Business Today

Battleground Lavasa

Is the controversy that has reared its head ahead of an IPO by India's first private-led hill station project genuine or just greenmail? Suman Layak reports from the ground.

Suman Layak | Print Edition: October 17, 2010

In Mumbai's bumper-to-bumper traffic and jowl-to-jowl commute, the drive on the bridge that arcs over the sea linking western suburbs Bandra and Worli can be a breeze. The builder of the towering bridge, which cheerleaders compare to the Golden Gate in San Francisco, has as stunning a property, if not more, nestled in the Sahyadri range in the Western Ghats - Lavasa, India's first planned hill station.

But as much as a postcard perfect destination Dasve village, the most developed part of Lavasa, is, all is not well at the project that will eventually consume 18 villages. Lavasa Corp., the company building the township and a unit of Ajit Gulabchand-promoted Hindustan Construction Company, or HCC, is in the firing line of social activists, environmentalists and politicians on charges of land grab and flouting environment protection laws.

The charges have been floating around for years now but roared into the limelight this August. Maratha politician and Nationalist Congress Party chief Sharad Pawar took a swipe at Bharatiya Janata Party leaders in the state accusing them of being in league with realtors. The opposition hit back asking questions about Pawar's piece of cheese in Lavasa. Supriya Sule, his daughter and now Member of Parliament, and her husband Sadanand sold a 12.5 per cent stake they held in the project to HCC in 2004 for Rs 16.5 crore.

The story so far

  • In 2000 the Maharashtra govt earmarks 23,000 acres in Pune district for the project.
  • In 2003-04 HCC becomes the majority shareholder in Lavasa Corp.
  • The company will build a city, comprising four or five towns with three lakh permanent residents by 2021.
  • It is offering jobs to all local inhabitants; promises another one lakh jobs to outsiders.
  • It has already invested Rs 2,500 crore and will raise another Rs 2,000 crore through an IPO.
Lavasa Corp.'s regulatory filing for an initial public offer (IPO) on September 14 to raise Rs 2,000 crore has only fuelled the angst on the ground. The project, which began in 2000, is the target of three public interest lawsuits, with a fourth one likely any day. The protesters, says Scot Wrighton, City Manager for Lavasa Corp., are "repeating lies and by doing so they hope they can make it the truth". Balancing the need of investors to retain control over the city administration to make sure investments are secure and rules that a city be managed by a democratically elected body can be challenging, he admits.

That challenge can be exhausting, especially when faced with Medha Patkar, India's best-known public activist. Her National Alliance of Peoples' Movements, or NAPM, has taken up the cause of affected villagers. What irks NAPM in particular, as also several villagers BT met on a recent trip to Dasve and other villages at Lavasa, is that the Maharashtra government has appointed Lavasa Corp. as the Special Planning Authority, or SPA, of the area. The SPA's planning committee, much like a town planning body, is chaired by Suresh Pendharkar, the chief planner at Lavasa Corp.; he is also the CEO of the authority.

"The company will, of course, seek to maximise its profits, but how did the government allow this? There will be a huge influx of outsiders (estimated at 300,000) in the area and the locals will be reduced to being their servants and khansamas (cooks)," says NAPM's S.R. Suniti. The Collector of Pune district has the authority to take action against the SPA if it violates rules of the regional plan of the district, says Pendharkar, but that may be just on paper.

Spokespersons for Lavasa Corp. and HCC told BT that Chairman Gulabchand was not available for comment. He did not respond to phone calls, e-mails and text messages to his mobile phone. HCC controls about two-thirds of the hill developer. There are several villagers who say they have been victims of land fraud, mostly by land agents and sharks, who have profited by turning over tracts of land to Lavasa Corp.

Farmer Dnyaneshwar Shedge, 48, says he has been left out in the cold. "When our land at Daund turned saline and uncultivable, we returned to our village, Mugaon, hoping to cultivate our two acres of land there. We learnt that our land had been transferred to an agent. When we confronted him, he gave us a cheque for Rs 5.8 lakh which bounced," he says. His charge could not be independently verified by BT. Mugaon lies adjacent to Dasve and will be eaten into when a proposed Lavasa Corp. golf course comes up.

Farmer Angst
Raghu Tukaram Watane, 78, a resident of nearby Gadle village, claims that an agent bought his land by getting his minor son to sign property papers. Documents with Watane show him as a joint owner of the property along with Lavasa Corp. and Aniruddha Deshpande, an early promoter of the company. Many such cases have been documented in a 2009 study, Interim Report of the People's Commission of Inquiry, by Magsaysay Award winner Arvind Kejriwal; Y.P. Singh, a retired Indian Police Service (IPS) officer-turnedactivist; S.M. Mushrif, Mumbai's former Inspector General of Police; and advocate Nirmal Kumar Suryavanshi.

