given.

Act ignored

Further to the advantage of the benefiting builders, Mr. Hooda has additionally frowned upon an important safeguard designed to ensure that housing remains affordable for consumers and arrest the use of black money in real estate. The bilateral agreement between the State government and coloniser under the Haryana Development and Regulation of Urban Areas Act 1975, states that in case the net profit of the owner/coloniser exceeds 15 per cent of the total project cost of development of a colony after making provisions of statutory taxes after completion of the project period, “the surplus amount shall either be deposited within two months in the State government treasury by the owner or he shall spend this money on further amenities/facilities in his colony for the benefit of the residents therein.”

However, on March 17, 2010, the minutes of a meeting held under the chairmanship of Mr. Hooda, conclude that “the 15 per cent profitability clause should be done away with,” while acknowledging that “the government should impose some levy while doing away with the clause,” since developers cannot be allowed “undue enrichment without sharing part of the profit with the government.” As per the norms, any coloniser can seek exemption from the 15 per cent profitability ceiling by opting to deposit Infrastructure Augmentation Charges. Both levies are only applicable after grant of Completion Certificate under Rule 16, but are bypassed by not applying for the Completion Certificate in the first place. The minutes itself admit: “as none of the colonisers has been granted final Completion Certificate till date, no exercise has been done by the Department to compute this profit in a single case.”

So while it is the builders and the State government’s responsibility to ensure that consumers occupy a property only after the builder has obtained a completion certificate (for group housing, commercial and IT developments), the State administration itself admits to almost a blanket violation of this provision despite the fact that this can attract cancellation of the licence.

Gurgaon’s residents are litigating against builders for non-provision of basic amenities like “maintenance and upkeep of all roads, open spaces, public parks, public health services.” These amenities are mandatory under the Bilateral Agreement between builders and the government “for five years from the date of issue of Completion Certificate under rule-16 unless earlier relieved of this responsibility,” after which all such amenities have to be transferred to the government or local authority free of cost.