Loss to Parishad due to incorrect Reserve Price. The Parishad was deprived of Rs. 2.27 crore due to incorrect fixation of Reserve Price of auctioned plots.
Para 16.1 of the Costing Guidelines (1986 as amended in 2001) of the Uttar Pradesh Awas Evam Vikas Parishad (Parishad) provides that the reserve price of the commercial plot shall be fixed at twice the prevalent land rates. It also provides that if the Parishad has auctioned nearby land at a rate above/below the reserve price, the auction rate of nearby land would be considered for fixation of the reserve price of the said plot. In addition to this, 12 percent freehold charges and 10 percent corner charges (for corner plots) shall be loaded to the cost of the plot to arrive at the reserve price.
Audit noticed (January 2017) that the Parishad auctioned (April 2016) a commercial plot (16/com-4) measuring 450.00 sqm at Sector 16 of the Vrindavan Yojna, Lucknow at the rate of 59,500 per sqm (Reserve Price 35,840 per sqm). The Parishad, however, without considering the auctioned rate of the plot (16/com-4), fixed the reserve price of nearby commercial plots (Plot No. 16/com-5,6 and 7) at the rate of 35,840 per sqm, fixed at twice the prevalent sector rates of 16,000 plus 12 percent freehold charges, and auctioned these plots (on 22 July 2016). Moreover, the Parishad did not record any reason for not considering the auctioned price of the nearby plot (16/com-4).
Thus, the Parishad was deprived of Rs. 2.27 crore due to incorrect fixation of the reserve price.
The audit further noticed that there was no system in existence in the Parishad to ensure that the reserve price had been fixed correctly as per the extant guidelines/rules framed by it. The fact that nearby commercial plots had been auctioned at a much higher rate, was not factored into the fixing of the reserve price of the plots in question. This indicates that the MIS at Parishad was deficient.
The Parishad stated (January 2019) that as the areas of plot no 16/com-5 and 16/com-6 were slightly less than that of plot no 16/com-4; hence, there was a possibility of getting lower bids. No reply in respect of plot no. 16/com-7 was furnished.
The Government accepted (June 2019) the contention of Audit that specific reasons for not considering auction price of nearby plots for fixation of reserve price should have been recorded.