In a potentially serious blow to Kerala's dream project in the IT/ITeS sector, the Kerala government will send an ultimatum to Dubai-based Tecom, asking it to immediately commence the construction of Smart City.
Government sources said the chief secretary would prepare a letter based on the advice of the Advocate General (AG) of the state. The Cabinet will take further action, including termination of the contract, based on the reply from Tecom.
It is learnt that the AG had formally expressed the view that the government can issue such an ultimatum as the company had breached the conditions of the contract by raising demands, which are not part of the agreement.
It is also learnt that the AG, in his report, had advised the government against granting land to the joint venture (JV) company with a right to sell. Earlier, the state Cabinet had sought the advice of the AG to terminate the contract with Tecom.
As per the agreement signed in 2007, Smart City, the JV between the state government and Tecom, will get 12 per cent of the total land area of the proposed project as freehold for developing other amenities like hotels and shopping malls. Its extent comes to around 29 acre in Kakkanad area, near here. But later, Tecom had demanded that the right to sell the freehold land be given to them, which government had denied, saying it was not part of the agreement.
The AG’s advice clearly says that as the government has a minority stake of 26 per cent in the JV, allotment of land with a right to sell will lead to real estate business, which is against the interests of the state and the conditions of the agreement. Hence, the government can now proceed with steps to formally exclude the promoter company (Tecom) from the project.
In March, the government had sent a letter to Tecom to start construction of the Rs 1,200-crore Smart City immediately. But the company's chief executive Farid Abdulrehman had replied that freehold was a contractual obligation, not a favour done. Moreover, he said, the freehold was for SmartCity Kochi, an Indian company registered under the Indian Companies Act.
“We are not asking for anything which is not in the Framework Agreement. The Framework Agreement is available on the website of Kerala IT Mission for anyone to verify the facts,” Abdulrehman said.
According to company sources, so far Rs 100 crore had been spent on the project including the lease amount for the land. It is also learnt that the company would bring the issue before the court and seek heavy compensation if the government goes for termination of the agreement.
They also plan to go in for a prolonged legal battle to ensure their association with the project. The project, for which the foundation stone was laid in 2007, is in doldrums since 2009 with Tecom's demand for the right to sell the freehold land.
Meanwhile, a meeting of the board of directors of the JV company is convened on June 28. The meeting, which will be its 22nd, is expected to be a formal one as the government is not in a mood to continue its association with Tecom.
