A plum role for developer in film city

[karira]

As reported by Raveen Thukral of TNS in tribuneindia.com on 10 Janaury 2009:
The Tribune, Chandigarh, India - Main News

A plum role for developer in film city


Chandigarh , January 10
As the Central Vigilance Commission (CVC) begins the probe into the much-publicised but controversial mega projects of the Chandigarh Administration, questions are now being raised on the very validity of the contract signed by it for the Rs 191-crore Film City with Parsvnath Film City Limited (PFCL).

Interestingly, while the entire negotiations for the project were carried out by Parsavnath Developers Limited (PDL), the contract was signed with its subsidiary company, PFCL, which was incorporated on February 28, 2007, two days before the deal. Moreover, at the time of signing of the deal, the company did not even have the mandatory Certificate of Commencement of Business (CCB), issued by the Registrar of Companies.
Even the paid-up capital of PFCL on the day of signing the agreement, March 2, 2007, was only Rs 10 lakh, whereas as per the Expression of Interest invited by the administration, the eligible company had to have a paid up capital of Rs 50 crore. While PFCL gave an application for enhancement of its authorised capital to Rs 50 crore after May 10, 2007, the CCB was issued on April 11, 2007, over a month after the signing of the contract.

Questions are being raised on the need for forming a new company, which as per law is a separate entity, when technical bids of PDL were evaluated and approved. In fact, the administration has been mysteriously silent on the existence of PFCL and till date most of the records pertaining to the project refer to the company as PDL. Even the press release issued by the administration on March 2 stated that a contract for the project had been signed between PDL and the administration and there was no mention of PFCL.

While officials of the company were not available for comments, UT Finance Secretary Sanjay Kumar said “since the matter was now being looked into by the CVC, I wouldn’t like to comment on it”.

According to some senior chartered accountants, under Section 149 of the Companies Act, a limited company cannot commence business until and unless CCB is issued. “CCB is a formal approval from the government for starting a business and no limited company can get into a contract prior to its issuance,” they say, adding that any agreement signed prior to that would only be “provisional” and the company is a “non-entity”. They said even subsidiary companies or the ones formed as Special Purpose Vehicles (SPV) also needed a CCB.

RTI activist Hemant Goswami, who has procured over 1,000 pages of documents pertaining to the project under the Act, said the payment of Rs 48.3 crore made by PFCL to the administration was shown as an advance from PDL and on the day of signing the contract the company did not have any staff on the rolls. He said PFCL was showing an inventory of Rs 191 crore and then adjusting the same in its liabilities in the balance sheet.

Raising questions on the concept of the Film City project, Goswami said no one knew how it all started. He said in a reply given to him under RTI, the administration had claimed that the project was initiated after the visit of Vivek Atray, the then Director IT and S. K. Sandhu, the then Finance Secretary, to Malaysia and Singapore. However, in their report to the administration, the officers had strangely made no mention of their visit to any film studio and/or anyone associated with the movie trade during their foreign jaunt. He said the file also had no mention of any feasibility study, project report and/or any pilot study prior to taking up of the project.

Meanwhile, apart from these technical aspects, according to sources the CVC is likely to also look into the reasons for the undue haste adopted in the clearance of this project. A scrutiny of the Film City file (available with The Tribune) clearly reveals the speed with which sanctions were accorded.

There are two separate notes regarding the project in two separate files and both are dated March 7, 2006. The file was sent by Director Information Technology (DIT) on that day to the then Finance Secretary, who further forwarded it to the office of the then Adviser, Lalit Sharma, and who finally sent it for approval to the Administrator Gen (Retd) S F Rodrigues. All these officers signed and approved the project on March 7 itself.

Again, the file was moved by the DIT for further approval on March 27, 2006, and again it went through the four levels of officers and was approved by Rodrigues on the same day itself. A recommendation to call Expression of Interest was moved on March 28, 2006, and the advertisement in all newspapers was placed the very next day.

Another aspect that is likely to come under the CVC’s scrutiny is the administration’s controversial decision to allow Parsvnath to construct a hotel on an area of five acres within the 30 acres allotted to it for the project. Initially the project had no provision for a hotel site. Goswami dubbed the deal as the “fraud of the highest order” and demanded that all officials, including the Administrator, linked with the project should be immediately removed for fair investigations.

[karira]

As reported by Vibhor Mohan of TNN in timesofindia.indiatimes.com on 13 January 2009:
http://timesofindia.indiatimes.com/C...ow/3970224.cms

UT quick to prepare dossier for CVC

CHANDIGARH: In less than a week of Central Vigilance Commission summoning records on the three controversial mega projects planned for
Chandigarh, UT administration, acting fast, has readied the dossier and plans to submit it on Tuesday.

Sources said that the voluminous documents pertaining to the ambitious projects of Amusement-cum-Theme Park, Multimedia-cum-Film City and Medi City, besides the chronology of the blow-by-blow account of progress in each project would be sent by the administration. The CVC would also probe the land deal for developing the IT habitat, a residential and commercial area close to the Rajiv Gandhi Chandigarh Technology Park (RGCTP).

