Bmc Scraps ‘credit Note’ Deal With Dbs For Pap Tenements, ET RealEstate
MUMBAI: The BMC has cancelled a contract it awarded to DBS Realty in March last year to construct 4,000 tenements for project-affected people (PAPs) at Chandivali under the new “credit note” policy because the developer failed to transfer the land title.
DBS was to purchase the required land and get its title transferred in the name of BMC before starting construction. BMC commissioner I S Chahal said the developer failed to comply with this condition.
On Monday, BJP leader Kirit Somaiya had submitted a written complaint to the chief secretary and the senior police inspector at Azad Maidan calling for a probe into what he called BMC’s fraudulent LOA (letter of acceptance) to DBS Realty for the PAP project.
According to the contract, the BMC was supposed to pay DBS Realty Rs 1,584 crore as premium (Rs 39.6 lakh for each flat) plus land and construction TDR. It is stated that an SRA (Slum Rehabilitation Authority) project was already on at the Chandivali plot that was selected for the PAP project by the developer. Despite that, the BMC issued a letter of acceptance to DBS Realty.
Under the PAP scheme, the BMC aims to construct over 35,000 flats to rehabilitate people whose homes might be demolished for various civic infrastructure projects. Since it didn’t want to use its fixed deposits, it introduced the credit note concept. The BMC wanted developers to buy land, construct houses and give them to the BMC. In lieu, it would issue a credit note to the developer along with the TDR. The developer would sell the credit notes in the open market (to other builders) to recover their expenses and profit. The credit note could also be used to settle BMC’s tax and FSI premium payments.
There was a legal hurdle in implementing the policy: there was no such provision in the Maharashtra Regional & Town Planning (MRTP) Act. But the urban development department permitted BMC to go ahead citing an MMRDA precedent. Last year, under the scheme, the BMC awarded contracts for constructing 15,000 tenements in Mulund, Bhandup, two places in Prabhadevi, and Chandivali.
In May, TOI had reported that BMC issued credit notes worth about Rs 350 crore to developers though actual construction work hadn’t started. Most of the payment went to the developer executing the Mulund project.