The project is being panned by many

  • Allegations of large-scale intimidation of locals, and also fraud while purchasing land
  • Also, it allegedly did not undergo the mandatory environmental impact assessment
  • It could divert the Pune water supply to Lavasa leading to crippling shortages in the city

...But Lavasa Corp. Denies the Charges

  • Land acquisition above board with full consent of landowners
  • The project parameters did not mandate an EIA and all other mandatory approvals were given
  • Check dams will actually increase water availability to the Varasgaon Dam feeding Pune
Watane and Shedge were among seven villagers who complained of fraud to BT but there were almost as many - five - who seemed satisfied with the compensation package offered by Lavasa Corp. One among them - Ganpat Bhalerao, 41 - said he and 15 other families in Dasve had been given one-room, kitchen and bathroom cottages. Lavasa Corp. has had to sew up some 1,500 transactions to snap up 9,500 acres - in effect, about six acres each.

Even if the anger is not widespread, it is easy to tap into. Says Balasaheb Ambedkar (grandson of B.R. Ambedkar, the chief architect of the Indian Constitution), who heads the political organisation, Bharipa Bahujan Mahasangh: "We have asked the collector to invoke the SC & ST (Prevention of Atrocities) Act in Lavasa to sort out the land issue." He spoke to BT outside the Pune Collector's office, where a group of about 50 people from Lavasa had gathered for a protest.

To be sure, controversies around land deals, especially those involving large companies, are not unusual in India. The most famous in recent years: the October 2008 withdrawal of Tata Motors from Singur, near Kolkata, after an agitation by locals, supported by the opposition Trinamool Congress, stopped construction of a factory there.

Several other such protests pockmark the country's industrial landscape - from Haryana to Maharashtra, from Uttar Pradesh to West Bengal - mostly involving governments acquiring land at prices lower than market rates. Lavasa Corp. executives are certain that they are not in the wrong.

President Rajgopal Nogja insists the company has not acquired any land through the fiat of any government or local body. "We have approached people who were listed in the land records and bought from them after negotiations," he says. Villagers say prices zoomed from Rs 10,000 an acre - when the project was first conceived as Pearly Blue Lake Resort in 2000 - to between Rs 5 lakh and Rs 20 lakh now, depending on how close the land is to development. In between, the project was renamed twice: to Lake City Corporation late in 2000 and Lavasa Corp. in 2004.

Other charges, too, have been hurled at Lavasa Corp. In May this year, Singh, the ex-IPS officer, sent a legal notice to the Union Ministry of Environment and Forests asking it to intervene as the project did not have an Environmental Impact Assessment, or EIA, done under the Environment Protection Act 1986.

Singh's contention was that the law mandates an EIA study on all projects at a height of 1,000 metres above sea level. The process mandates a public hearing for all affected people. "The project's gate is built at a height of 1,059 metres - you check Google Earth and it shows the height," he says. "This alone makes it mandatory for the project to seek an EIA with open public consultations and meetings.

The state government put that height at 975 metres." The ball is in Environment Minister Jairam Ramesh's court now. City Manager Wrighton says most of the project is below the 1,000 metre mark and the gate is ornamental.

Environmentalists also point to two dams and several smaller check dams Lavasa Corp. has built without consulting people down the Mose Valley who use the water for cultivation. Lavasa Corp., in its defence, says it has taken several steps to ensure a fair deal to the locals, 300 of who it employs. "Eighty five per cent of the people who own land here do not live in Lavasa but have moved to Pune," says Nogja, the company president.

"In fact, we are having trouble finding people for the second batch of our training centre course that imparts skills like carpentry." An environment management programme has periodic reviews built in and aims to raise forests destroyed in the region by planting local plant species. Lavasa Corp. has started a school called the Christel House, part of an American chain for underprivileged children, which is conducting an intensive English language programme for 180 children under eight, at a cost Rs 2.5 lakh a year per child, says Nogja.

Still, the hill station developer and its parent HCC have a task on their hands. Much of the noise around the project, for sure, may be targeted at the Lavasa Corp.'s IPO but some pressures could hold. NAPM'S Suniti says Dasve is only one of 18 villages at Lavasa that have been developed. "It will be a battle for every one (of them) from now on," she promises.

  • Print
A    A   A