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From Tehelka Magazine, Vol 7, Issue 51, Dated December 25, 2010
CURRENT AFFAIRS  
KARNATAKA

Once bitten, twice not shy

After weathering graft charges, a brazen BS Yeddyurappa changed a law to give housing society land to Karnataka builders. IMRAN KHAN blows the lid off yet another scam

BS Yeddyurappa

PHOTO: GK HEGDE

BS Yeddyurappa

On 20 November, in the very week that Karnataka Chief Minister BS Yeddyurappa got a reprieve from the BJP party leadership, which allowed him to retain his throne if he cancelled controversial flat allotments to kith and kin, a Gazette notification quietly made it legal for ‘associate members’ to be admitted in employee housing societies . Nobody could have expected such a brazen move in contempt of court rulings at a time when the prime mover was himself the focus of the nation’s attention.

However, as in all matters related to land, the daring move will bring huge dividends to those lying in wait for precisely this stroke of the pen. The lands are all prime properties near the airport and the present market rate varies from Rs 1.7 to Rs 3 crore per acre. Among them is one of Yeddyurappa’s sons, the medical education minister and an MLA.

Asked for an insight into this move, Lokayukta Justice Santosh Hegde commented, “The notification brought by the state government runs contrary to the very object of giving lands to the society members. Such a circular would definitely be beneficial (only) to builders and businessmen’’. The Cooperatives Minister Lakshman S Savadi refused to comment.

The sleight-of-hand was similar to that pulled off in the Adarsh Cooperative Housing Society in Mumbai, in which a Congress chief minister was brought down when it was exposed that the original allottees, for whom the scheme was meant, were edged out by army officers, politicians and bureaucrats.

The Karnataka High Court had ruled (Narayan Reddy vs State of Karnataka, 1991) that in case a society is set up by employees of a particular organisation, none other than employees shall be admitted for membership. And even if there is a provision to admit associate members, they should not be allotted sites by the society.

‘The notification runs contrary to the objective of giving lands to housing society members,’ says state Lokayukta Santosh Hegde

There are about 110 cooperative housing societies in Bengaluru, many of which seem to have violated the high court order to admit associate members. These members, who were not even eligible in the first place, are paid huge amounts of money as advances to develop the sites over a period of time.

Copies of receipts available with TEHELKA show that BJP MLA and former minister Krishnaiah Setty received around Rs 173 crore on 31 March 2008 from the Karnataka Telecom Employees Society towards the purchase of land, conversion and development.

In November, former chief minister HD Kumaraswamy had alleged that Setty had deposited Rs 5 crore in the account of two companies owned by Yeddyurappa’s son BY Raghavendra. This payment, he says, was towards the change of land use in favour of the society in Attebele Hobli, Anekal taluk, where Electronics City is located. In response to TEHELKA’s queries, Setty says the loan for the CM’s son was for some other purpose and that he did receive a large cheque from the society as he was one of its developers.

Raghavendra is the managing director of Davalagiri Properties in whose name the apartment was bought through the developer Vaishnavi Group (which has constructed 88 luxury apartments in the land allotted to Vyalikaval Housing Society by BDA). A site measuring 25,000 sq ft was also bought through an agent from the same society. Sundar Raj, legal head of Vaishnavi, says the government approved the joint development agreement.

The ‘agents’ in this context are those employed to influence the government and to get the preliminary and final notifications acquiring large tracts of land from the government. They are also frowned upon as ‘go-betweens’ and ‘carriers’ in the High Court judgement.

The political nexus is obvious. The Karnataka Telecom Employees Society released an amount of Rs 287.25 crore and Rs 35.10 crore to two companies named ESS & ESS Infrastructure Pvt Ltd and Shambhavi Builders & Developers in March 2008. Both companies are owned by Srikant Das, the brother of Medical Education Minister SA Ramdas. Srikant Das said, “It is a fact that I have received money from the housing society and also that around 900 acres of land has been given to us. But this has nothing to do with my brother being a minister. Even when we purchased this land, my brother was just an MLA. As for your other question, we have purchased the lands from the society after they were converted. We are in this business for almost a decade and are currently involved in developing layouts for more than 32 housing c-operative societies.”

