It is one blow after another for the beleaguered realty firm DLF. The Punjab and Haryana High Court recently decided to cancel the allotment of 350-acre land sold to DLF in Gurgaon by the Bhupinder Singh Hooda-led Haryana government. The court has directed the state government to invite fresh bids for the land from both domestic and international developers, including DLF.
The piece of land came under a cloud after villagers from Gurgaon's Wazirabad area protested against the Haryana government's decision for allotting land to DLF in 2010 for Rs 1,703 crore.
They claimed that the government acquired the land for "public purpose" but later sold the land to DLF, which was supposed to use it for a project comprising residential, commercial and sports facilities.
This setback has come on the heels of the Supreme Court's ruling last week that directed DLF to pay Rs 630 crore penalty within three months in a case related to its Belaire project in Gurgaon. In 2011, the Competition Commission of India found that DLF was abusing its dominant position, which was hurting the interest of its buyers.
The CCI had imposed a fine, which was later contested in the competition tribunal COMPAT by DLF. In July this year, DLF moved the Supreme Court against the COMPAT order. Land acquisition is one of the most controversial issues at the moment. The new Land Acquisition Act, which came into force in January this year, has been severely criticised by industry.
The industry has been asking the Narendra Modi government to either modify or repeal the existing law. Among other issues, the industry is particularly concerned about the consent and compensation clauses within the law.
It may be noted that last month the Rajasthan government announced its plan to amend the state's land acquisition law that would simplify the acquisition process to make it more investment-friendly. While land is a state subject, its acquisition comes under the concurrent list, which means that both central and state governments have a say in the way the process is to be carried out.
Shares of DLF slumped more than 10 per cent on the Bombay Stock Exchange in late afternoon trade on Thursday to Rs 164.
For the quarter ended June 2014, DLF registered a 12.4 per cent fall in net sales over the January-to-March 2014 quarter. Its net debt was Rs 19,064 as of June, more than two times its net sales for the financial year 2013/14.