(EXCLUSIVE) Rs 7,000 crore scam in Shivraj Singh Chouhan’s Madhya Pradesh

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Md. Hizbullah 

An investigation by  CobraPost-JantaKaReporter found a huge scam worth Rs 7,000 crore under the nose of the Madhya Pradesh chief minister, Shivraj Singh Chouhan. 

Our investigation has unearthed how in a unique public–private partnership, the BJP-led government gave away prime land to Gammon India, and upon its representation to its materialised-out-of-blue subsidiary Deepmala Infrastructure, for a song in haste leaving many questions unanswered, thus raising a stink.

Here’s how it all started

When on 17 May, 2007 the Shivraj Singh Chauhan-led BJP government of Madhya Pradesh invited bids for redensification of 15 acres of government land in South TT Nagar, one of the toniest and upscale localities in the capital city of Bhopal, there was nothing unusual about it.

The bidding process had two components, technical and financial, and the bidder had to qualify on both counts. Of the 29 companies which submitted tenders, 17 were shortlisted, major among them were Oriental Structural Engineers, DLF Limited, Larsen & Tubro, Reliance Engineering, Reliance Energy, Unitech Limited, Gammon India Ltd. and Parsvanath Developers.

Bhopal, India - July 8, 2014: Detail of WHO doing WHAT in Bhopal, India, on Tuesday, July 8, 2014. (Photo by Gagan Nayar/ Hindustan Times)
Bhopal, India – July 8, 2014: Detail of WHO doing WHAT in Bhopal, India, on Tuesday, July 8, 2014. (Photo by Gagan Nayar/ Hindustan Times)

Launched as a pilot project in 2005, the redensification project involved development of a part of the government land for government use while the rest of the land would be developed by the contracting party for its benefit.

Of all such bigwigs, only Gammon India Ltd. could qualify and was promptly awarded the contract, as other companies failed to submit their financial bids on time.

Huge twist to the tale-

As the facts emerge from the investigation conducted by CobraPost-JantaKaReporter, the whole bidding process was conducted in a partisan manner to benefit Gammon India Ltd. and its so-called SPC, Deepmala Infrastructure Private Limited (DIPL). Not only that, while the lease deeds were signed without holding Gammon India or Deepmala Infrastructure accountable, the government cut the circle rates for this particular project almost by half while making the prime land freehold again as recently as July this year while it had to rescind a similar order in 2012 before the MP High Court.

Bhopal, India - July 8, 2014: Detail of WHO doing WHAT in Bhopal, India, on Tuesday, July 8, 2014. (Photo by Gagan Nayar/ Hindustan Times)
Bhopal, India – July 8, 2014: Detail of WHO doing WHAT in Bhopal, India, on Tuesday, July 8, 2014. (Photo by Gagan Nayar/ Hindustan Times)

How a particular company was favoured for this project over others from the day one is clear from the fact that Reliance Energy, a successful bidder in the first round, had sought a month’s time to place its financial bid, on 23 November, 2007.

The Madhya Pradesh Housing Board, the nodal agency in-charge of the project did not oblige, although the bids were not closed by December 2007, as intended initially by the Housing Board.

It was three months later on 29 March, 2008 that the redensification project was awarded to Gammon India Ltd. A month before the contract was awarded, the proposal was sent to the cabinet, headed by none other than the chief minister himself, on 8 February, which approved it then and there. On 29 March, 2008, the state government invited Gammon India to sign the agreement.

Nineteen days later, in its reply of 17 April, 2008 to the invite, vide letter no. MKTG:G:233, Gammon India informed the state government to have “incorporated a Special Purpose Company (SPC) by the name of Deepmala Infrastructure Private Limited (DIPL) for the project which will perform the obligations of Developer pursuant to the terms of the development agreement.”

Story gets even more murkier and shady

DIPL, which Gammon India claimed to have been incorporated as an SPC for the execution of the redensification project was, in fact, promoted by two individuals, namely, Manoj Roopram Chamoli and Rekha Manoj Kumar Chamoli, 6 months before the tender process actually began, on 3 October, 2007 to be precise, with a capital of Rs. 1 lakh only.

Gammon 4

Gammon India bought 51 percent stake in the company almost overnight and declared it to be their SPC. The ownership of the company was transferred to Gammon India between April 10 and 16, 2008. A day after, Gammon India accepted the contract and declare Deepmala Infrastructure its SPC.

After that things moved with lightning speed. According to the documents available with CobraPost-JantaKaReporter, this letter did not even take a day to reach Bhopal from Mumbai and on that very day the principal secretary of the state Revenue Department vide letter f6-209/2006/7/nazul Bhopal directed the collector of Bhopal to execute the deed with DIPL.

A tripartite development agreement between the state government, the Commissioner of the MP Housing Board and DIPL was signed on the same day, that is, 17 April, 2008.

Questionable super efficiency by babus, Shivraj in the dock!

This kind of spectacular efficiency is indeed a remarkable feat that governments in India seldom achieve. Why? The reason can be discerned.

After the agreement was signed, the CM Office took charge of the affairs, giving clearance to this project under a “100 day Action plan” and washing ashore all hurdles that Deepmala Infrastructure faced as the company now directly corresponded with the CM Office.

Gammon 5

The chief minister is also said to have visited the site on 13 December, 2008.

