December 25, 2011

life in financial markets: (part 2) how companies manipulate government authorities

In part 1 of this post series dated January 3, 2008 (, I had shared a classic example of how Bombay's construction companies and local government authorities including municipal corporation and state government departments get together to twist rules to benefit the builders and enable kickbacks to politicians, bureaucrats and government officers. That example was about Hiranandani Builders. (the image to the right is of the area in Powai, Bombay where Hiranandani Builders' construction took place. the image is courtesy a news story on rentals at

Below is a news update relating to that very case. 

Petitioners reject Hiranandanis’ ‘cheap’ offer

The builder agrees to build affordable houses provided PILs are squashed, petitioners insist they should follow original agreement or return Powai land to govt

Mumbai Mirror Bureau

Posted On Tuesday, December 20, 2011 at 02:03:25 AM

In a bid to buy “peace”, the Hiranandani Developers on Monday told the Bombay High Court (HC) that they are willing to build affordable houses on the remaining plot in Powai, allotted to them by the State provided all PILs against them are squashed.

In 1986, the Hiranandanis entered into a tripartite agreement with the owners of the land, MMRDA and the State to develop a 230-acre plot in Powai.

The developers were supposed to build affordable houses measuring approximately 430 sq feet and 861 sq ft for those from the economically weaker section.

However, PILs filed by three social activists - Kamlakar Satve, Medha Patkar and Rajendra Thacker allege that the builder violated the tripartite agreement and constructed luxurious flats costing Rs 5 crore and above for wealthy people.

On Monday, the Hiranandanis told the court that they are willing to construct 225 houses of 430.5 square feet and 225 houses of 861.1 sq feet on the remaining 2,90,625.5 sq ft plot provided all the PILs against them are disposed off.

“We agree to construct affordable houses on remaining land but this should put an end to the matter and not open a can of worms. We are doing this as we want to buy peace,” said Hiranandani’s counsel.

Petitioners reject proposal

However, the three petitioners rejected the proposal, saying, the flats should be built as per the original tripartite agreement or else the land should be returned to the government.

The division bench of Chief Justice Mohit Shah and Justice Roshan Dalvi asked Hiranandani Developers if they were going to utilise the remainder of the plot to construct affordable homes. “We are not inclined to make our judgement on the basis of arbitration petition,” the HC bench observed.

The court also asked the developers to tell them how many buildings were constructed after the interim order passed in 2008, directing them to construct tenements as per the tripartite agreement.

The petitioners alleged that the developer had amalgamated two or three flats and converted them into one big flat ranging between 2,000 and 3,000 sq ft.

However, Hiranandani’s counsel argued that they had sought permission from the MMRDA to amalgamate flats and convert them into bigger houses in 1989.

At this point, MMRDA’s counsel told the HC that as per a clause in the agreement, the permission to amalgamate houses was given for only one year. The HC has adjourned the matter to Tuesday.

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