UAE firms sue India, desi co for Rs 5 lakh cr over Mumbai plots

Times of India | 5 November 2015

UAE firms sue India, desi co for Rs 5 lakh cr over Mumbai plots

Nauzer K Bharucha

A tussle over two large property redevelopment projects in the city may head to an international arbitration court, with two UAE firms claiming Rs 5 lakh crore ($85billion) as compensation, perhaps the highest arbitration demand in India’s history.

Last month, a notice of arbitration was served on the Indian government on behalf of Strategic Infrasol Foodstuff and Thakur Family Trust UAE Joint Venture. Their grievance is that they were "expropriated" of their rights over these two projects by their co-developer, the Shapoorji Pallonji (SP) Group.

An SP Group source said on Wednesday the charges are "wholly false, baseless, unjustified and made with malafide and malicious intent to harm and damage Shapoorji Pallonji’s reputation and cause financial loss". It is absurd to claim that the Indian government is anyway involved in these projects and to state that the "claimants feel that the Republic of India has become a party". The government should take serious note of such baseless and motivated allegations, added the source.

He further denied that the SP Group has dealings with the Thakur Family Trust. "We will investigate the allegations and take appropriate criminal and civil action against them," the source added.

"The Indian government has been made a respondent because these lands belong to various government agencies," said advocate Anil Chawla of Anil Chawla Law Associates, which represents the UAE firms. He added that the government agencies also wrongly recognized SP’s right over theirs. The Rs 5 lakh crore demand has been calculated by estimating the profits that would accrue to the developer from these two plots, he said.

The claimants said they, along with a consortium of Indian companies, have spent over Rs 250 crore to start redevelopment of 1,308 acres of slum sprawl on salt pan land at Ghatkopar and a 56-acre Mhada colony called Samata Nagar in Kandivli. Later, they roped in SP as a JV partner for both the projects.

The Ghatkopar salt pan lands belong to the Centre, which were on lease to a company of the Garodia Group. "Freeing up the salt pan lands for development was made possible with inputs provided by the claimants and the consortium," they said.

They worked on these projects since 1998, which "eventually yielded a staggering in-principle approval for creation of constructed floor space of 270 million sq ft". The consortium’s "patent-pending redevelopment strategy’’ has a potential to upgrade a total of 60,000 tenants from unsafe housing in MHADA colonies at the two projects to 15,000 clean, safe and modern units. In addition, it promised to give to the Maharashtra government more than 152,000 free housing units.

The UAE firms said they collaborated with the SP Group for financial support and for help with construction activities. "The SP Group betrayed the consortium and fraudulently expropriated our rights by using forged documents," said the arbitration notice.

"As long as the two projects seemed distant and impossible, the consortium and the claimants walked the long journey alone, with the SP Group playing only a marginal role in later years. As soon as clearances were obtained and success seemed within reach, the SP Group turned greedy and fraudulently expropriated the two projects, overthrowing the original promoters of the projects by a series of dishonest and malicious means," it added.

The notice further alleged that various organs of the Republic of India actively supported the "fraudulent efforts of the SP Group by believing, relying on and acting on the forged documents provided by the SP Group, ignoring the investments made by the claimants".

Fuente: Times of India