Corporate Nov 17, 2012
If ever there ever was a paisa vasool western, one candidate for it would be Butch Cassidy and the Sundance Kid, which starred Paul Newman and Robert Redford. The film, other than having great visuals, a fast-paced story line, brilliant background music and excellent performances by its lead cast, also had what is my favourite one liner from an English movie.
In a rather non-descript scene as Butch and Sundance head into the sunset, Butch says "Boy, I got vision, and therest of the world wears bifocals."
Nowhere is the statement truer currently than in the case of Robert Vadra, who has earned hundreds of crores without putting much of his own money at risk. As a line from a song in the movie Gol Maal (the original one made by Hrishikesh Mukherjee and not the recent Rohit Shetty series) goes, "Ke paisa kamane ke liye bhi paisa chahiye".
Vadra broke the age-old wisdom inherent in the phrase. He had the vision of figuring out how to make profits of hundreds of crores by putting very little of his own money into the business.
Of course this clarity of vision wouldn't have been possible to execute if he was not married to Priyanka Gandhi (now Vadra), India's perennial politician in waiting, a spare tyre if Rahul Gandhi develops a puncture.
The story started with Sky Light Hospitality, a company in which Vadra owns a 99.8 percent stake, zeroing on 3.5 acres of land in Shikohpur, 10 km from Gurgaon, in February 2008. This land was bought from Onkareshwar Properties, then majorly owned by Satyanand Yajee, a man known to be close to Haryana Chief Minister Bhupendra Singh Hooda.
Yajee sold the land to Vadra for Rs 7.5 crore. The balance-sheet of Vadra's Sky Light Hospitality as on 31 March 2008, clearly reveals that the company had a capital base of only Rs 1 lakh. Also the company did not have any loans on its books. So how did a company with a capital of Rs 1 lakh buy a piece of land worth Rs 7.5 crore? Over and above this stamp duty also needed to be paid, where did that money come from?
Vadra's Sky Light Hospitality issued a cheque without having the requisite money in its bank account. Yajee did not deposit the cheque and supposedly also paid up the stamp duty. Soon Vadra sold the piece of land to DLF which valued it at Rs 58 crore. DLF gave an advance of Rs 50 crore on this. The first Rs 5 crore of this advance was paid out in early June 2008.
This money was used by Vadra to pay off Yajee. He also used the money to go on a major property buying spree across Rajasthan and Haryana, two states ruled by the Congress party and made a killing on it.
But some recent revelations made by Outlook magazine show that Vadra could not have sold the land to DLF in the first place. "Documents seen byOutlookreveal that, till recently, the land did not have the required permission to be sold, leased or used for any other purpose (than for which it was sold to the buyer). In short, Vadra's company (Sky Light Hospitality) could not by law sell the land (as it claims to have done in 2008) to DLF," the article points out.
The land that Vadra had bought in February 2008 was agricultural land and agriculture land can't be used for commercial purposes. The change of land use (CLU) was approved by the Haryana government in late March 2008. As The Hindu had reported earlier, "A little more than a month later, on March 28, 2008, the Town and Country Planning Department issued Mr Vadra's company a licence to develop 2.701 acres of the land into a housing colony."
So Vadra got the permission to develop the land into a housing colony in March 2008. But did that permission allow him to sell the land along with the licence? The answer is no.
As Outlook points out, "As per one set of official records of the state government for 2008, 2009 and 2010, the permission the Shikohpur plot had was a 'CLU', which makes farmland fit for commercial use. This 'licence', officials say, could not have been transferred. Nor could a plot with CLU have been sold, sub-let, sub-divided, broken into plots, or developed in any way other than what the CLU was originally meant for. In Skylight's case, the permission is understood to have been for developing residential properties, though it is not yet known whose name exactly it was taken in. Subsequently, Skylight may indeed have decided to tie up with a builder such as DLF to develop homes-but would the company be permitted an outright sale, along with the licence? That's something officials say can't be done."
What this means is that if Vadra wanted to build homes on the piece of land and sell them, he could do that. He could have even tied up with a builder and built homes. But he couldn't have sold the land along with the licence to DLF. And that is precisely what he did.
This is proved by the statement issued by DLF on 6 October 2012. "M/s Skylight Hospitality Pvt Ltd approached us in FY 2008-09 to sell a piece of land measuring approximately 3.5 acres just off NH 8 in Village Sikohpur, Dist Gurgaon. This was licensable to develop a commercial complex and the LoI from government of Haryana to develop it for a commercial complex had been received in March 2008 itself. DLF agreed to buy the said plot, given its licensing status and its attractiveness as a business proposition for a total consideration of Rs 58 crore."
So what DLF was paying for was essentially the licence that Vadra had to develop the land for commercial use from the Haryana government. The company has clearly said this.
This admittance by DLF raises another interesting question. The company has practically built a new city, Gurgaon, often referred to as the Millennium City, from scratch. Given that, why were they so nave as to not be aware what the law was? Or was it just an attempt on their part to be nice to the first son-in-law of this country?
Vadra used the Rs 50 crore advance that he got from DLF to build a mini land empire for himself between 2008 and 2011. But all this had only been possible because he had the 'vision' to marry Priyanka Gandhi. The rest of us in the meanwhile were caught wearing bifocals.
Vivek Kaul is a writer. He can be reached at firstname.lastname@example.org
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