 "Sebi's largest property fire sale crosses the first hurdle")
In the next stage, the people who have successfully filed their EOI would be able to participate in the bidding process. The reserve price would be fixed, taking into account the prevailing market prices and circle rates.
These properties are being put on sale by Sebi under the supervision of a Supreme Court, appointed committee headed by former chief justice R M Lodha. The proceeds of the sale are to be used to repay over 56 million investors who had put in over ~49,000 crore in PACL’s investment schemes, which were held to be illegal.
Business Standard dug into the land documents and recently visited some locations in Tamil Nadu, which had most properties on sale, to understand the intricacies and challenges of the first of its kind effort in India, and probably the world.
Not many have heard of Tarlochan Singh in Sivaganga or its neighbouring areas, but the arrested director of PACL is one of the largest landlords in this lesser developed district in south-eastern Tamil Nadu.
In fact, the undivided Ramanathapuram district, known for uncultivable waste lands, used to be referred to as a punishment area for government officials. It is no coincidence that Singh and his company landed here looking for cheap land. The undivided Ramanathapuram district accounted for over 3,900 properties, nearly half the number in Tamil Nadu. Of late, several integrated farms and solar projects have come up in these areas.
Singh’s name appeared on hundreds of properties in Ramanathapuram, Virudhunagar, Thoothukudi and Tirunelveli.
Singh alone lords over some 2,675 properties, 2,661 of which are in Tamil Nadu. Properties are held in names of other directors and executives such as Subratu Bhattacharya and Gopal Garg. But nobody comes close to Singh. A large number of properties are also held in PACL India’s name.
Over 26,500 such properties across 23 states are now on sale. While Tamil Nadu topped the list with 8,193 properties, Madhya Pradesh and Rajasthan followed with 4,478 and 3,818 land parcels, respectively.
In comparison, Sebi had to deal with over 3,200 title deeds in a similar exercise to sell properties of Sahara group. This process has been outsourced to HDFC Realty and SBI Capital Markets.
Last month, Sebi had sold around 30 luxury cars belonging to the group in a similar public auction. While that auction was conducted by state-owned firm MSTC India, Sebi took a different route considering the size and complexity of this exercise.
It has launched a separate portal called auctionpacl.com, designed and managed by the document management arm of Stock Holding Corporation of India. Though the portal was user-friendly, the window of 21 days given by Sebi was probably short for users to get familiar with it and locate properties they might have wanted to buy.
The portal allowed state-wise, district-wise and tehsil-wise searches of the properties. It had complete details of the properties, with survey numbers and original owners from whom PACL and its representatives had bought the land. Most documents reviewed by Business Standard showed that these were in the form of general power of attorney. Many of these date back to early 2000s. Interestingly, several of these documents were executed from Tirunelveli, even when land was situated in other districts. While some of them appeared clean, others threw up some discrepancies when compared with local land records.
For example, a piece of 34.04 acres land in Sembanoor village had been bought in 2001 by PACL representative Rajinder Singh for a sum of Rs 4 lakh. The entire property bought from heirs of one Manickam Chettiar and one Subbiah Chettiar, who were then settled abroad, was represented by a single survey number 247/3. Official records showed that while the survey number has slightly changed to 247/3b, but the property was indeed in the name of Rajinder Singh.
However, another parcel of 38.51 acres in Periyakannanoor sold to Tarlochan Singh came with multiple survey numbers. A couple of these survey numbers, which nearly accounted for 30 acres, showed these were “government land.” Another piece of about 5 acres showed the owner’s name as one Lakshminathan.
Since the whole auction process is on “as is where is” basis, the successful bidders will inherit all of the physical and legal conditions of the said properties they are going to buy. “In essence, you get everything that comes with a property, at its present condition, good or bad, with or without encumbrances, when you buy it,” an FAQ answer on the portal said.
“Such an auction often goes without much response because besides the financial risk, there is also the animosity risk. People are worried about what the original owner would do if the interested person bought the land,” said a former Sebi official. Another factor that is often underplayed is the superstitious beliefs around luck, that might come attached with properties that have gone through such auctions, he added.