The Uttar Pradesh State Industrial Development Corporation Limited suffered a loss of Rs. 2.92 crore, due to the selection of unsuitable land.

Loss due to selection of unsuitable land. The Company selected unsuitable land and ignored revised high rates of compensation due to applicability of the new Land Acquisition Act which resulted in the loss to the extent of Rs. 2.92 crore.

The Company forwarded (November 2013) a proposal to the District Authorities, Firozabad for the acquisition of 170.537 hectares of land for the development of an IT Park and an Industrial Area at Shikohabad, Firozabad, and paid Rs. 18.81 crores to the District Authorities, Firozabad. Notifications were issued under Section 4/16 (for 170.537 hectares) in December 2013 and u/s 6/16 (for 167.578 hectares) in December 2014. The final notification u/s 6(i)/16 on-site of the Land Acquisition Act (LAA) was published in the Gazette in May 2015.

Audit noticed (April 2018) that the demand for estimated compensation and acquisition charges amounting to Rs. 46.11 crore was raised by the District Authorities (17 December 2015) so that award under Section 11 could be declared and land might be handed over to the Company. The Management of the Company, however, did not deposit the compensation due to its assessment of weaker marketing prospects given the high input cost (due to revised high rates of compensation under the new LAA effective from 1 January 2014 and the high development cost of uneven land). The Company forwarded Karar Patra with landowners in respect of only 6.859 hectares of land out of a total 167.578 hectares of land to the District Authorities for which award was declared and compensation amounting to Rs. 1.65 crores was disbursed. As a result, the land acquisition proceedings in respect of 160.719 hectares of land lapsed after two years of publication of notification at site i.e. on 31 May 2017. The District Authorities deducted (November 2017) Rs. 89.38 lakh as 50 percent of acquisition charges of Rs. 1.79 crores.

Thus, the Company suffered a loss of Rs. 2.92 crore being acquisition charges of Rs. 85.73 lakh and interest amounting to Rs. 2.06 crore on the total amount of Rs. 17.46 crore blocked with the district authorities for the acquisition of land.

Audit noticed that the Company was well aware since September/October 2013 that though the land in question could be easily acquired at lower rates, however, it was highly uneven and not suitable for acquisition and onward development/disposal. Later on, by November 2013, the Company was also aware of the fact that the amount of compensation would increase up to three times17 (approximately) due to the applicability of the new Land Acquisition Act which was also brought to the notice of the Company by the District Authorities through their initial demand letter dated 30 November 2013. Despite the above, the Company did not stop the process of land acquisition in time. The Company had paid Rs. 18.81 crores to District Authorities during the period December 2013 to October 2014 but did not make any further payments, as the new rates were four times that of the D.M. circle rates considered at the time of issue of notification u/s 4/16. Thus, by the selection of unsuitable land in the first instance and by not taking cognizance of the higher rates of compensation due to applicability of the new Land Acquisition Act, the Company ended up suffering a loss to the extent of Rs. 2.92 crore.

The Management stated (March 2019) that the Company decided to quash the process of land acquisition as prospects of its marketing had weakened after the determination of the market value of the land at new acquisition rates under the new Rules. It also stated that the Board had subsequently increased the land allotment rates by an additional ` 300 per sqm in all of its existing industrial areas to recoup the expenditure incurred on such acquisition.

The reply of the Management is not acceptable as the Company has shifted the incidence of the cost of its inefficiency upon new allottees for no fault of theirs.

The matter was reported to the Government (December 2018). The reply of the Government is still awaited (September 2019).