Smooth operator

Smooth operator BJP MLA Setty got around 173 crore from KTESfor buying land and conversion

All this has been done in defiance of a string of strictures. As far back as 29 August 1985, a circular from the government said emphatically, “It has been brought to the notice of the government that some of the deputy commissioners/tahsildars have been granting conversion of agricultural land for non-agricultural purpose in favour of House Building Cooperative Societies even though there is no provision to grant such conversion under the provisions of the Karnataka Land Revenue Act 1964.”

Then in 1988, the GVK Rao Committee gave a damning report holding that most of these societies were ‘fraudulent’ with ‘fictitious’ membership and the allotment of sites was done in an illegal manner.

But Bengaluru was exploding thanks to the software boom, and land was as precious as gold. When the matter was referred to the Supreme Court in 1995, it ordered the government to quash all the allotments and to return the land to the original owners.

However, the opposite happened: the racket thrived. DK Shiva Kumar, Co-operative minister in SM Krishna’s cabinet, has the following explanation, “If we hadn’t allowed the society to get into joint agreements, then most of their lands would have gone for auction. The societies were unable to pay the loans they had taken from the BDCC bank. In order to save the bank and the society, we took that decision.” When asked by TEHELKA whether the debt was serviced, the former minister failed to give any reply.

TEHELKA has documents in its possession which show that after the Supreme Court judgement, successive governments – both politicians and bureaucrats – found ingenious ways of making a fortune with the active connivance of private builders and land sharks.

Powerful push

Powerful push Former minister Shiva Kumar defied court orders to help Shakti Promoters

The Vyalikaval House Building Cooperative Society is an example of this unholy nexus. It was granted around 164 acres at Nagavara, Bengaluru North, by the revenue department. In 1989, the same society was allotted 2.2 acres plus 89,298 sq ft in 2004 at RMV Extension by the Bangalore Development Authority (BDA) with a condition that a layout will be formed and site would be allotted only to its members, failing which the BDA may take back the land. The High Court had, however, in its 1991 judgement, termed this society ‘bogus’ and had asked for its acquisition of land to be set aside.

In fact, even where there were genuine members, they were hoodwinked by land sharks who converted the Supreme Court order into an opportunity. They were told the sob story that the Supreme Court had cancelled their acquisition and that there was no money to complete the layout. Further, that huge amounts of money had been paid out in bribes to politicians and lawyers to defend the society. Therefore, went the spin, there was no option but to bring in builders to bear the costs and get chunks of land as recompense.

In 2002, violating the court order and the bylaws, the then Cooperatives Minister DK Shiva Kumar himself permitted the society to go into a joint venture (without any tender or security – pre-requisites under Section 54 of Cooperative bylaws) with middlemen and allotted 50 percent of the land to Shakti Promoters and Builders. The joint venture also flouted high court norms by granting permission to allot sites to associate members. The management of the Vyalikaval Cooperative Society and Shakti Developers made a cool Rs 1,500 crore by this stratagem. The society allotted 173 sites of various dimensions in 2004-05 to G Prasad Reddy, who unsuccessfully tried for the state Assembly on a BJP ticket. No wonder, an enraged S Ramachandra, a genuine member since 1988 fumes, "I paid Rs 1 lakh for allotment of a site. Like me, there are more than 2,000 members. But the Society, citing various reasons, did not bother to allot sites to us whereas it went on to allot sites to politicians, officers of Co-operation [Ministry] and BDA. They have shattered our dreams."

The allocations are all prime properties near the airport and the current market rate varies from Rs. 1.7 crore to Rs. 3 crore per acre

MLA KJ George, who was urban development minister in Bangarappa’s cabinet, along with his sister Suji George have also got sites from the same society in violation of the existing bylaws of the society (the MLA was also allotted a G category site).

Transcending parties, Yedyurappa’s son got a 25,000 sq ft site with an additional 18,000 sq ft of margin land from Vyalikaval House Building Cooperative Society, through BG Chennappa, member of the Karnataka Pradesh Congress Committee, who got around 73 sites of various dimensions from the society between 2004 and 2005. Chennappa says, “Yes, we got the 73 sites but we purchased them. We had taken permission from the then Co-operatives Minister.”

