Edit/Op-Ed

Lok Group’s ROMF Scam

residential building

Krishnaraj Rao

Mumbai: Few days ago, the city observed builder Lalit Gandhi’s second death anniversary. Gandhi, co-founder of Lok Group, passed away on 23 March 2010. He had seen visions of innovatively making money from the dilapidated ceased buildings of Chira Bazaar in South Mumbai. In 2006-07, he founded an NGO called Remaking of Mumbai Federation (ROMF).

This NGO was spearheaded by Mayank Gandhi, Shri Lalit Gandhi’s charismatic nephew (who went on to achieve national fame last year as a major architect of Anna Hazare’s India Against Corruption campaign). By fudging the lines of demarcation between commercial interest, private interest and public interest, this NGO merged Lok Group’s commercial interest with the ambition of over 8000 tenants living in dilapidated buildings to have better homes. By connecting with the Mumbaikar’s desire for a beautiful city, Remaking of Mumbai Federation (ROMF) became a media-darling and messiah of Chira Bazaar Cluster Development. It organized several events.

Around the core of these events, a publicity campaign consisting of systematic misinformation and name-dropping was built. Sri Sri Ravishankar, Justice P N Bhagwati, Narayan Murthy and Deepak Parekh, Citispace are a small sample of the dignitaries whose names were exploited for creating brand-equity around ‘Remaking of Mumbai’. The credits-list of this newsletter is a good specimen of such name-dropping.

Contrary to the public perception that was created, there was nothing “inclusive” about Remaking of Mumbai Federation. It was never a true federation of stakeholders, and it never gained the grassroots level support from landlords and tenants of Chira Bazar. The couple of tenants associations supposedly supporting ROMF were little more than letterheads.

To Lalit Gandhi’s Lok Group-the owner of this NGO-Chira Bazaar Cluster Development was a cash cow to be carved up into beef and sold to the highest bidder. Had things gone according to plan, Lok Group might have reaped bumper profits by selling it for at least Rs 37.5 crores, if not much more.

Under the heading, ‘Cancellation of earlier MOUs and Agreements’, this document refers to an earlier transaction worth Rs 37.5 crore in August 2010, in post-dated cheques dated from November 2010 till end-2013. ROMF had claimed that it would deliver the Chira Bazaar cluster development project, tied up neatly, to Unity Developers. (Unity Infraprojects Limited (UIL) is the holding Company of Unity Realty & Developers Ltd – the buyer of this project.  The promoters of UIL- K K Avarsekar and his associates – are known to have the blessings of the Thackeray family; this may explain the eagerness of MCGM’s High Powered Committee to overlook the glaring shortcomings of this project.)

So, in effect, this present agreement, which scaled down the payment to Rs 10 crore, was an admission of ROMF’s inability to deliver as promised.

As per the present agreement made in Jan 2011, Lok Group and ROMF sold a 5 acre “pilot project” carved out of this 30-acre project to Unity Realty & Development Ltd (URDL) for down-payment of Rs 5 crore, plus Rs 5 crore linked to the project progress. Under the heading, ‘Monetary Obligations & Considerations’. (Incidentally, this deal was transacted on stamp paper of Rs 100. Stamp duty of 5% of value of immovable properties / land / development rights was not paid on this Development Agreement. If we take the deal at its face value – Rs 10 crore – it amounts to stamp duty evasion of about Rs 50 lakh. But some experts feel that the true value of this agreement is far beyond these figures; even under the scaled-down agreement, ROMF was delivering to Unity Realty an intangible asset worth hundreds of crores. One way or another, it is a huge evasion, and Maharashtra Stamp Duty department should estimate what its true value is!)

In this agreement, the seller is ROMHIF. So what is the connection of ROMHIF with ROMF? This extract from Lok Housing & Constructions Ltd Directors Report 2010 explains it: “Remaking of Mumbai Housing Infrastructure & Finance Ltd” (ROMHIF) submits proposal for Chira Bazaar Cluster redevelopment in C Ward of Mumbai. The High Powered Committee clears Chira Bazaar Cluster redevelopment proposal of ROMHIF to redevelop around 30 acres of land (362 buildings and over 8000 tenements). The proposal for demolishing of old and dilapidated structures and construction of high rise buildings is under consideration with Government of Maharashtra. ROMHIF has submitted its proposal to redevelop around 30 acres of land (362 buildings and over 8000 tenements) in the Kalbadevi-Chira Bazar area in C Ward. It proposes to demolish these old and dilapidated buildings and in their place construct high rise structure in the ear-marked plots. Lok Housing Ltd has 49% stake in the shareholding of Remaking of Mumbai Development Ltd. (ROMD) which is the holding Company for ROMHIF”. As per the website of Registrar of Companies, the registered Addresses of both ROMD and ROMHIF is Lok Bhavan, Andheri East, Mumbai. Paid up capital of ROMD and ROMHIF is Rs 40 lakh and Rs 5 crore respectively.

Since Lok Housing Ltd as per Directors Report has 49% stake in the holding company ROMD for ROMHIF, who owns the balance 51% stake?  Is it somebody in the government or civic administration? We don’t know, but it will be interesting to find out.

The names of all companies start with Remaking of Mumbai. Why? So that the brand equity of ‘Remaking of Mumbai’ can be effortlessly passed on to any buyer. The government approvals gotten by ROMF can also be transferred, with some help from pliant government officials, to another entity with the same name, namely Remaking of Mumbai Unity Developers Private Limited. In this crucial clause, the agreement recognizes that it is crucial to retain the ‘Remaking of Mumbai’ name at all times, even if the latter part of the name were changed in future i.e. if Unity Realty & Developers sold its stake to someone else. (Now that is like saying: Smita is married to Ramesh. It is crucial that any man desirous of sleeping with Smita must knock on the bedroom door and say, “Open the door, I am Ramesh.” Needless to say, the real Ramesh gets paid.)  

Unfortunately for Lok Group and their buyer, Unity Realty, the state government questioned the fraudulent claims of Lok Group/ROMF – especially the claim that that it had written consent from 79.2% tenants. What it actually had was some letters from a small number of tenants, giving the project their best wishes without even knowing the particulars of the project – and of course, without knowing even which builder was going to undertake the massive redevelopment, and whether he had the capital and infrastructural capabilities to do so.

The state government pulled up MCGM’s high-powered committee for not exercising due diligence.

To some activists, the design behind Remaking of Mumbai Federation was clear from the start. UTSAL KARANI AND HIS COLLEAGUES AT JANHIT MANCH blew the whistle on Lok Group and ROMF several times, until Chief Minister Prithviraj Chavan and Municipal Commissioner Subodh Kumar finally opened their eyes.

We need to remember that builders can create a marketable asset without having anything in hand, just like magic. We must remember that builders will always find innovative ways of bypassing the processes of competitive bidding and project evaluation by whipping up public sentiments. On this solemn occasion of Shri Lalit Gandhi’s second death anniversary, let us all maintain one minute’s silence and remember how Lok Group and Remaking of Mumbai Federation nearly pulled a fast one on this city.

(Krishnaraj Rao is a prominent Right-to-Information activist and journalist based in Mumbai. He can be reached at thebravepedestrian@gmail.com )

The views expressed in this article are the author’s own and do not necessarily reflect BH’s editorial policy. 

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