In a significant development for the Andhra Pradesh Industrial Infrastructure Corporation (APIIC), the state government has given it the go-ahead to act against Emaar Properties based on the recommendations of the various committees that probed the alleged scandal involving the company.
The decision was taken at a Cabinet meeting on Wednesday, according to information and public relations minister J Geeta Reddy.
Emaar Properties PJSE and APIIC had entered into a joint venture agreement for developing an integrated project during the regime of the Telugu Desam Party in 2002. According to the agreement, APIIC would hold 49 per cent equity and the remaining 51 per cent stake would be held by Emaar.
The project involves construction of an international convention centre, star hotels, an 18-hole golf course and a township besides an IT/ITeS special economic zone in Hyderabad.
The controversy centres around dilution of APIIC’s equity from 49 per cent as agreed in the original memorandum of understanding (MoU) to 26 per cent and also Emaar roping in its group company Emaar MGF Land Limited as a co-developer for the township component of the project.
The APIIC had allotted 535 acres for the project. Of the total land, 285 acre was given to Emaar at Rs 29 lakh an acre and the remaining was given on lease for 66 years at a nominal rate of two per cent of the total revenue made out of the golf course. Emaar was supposed to pay Rs 12 lakh per annum to the APIIC towards the lease amount.
Emaar in the last five years has paid just Rs 9 crore to the government.
The land deal had come under criticism recently when some MLAs alleged large-scale irregularities in the deal. They said poor farmers were tricked into selling their lands for the project.
In the wake of the allegations, the APIIC said it was ready to cancel the agreement and sent a legal notice to the firm. However, further efforts were stopped after industries department principal secretary BP Acharya wrote to the APIIC asking it to not initiate any action against the company until further orders. Incidentally, Acharya was heading the APIIC till he was appointed to his current position as industries principal secretary.
Following this, a three-member internal committee and a central Planning Commission-approved experts committee conducted an inquiry into the episode. APIIC has also taken the opinion of solicitor general Gopala Subramanyam. All these have indicated that Emaar had profited at the cost of APIIC. They have recommended that the agreement with Emaar be scrapped apart from taking other legal measures. The APIIC has brought these to the notice of the government.
A final decision on Emaar would be taken by the APIIC at its executive council meeting on October 19.
With today’s Cabinet nod, the APIIC would be free to act upon the recommendations of these committees. It also implied that the orders by Acharya stalling action against Emaar stand cancelled.
Acharya, who continued on the APIIC board even after he took over as industries principal secretary, was recently relieved from the board functions.