Interestingly, the tripartite development agreement, executed on a Rs. 100 non-judicial stamp paper, was neither registered nor notarised, and hence carries no legal validity in a court of law. To top it all, the agreement does not bear the name of any of DIPL’s directors, and it does neither mention that DIPL is a Special Purpose Company of Gammon India nor does it mention any MoU or agreement between Gammon India and DIPL.

Therefore, in case DIPL faltered or failed to fulfill its part of agreement, neither DIPL nor Gammon India could be held liable or prosecuted, as Gammon India too was not made a party to the agreement.

Moreover, everywhere in the tripartite agreement, Deepmala Infrastructure has been termed as a ‘developer’ and not a lessee. It means that Deepmala Infrastructure has only been given the said land to develop and that it has no claim on the land. This also means, however, that the liability of the 15 acres of land, for a time period of 30 years, does not rest with the company.

Could then this all be an error of judgment or a mistake committed unknowingly on the part of government authorities?

Asks RTI activist Devendra Prakash Mishra, who has been following the case closely, “Why was such an important document, which fixes the liabilities of the entire project on the company, was never registered? It has no legal validity, raising serious doubt on the role of the state government. Moreover, how can a company send a representation letter for another that manages to sign an agreement on that very day? Is all this possible on a single day?”

Willful throwing away of government guidelines

It was more by design than by oversight that the agreement was never registered as the government authorities bent or simply threw away their own guidelines with regard to redensification project, to the benefit of Deepmala Infrastructure.

For instance, Deepmala Infrastructure, as per the requirements of the agreement, was supposed to pay the entire amount of Rs. 338 crore as lease rent and premium to the government within a year. But it paid the same in parts in about three years.

How a company worth Rs. 1 lakh could pay the government Rs. 338 crore, a huge sum by any standards, or how could it be allowed to execute a project, which according to estimates runs into Rs. 7,000 crore, without any disclosure of sources of funds, is a pertinent question that nobody bothered to ask. Not only that, Deepmala Infrastructure also paid a fee of Rs. 5.80 crore to Infrastructure Development & Finance Co. for liaison with the state government.

Reasons why Shivraj govt moved mountains to award the contract to Gammon  

The more one looks at the facts the murkier the whole deal gets. It is surprising to note that the authorities who moved mountains to award the contract to Gammon India on a single day took three years to execute the lease deed on 22 September, 2011.

Even the lease deed makes an interesting study.

Surprisingly, the government registered two sale deeds that day, one 12 and the other 11 page long, and both were similar in content barring two dissimilarities: the first deed bore the photograph of the lessee and had the map of the leased land while the second deed had none. In these deeds, the money paid to the government is not to be considered a premium toward the leased land but as project payment.

The deed also says that there would be no payment of lease rental. The question then arises: can there be a lease deed without premium and lease rental? This question was not raised by the sub-registrar Bhopal whose office registered the lease deeds.

According to rules laid down by the state government, a government land can be leased for a period of 30 years at the annual lease rental for residential use at 5 per cent of the premium amount and 7.5 per cent for commercial use.

Since the land is being used for commercial purposes, the state government could have earned a lease rent not less than Rs 25 crore every year and in 30 years it could have added about Rs. 760 crore to its coffers. However, stamp duty and registration charges on the component of lease rental were completely done away with, and strangely no objection was raised by the sub-registrar or the registrar who thought it appropriate to register the transaction as lease deed.

Here too, the lease deeds do not mention Gammon India as the main contractual party or lease holder having anything to do with transactions done by Deepmala Infrastructure.

It is obvious that the land has been leased only for namesake and the company is de facto owner of the land, as there is no development of the government property to be seen on-site where a full-fledged residential and commercial complex is coming up which includes five 22 storey deluxe residential towers consisting of about 600 apartments, a premium tower with 66 sky villas, 288 premium apartments, 349 grand retail shops, 520 offices, 18 exclusive high-end shops, multiplexes and a five-star hotel. A 2000 sq ft apartment costs about Rs. 2.20 crore in this complex.

Apart from the payment made to the government, Deepmala Infrastructure has so far invested about Rs. 400 crore in the project.

When Shivraj govt cut the circle rate by half for Gammon India

Another special favour that the state government did was that it cut the circle rate to almost half – from a prevailing circle rate of Rs. 7500 per sq ft for residential use and Rs. 11200 for commercial use to Rs. 4000 and Rs. 6000, respectively, in April 2012 by declaring it a separate development area, after a year these deeds were executed.

The intent was unmistakable: help the developer sublease or sell at the lower circle rate and in turn help the buyers.

Shivraj government’s generosity reaches new high, leasehold converted into freehold

Five months after these lease deeds were signed in February 2012, Deepmala Infrastructure sought to make the leased land a freehold property, and the state government promptly obliged. However, the government had to withdraw its order when Mishra filed a PIL in the MP High Court in September 2012.

But barely three years later, the government in an inexplicable move again decided to make the land freehold on 15 July, 2015 in violation of its submission of November 2012 to the High Court claiming that it had withdrawn the order.

Maybe it is not yet official, but the way the state government authorities, right from the CM Office to the registrar, have worked overtime to help Deepmala Infrastructure get possession of the prime government land for a song for private benefit, using all manner of questionable means and throwing all guidelines to wind, it is only a matter of time when the land will be declared as sold off if the latest attempt by the state government to make it freehold is any indication.

For the Shivraj Chauhan government, embroiled as it is in one big scandal after another big scandal, this scam is one more addition.

CobraPost-JantaKaReporter approached all authorities concerned and the office bearers of Deepmala and Gammon India asking for their reaction but none of them chose to respond.

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