The Bruhat Bangalore Mahanagara Palike withheld information about a mortgage from the Bangalore Development Authority when it handed over the Malleswaram market for joint development, according to documents accessed by RTI activist B.M. Shivakumar.

In a May 16, 2012 memorandum of understanding between the two agencies, the BBMP said the project site is “free from all encumbrances”. However, documents accessed by Mr. Shivakumar under the RTI Act show that the market was mortgaged to the Housing and Urban Development Corporation (HUDCO) by the BBMP on March 23, 2012, for Rs. 256.53 crore.

Not only did the suppression of this fact impact the BDA adversely, it also was done without the knowledge of HUDCO, alleges Mr. Shivakumar. “It is just like transfer or sale of a property on which you have taken a loan. You cannot enter into such a transaction without the knowledge of the bank or credit agency. And not informing the beneficiary of the sale or transfer about the mortgage also amounts to fraud.”

The BDA has taken another loan on the property from the contractor hired to construct a new mall in place of the old market. Owing to financial crunch, the BDA has promised to treat the Rs. 132 crore payable for construction of the market as a loan from the builder. This money will be paid to the contractor in six annual instalments with a 14 per cent interest, amounting to Rs. 18.5 crore per year only as interest.

“How can you take a loan on the same property twice?” Mr. Shivakumar asks. However, he says that even after he brought the issue to the notice of the BDA Commissioner, he took no action. Both the BBMP Commissioner as well as the BDA Commissioner were unavailable for comment.