Orrisa Government may Cancel Agreement with Unitech

December 3, 2009	(Be the first to rate this story!)  Loading ...
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The Orissa government today said that it may cancel the agreement with ‘Unitech’ for a 10.74 acre land in Bhubaneswar, if any developer bids more than the reserve price for the land, which has been put up for retendering after the real estate major defaulted in its payment to the Bhubaneswar Development Authority (BDA) Unitech was selected to construct a commercial complex on the plot through an open tender in 2007 after the state government decided to develop the property on public-private-partnership mode. Unitech had then quoted the highest price of Rs 211 crore for the 10.74 acre land.

As per the tender condition, the company had deposited Rs 52.75 crore (which is one fourth of the full amount) upfront and signed an agreement with BDA. The remaining money was to be paid in next four months. But the Delhi-based real estate major failed to pay the rest amount taking the plea of economic slow down and requested BDA to give it one fourth of the land in proportion to the amount paid.

The Unitech’s proposal was referred to Ernst &Young, the consultant, who suggested for acceptance of the proposal to salvage the project. Since there was no specific clause in the agreement for forfeiture of deposited amount in case of default and to avoid prolonged litigation on the issue, the state government finally decided to go for retendering of the property with an understanding that if anyone bid higher than the price offered by Unitech, it would cancel the agreement with the company or else, it would sign a fresh agreement with the Unitech for one fourth of the land.

“The bid would be settled with the highest bidder. If no one bids above the reserve price, fresh agreement would be signed with Unitech for one-fourth of the land”, said housing and urban development minister, Badrinarayan Patro. Replying to an adjournment motion on the subject in the state assembly, the minister said, with a view to salvage the project, the government had approved the proposal of BDA to retender the property in two parts. One bid has been invited for the entire piece of land i.e. 10.74 acres and the other bid is for the one fourth of the property i.e. 2.64 acres with a reserve price of Rs 52.75 crore, the same amount deposited by Unitech.

On a similar dispute between the Orissa State Housing Board (OSHB) and Gurgaon-based Vipul Ltd for development of an integrated housing project on 18.18 acre property in PPP mode, Patra said, the same principles will be applicable. Though Vipul quoted a bid price of Rs 152 crore and deposited Rs 38.5 crore, it later asked OSHB to allot one-fourth of the land to it in view of the economic slowdown. Earlier, the opposition members alleged that there was large scale favouritism in the deal and wanted to know how BDA had floated tenders without cancelling the earlier one. Similarly, the BDA authorities didn’t initiate any action against the company even as Unitech defaulted for about two years.

News Published Under:   Real Estate Trends |

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