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MUMBAI: An eight-acre plot in Kalachowkie in the heart of central Mumbai, which was sold for a throwaway price of Rs 1.75 crore a decade ago by a Madhya Pradesh government undertaking to a small-time developer, fetched Rs 600 crore last month. South Mumbai property redeveloper Haresh Mehta, who was in possession of the property for the past two years, sold it to the Lodha Group, it is learned. The Lodhas have already announced a residential project on this land.

Last year, this paper had reported how the prime property had originally been sold for peanuts by the MP government-owned Provident Investment Company Ltd.

Mehta’s company, Rohan Lifescapes, sold around five lakh square feet to Lodha about a month ago. In 2010, the private equity arm of JP Morgan Chase invested Rs 160 crore in the first phase of Mehta’s Rohan Lifescapes’ Kalachowkie project. JP Morgan’s arm was to receive around 26% stake in the project and the deal was likely to fetch an internal rate of return of 24-25% a year. However, Mehta decided to put the entire project on the block recently and found a willing buyer in Lodha.

The sprawling plot has a controversial past. It was owned by Provident Investment Company Ltd, a MP government undertaking, when it decided to call for tenders in 2002. The highest bidder was Esque Finmark, a firm owned by a politically connected developer, Paras Porwal. What raised eyebrows was when it was discovered that the highest bid was just Rs 1.76 crore, a price of a mid-sized apartment. Although the real estate market was not exactly booming in 2002, the plot could have still fetched at least Rs 160 acre at Rs 20 crore an acre.

The controversial transaction between Provident Investment Company and Esque Finmark came out in the open only last year when some tenants of Ambewadi, as the enclave is popularly known, dug up information about the status of the land. These residents were perturbed when Porwal began pushing for redevelopment. Residents alleged the Slum Redevelopment Authority “hurriedly” declared the entire 32,000 square metre (1 acre equals approx 4,000 sq m) sprawl as a slum, although they are legitimate chawl tenants. Two Ambewadi housing societies, Shri Khapri Baba and Om Sai Darshan, challenged the SRA’s slum notification. They said in 1996, 2,275 sq m of the 32,411 sq m land was declared a slum. Residents of the tiny slum portion went on to form their own society, Yashodhan. Now, the SRA has classified the entire sprawl as a slum based on the tag given to Yashodhan, they said.

The tenants then wrote to the MP government to ask if it had given a no-objection certificate for the sale. However, senior MP government officials said they knew nothing about the transaction as it had occurred a decade ago.

Provident Investment Co said it had announced the land sale in two city newspapers. It decided to sell the property because it was encumbered and hence not getting good returns. The property was sold on an ‘as is where is basis’ for Rs 1.75 crore a decade ago. An earlier tender had received a single bid, a paltry Rs 9.11 lakh. The company’s board then called for fresh bids to which six firms responded. The company’s board noted that the valuation of the property came to approximately Rs 1 crore.

Two years ago, Rohan Lifescapes took over the redevelopment rights of Ambewadi from Paras Porwal to jointly develop the property. Subsequently, Porwal sold the entire project to Mehta for an undisclosed amount.

Via : ET