Most senior UT officials have heaved a sigh of relief ever since the CVC inquiry was ordered and hope that the focus would now move away from the contentious issues pertaining to the projects and working of the administration would be back on track.

Questions have been raised about the procedures followed in allotment of these procedures after UT adviser Pradip Mehra raised a gamut of issues, forcing the administration to issue repeated clarifications.

The charges of corruption and procedural lapses in these projects, including allotment and transfer of land, would be looked into by the CVC to highlight any illegality. The CVC took notice of the controversies surrounding the projects after certain social activists raised hue and cry on the basis of information received under Right to Information Act.

To add to this, UT adviser Pradip Mehra demanded that an independent Central agency be asked to inquire into the procedures followed in allotment of the Multi-media-cum-film City project to Parsvnath Developers Limited. On the Medi City project, Mehra had reportedly objected to the move to give 45 acre of prime land in IT Park, near Manimajra, on a very low reserve price of Rs 203.70 crore as the upfront fee, which, as compared to his own estimate of around Rs 2000 crore.

Mehra also questioned the valuation process, claiming that for a project, which was out-and-out commercial, the benchmark figure of Rs 175 crore was grossly undervalued. The fact that there was a financial consultant does not absolve the administration of its responsibility. He has alleged that there was no transparent bidding process for selecting the consultant.

The CVC has also asked for records on the Prideasia project in light of the objections raised by the comptroller and auditor general of India (CAG) on the land deal between Chandigarh Housing Board (CHB) and Parsvnath Developers for the IT habitat. The CAG had pointed out that the Rs 831-crore land deal had caused a loss of around Rs 1,200 crore as the land was transferred at a concessional rate to CHB.

[karira]

As reported by Raveen Thukral in tribuneindia.com on 14 January 2009:
The Tribune, Chandigarh, India - Main News

Parsvnath had no multimedia experts

Chandigarh, January 13
The Chandigarh Administration is likely to face some tough questions from the Central Vigilance Commission (CVC) for allotting the contract for the controversial Rs 191 crore Film City project to Parsvnath Film City Limited (PFCL) as it now turns out that the company did not even fulfil the technical parameters laid down by the administration.

As reported by The Tribune on Sunday, while the negotiations for the construction of the project were conducted by Parsvnath Developers Limited (PDL), the contract was mysteriously signed with its subsidiary, PFCL, which was incorporated, with a paid up capital of merely Rs 5 lakh, two days before the finalisation of the deal on March 2, 2007. And now it has come to light that contrary to the laid-down provisions that the project developer should have on its board/panel experts from the multimedia and film- making field, PFCL had none on the day of signing of the contract.

The Expression of Interest (EoI) and technical bids of the PDL had earlier been accepted by the administration on the grounds that it had Real Good Films, a company promoted by cine star and producer, Satish Kaushik, as a partner. Similarly M/s Digital Academy and Maya Entertainment were shown as two partners by Parsvnath for its educational institute project in the Film City. These three companies reportedly have no role, whatsoever, either in PDL or PFCL.

Documents pertaining to the EoI approved by the administration on May 16, 2006 (available with The Tribune) reveal that PDL had shown Satish Kaushik’s “promoted” Real Good Films both as a “board/panel member” and as a “tie-up”. In fact Kaushik had come down to Chandigarh later to give a “technical” presentation to the administration.

According to an interesting revelation by RTI activist Hemant Goswami, who has procured over 1,000 pages of documents pertaining to the project under the Act, Ksuahik’s promoted company, Real Good Films Pvt. Ltd, was incorporated on February 2, 2007, almost nine months after the EoI was approved. The company was registered by the Registrar of Companies, Mumbai, with three directors on its board and having a share capital of one lakh only.

Goswami said neither Kaushik nor his company has a single share in PFCL or PDL and they also do not hold any positions there. Besides Kaushik has never ever received any consultation amount from any of the Parsvnath companies, he added.

Goswami said PDL had furnished wrong information to the administration, which, for reasons best known to it, accepted their bid without ve ification of facts and in the process rejected several other deserving companies.

Kaushik admitted that he had never received any money from Parsvnath and said that despite verbal assurances, he had not been allotted any shares in PDL nor appointed a director in it. As for Real Good Films, he said it was a partnership company when PDL submitted the EoI. He however, expressed ignorance about the date of incorporation of the company as a Private Ltd firm and claimed that he had left all the paperwork to PDL.

Accusing the PDL of “befooling” him and “betraying his trust” by keeping him in the dark about the developments relating to the project after it was short-listed, Kaushik said even he was surprised when he realised that he had no role in PFCL. “They have used me and now I realise that it was always a real estate project for them and they had no interest in Film City,” he said, adding that, if required, he would apprise the CVC about how Parsvnath had gone about getting the project.

Goswami alleged that the hasty clearance of the project and these fresh revelations indicated that the city’s bosses in league with the property developers were playing a fraud on the public. “All this is nothing more than a lucrative real-estate deal, camouflaged in the name of Film City or such projects,” he said.