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« ASK Investment Launches 500 cr Real Estate Fund | Home | Ambuja Realty to Start 3 New Projects in Bengal »

Slowdown Affects Workers

The slowdown in the real estate market has hit over 1,700 workers of the now-defunct Pal Peugeot plant in Dombivli after Citra Developers last year backed out of its bid of Rs 676 crore for the 134-acre plot or six Oval maidans. Citra is a 100% subsidiary of Indiabulls Real Estate. Workers were hopeful that their dues-amounting to Rs 122 crore and pending since the past decade-would be cleared. “There were 1,712 employees at this plant and a majority of them were over the age of 50 years. They have been waiting since 1998 for their outstanding claims of wages and compensation,” said Umesh Upadhyay, secretary of the Sakharam Seth Employee’s Union. Just a little over a year ago, this sprawling plot had evoked considerable interest among developers as such a large parcel of land is generally in short supply.

But, now the workers say they have been left high and dry because any fresh auction will not fetch the same high price that this land once commanded when the market was booming. In fact, Citra’s highest bid of Rs 676 crore was found to far below the reserve bid of Rs 1,650 crore by the Bombay high court. The auction was conducted by the court receiver, which is in possession of the land. The union has now filed an appeal in the court, asking it to confirm the sale to Citra, but said it was shocked at the state government’s affidavit, asking for a re-auction of the land. A single bench of the court had allowed Citra to withdraw Rs 169 crore, which the developer had deposited with the court as part payment (25% of the Rs 696 crore) of the land transaction.

The union, in its appeal before a division bench, stated that according to the terms and conditions of the auction process, once 25% of the money is deposited, the sale is deemed to be confirmed. There is no provision for a withdrawal after this. “This amount should have been forfeited by the court and this is what we have challenged in our appeal,” said Upadhayay. Last June, a single bench had ordered that the Rs 169 crore deposit of Citra be returned along with interest after the developer’s advocate said his client did not desire to raise its offer and was in fact, withdrawing from the auction. The judge had said the bid could be withdrawn at any stage before its confirmation.

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