As for BDA land, instead of the plots being allotted to members of the society, Vyalikaval illegally diverted the land for a project in the name of Vaishnavi Splendor with 88 luxury apartments to be sold at Rs 1.2 to Rs 1.8 crore per flat. BY Raghavendra, present BJP MLA and Chief Minister BS Yeddyurappa’s son, who is known to have a flat there, says, “It is not in my knowledge right now, I will check with my accountant.”

Tellingly, documents available with TEHELKA reveal that the entire project lies next to the house of Yeddyurappa, who is also the minister for BDA. A penthouse apartment bearing no A-PH-01 on the A block with an undivided share of 1,464 sq ft has been transferred by the society to Davalagiri Property Developers Pvt Ltd, which is owned by Yeddyurappa’s sons. As per the documents, the site, along with two parking spaces and a super built area of 3,696 sq ft, was transferred for a consideration of Rs 51.74 lakh.

Instead of giving plots to members, Vyalikaval diverted the land for 88 luxury apartments to be sold at Rs. 1.2-1.8 crore per flat

The society’s 12,000 members, including the associate members who paid site deposits, were all deprived of the allotments and have filed cases in the consumer court for refund of the deposit. The same is true of other cooperative societies as well.

The government has approved the change of land use and conversion in respect of 650 acres of agricultural land near the airport and Sarjapur in favour of another housing society of the telecom department, named Telecom Employees Co-operative Housing Society Ltd, through the agents Anjaneyalu Pratipati of Rasasri Developers and Ravikumar Reddy of Raviteja Constructions and Kanthi Properties, who received Rs 146.25 crore and Rs 121.37 crore respectively. President of the Society Babu was unavailable for comment.

Privileged member

Privileged member Congress MLA George got sites from Vyalikaval Cooperative Society

In case of another society formed by Ministry of Communications Employees, around 250 acres of land in Bengaluru North was approved for the change of land use and conversions through agent KN Manjunath of MCN Developers to whom Rs 139 crore was released by the society towards the purchase and conversion.

Left in the lurch Despite paying 1 lakh, Vyalikaval member Ramachandra was not allotted a single site

Left in the lurch Despite paying Rs. 1 lakh, Vyalikaval member Ramachandra was not allotted a single site

All the societies have appointed contractors without any tenders and the societies have released amounts in hundreds of crores without any bank guarantee or adequate security in violation of the Supreme Court order.

In the case National Technological Institution Housing Society, the then government acquired 182 acres of prime agricultural land in 1988. The society took huge loans from Bengaluru District Central Cooperative Bank for development of the layout and failed to repay the amount. In 2005, the society sold 10 acres of prime land illegally to SBG Housing, which in turn mortgaged the land for a loan of Rs 50 crore availed by Sobha Developers. All the transactions are illegal in view of the Supreme Court judgement.

In addition to that, the BDA had allotted 19.32 acres in Dollars Colony, one of the prime locations in the city, to NTI House Building Cooperative Society. Five acres out of this was sold by the Society to Kolte Patil Developers and 11.5 acres to Raheja Builders (through one LK Trust). Raheja constructed around 400 luxury apartments in the name of Pebbles Bay, in clear violation of court observations and model bye-laws. Harsha Vardhana, legal advisor for the project, says, “We have all records to show that the property purchased by us is in compliance with law. On this point, you may please note that the matter of purchase by our predecessor in title has already been upheld by the Supreme Court.’’ But the documents available with Tehelka shows there was only a compromise arrived between the Society and the Trust on a case filed in the civil court by the said Trust.

The broad point, however, is that all this builder activity goes against the spirit of cooperative housing societies. And if the depredations of the ‘official’ land mafia in the Karnataka capital are to be checked, thousands of acres that have been changed from green zone (agricultural) to yellow zone (residential) to favour cooperative societies will have to be reclaimed. Only then will justice be done to original members who got together with like-minded people to build a cohesive community space.


imran@tehelka.com

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From Tehelka Magazine, Vol 7, Issue 51, Dated Dec 25, 2010
 

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