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Key rules flouted in (Bhushans) Noida farmhouse allotments: UP govt audit by Maulshree Seth

Remember the over 100 farmhouse plots allotted in Noida measuring at least 10,000 sq m each without an auction or a draw of lots, including two to Supreme Court advocate Shanti Bhushan and his son Jayant Bhushan?

An audit has now found that not only was there no transparency in the allotment of these plots — 101 in all — but that the Noida Authority had fixed a very low rate, Rs 3,100 per sq m, disregarding its own formula, causing a loss of Rs 145.80 crore to the exchequer.

In the process of carving out farmhouses from agricultural land and selling these, the authority violated the law under which it was set up, did not consult the law department, kept making changes to the benefit of allottees, and kept the scheme open for 15 months “by reserving allotment in sectors other than those available”.

The authority allotted 79 plots in 2009-10 and 22 plots in 2010-11, while seven farmhouses were reserved for allotment in future.

These are some of the findings of the audit, which was conducted by the state government’s own Local Fund Audit Department. A wing of the finance department, it conducts audit of urban local bodies’ activities which are outside the purview of the Comptroller and Auditor General of India. The report also notes that the Noida Authority withheld documents and record of important matters from the audit.

Reports of the Local Fund Audit Department are first sent to the audited organisations. After getting their comment, these are processed and sent to the Local Fund Accounts Committee of the state Assembly. In view of the damning findings, sources said, a move is afoot to water down the report after treating the Noida authority’s explanation as satisfactory on important points.

Asked about the current status of the report, Ravindra Tiwari, who recently took charge as Director of the Local Fund Audit Department, said: “We had got the reply of the authority last month but they have recently sent an amended reply. The scrutiny of the reply is pending with the assistant director’s office and will reach us soon.” Neither Noida authority CEO Rama Raman nor Chairman Mohinder Singh could be reached despite several attempts.

When The Indian Express had first reported the discretionary allotments, Shanti Bhushan had admitted that there was no transparency in the scheme and that farmhouses were given without any clear criterion. Claiming that he too was “surprised” at the farmhouses allotted to his son and him, Bhushan said: “The people who applied and were not given the farmland should challenge it. I have heard that bribes have passed hands for these allotments but, obviously, not from us. There may be a case for a scheme like this to be cancelled.”

The findings of the audit:

* “The department has not clarified the basis on which land for farmhouses was allotted at the rate of Rs 3,100 per sq metre. This has caused a loss of about Rs 145.80 crore.”

The report adds, “For social infrastructure, like religious institutions, government and semi-government hospitals, dispensaries, post-offices, super-bazars, milk and vegetable distribution centres in institutional area, land rate had been fixed at Rs 4,200 per metre in 2008-09” and this was “the lowest rate in 2008-09 for activities related with public services”.

It further says, “The records related to how Rs 3,100 per sq m rate was fixed were sought through a letter dated February 25, 2010, but the authority neither replied, nor presented any record.”

However, as the report notes, on May 8, 2008, the authority had issued an order prescribing the method of calculating the rate of land. Using this method, the audit arrived at a figure of Rs 4,500 per sq m in 2009-10 and Rs 5,100 in 2010-11, after making allowance for the fact that, unlike residential land, farmhouses are large in size. It fully excluded the cost of internal land development and assumed that 85 per cent of the land was available for sale.

* Under the Uttar Pradesh Industrial Area Development Act, Section 6(1), the Noida authority was constituted “to secure planned development of industrial development areas”. Therefore, “the justification for bringing a farmhouse scheme needs to be clarified”, says the audit report.

The stated purpose of the farmhouse scheme was to prevent haphazard, unplanned colonisation of reserved agricultural land. However, a bare reading of Section 6, which defines the functions of the authority, clearly says that it was constituted to demarcate and develop, allocate and transfer plots for industrial, commercial or residential purposes. Nowhere does it mention farmhouses.

* The audit report cites “lack of clarity regarding transparency in the process of allotment on the basis of applications”. Incidentally, the authority had hired UPICO, a UP government consultancy, for evaluation of applications and it was paid Rs 7.60 lakh for scrutiny of 190 applications received between January 19, 2009, and April 12, 2010, at the rate of Rs 4,000 per application.

According to the audit, the entire payment of Rs 13.45 lakh to UPICO, including Rs 7.60 lakh paid for evaluation of applications, was “unnecessary financial burden” because “five amendments were made by the authority itself in the rules and conditions prepared by UPICO. Even the scrutiny of the applications could have been done by the authority itself.”

* “After publication of the farmhouse scheme, five amendments were made in one month, changing the original format, and all were in favour of the allottees. It was stated that the changes were made on applicants’ requests, which were made orally or on the phone.”

The first two changes were made on the day of the launch, Jaunary 19, 2009. By one, the time period for payment of 80 per cent of the allotment money was increased from eight years to 10 years and, by the second, the maximum permissible height of the construction was increased from 7.5 metres to 11 metres, in violation of the rules.

On January 30, 2009, changes were made to allow “social functions” at the farmhouses, apart from “family functions”.

On February 16, 2009, in a very important change, transfer of non-functional units was allowed; originally, only fully functional units could be transferred.

After a few days, “motel-related activities” were disallowed, reportedly because it was a commercial activity.

* The entire process of formulation of the scheme and its launch was completed in 13 days and there was nothing on record to show how objections from the public were dealt with.

On Janaury 7, 2009, the authority CEO constituted a seven-member committee, headed by the OSD, for an open-ended scheme to develop farmhouses. On January 12, the OSD called a meeting of the committee, which was held the same day at 5 pm and recommended appointment of UPICO as adviser. The same day, the CEO gave his approval to the recommendation. Also, the same day, UPICO submitted its proposal and a bill for Rs 5,85,558. The next day, January 13, the CEO approved the proposal. On January 15, an advertisement regarding the scheme was published in newspaper. On January 19, the scheme was launched.

“In the absence of records, it could not be ascertained what objections were received from the public and what action was taken on them,” says the report.

* The report says that changes were made in the lay-out of Master Plan 2021 again and again, without confirming whether the farmhouse scheme was included in Master plan 2021.

* Under rules, only agriculture, horticulture, animal husbandry, fisheries, dairy farming and poultry farming were allowed on agricultural land. However, the authority allowed activities like open-air theatre, swimming pool, and religious buildings “in anticipation of approval from the government”. The approval from the government “was not available in the records”, says the report.