The CAG report was submitted Friday and dealt with 5,166 sq metres, which had been in the possession of the army's Central Ordnance Depot since 1942.
The land was relinquished to a private company for the construction of a residential building, based on an "irregular no-objection certificate issued by the DEO (Defence Estates Officer), Mumbai," the CAG noted, after its audit of April 2011.
It pointed out that although certain fraudulent activities pertaining to the land had been brought to its notice, the COD Mumbai did not get the land demarcated in its favour from the state government, which facilitated its usurpation.
As per the audit, the state government's land measuring 13.28 acres was under COD, Mumbai, a part of it falling within the boundary and another portion outside, but was being used for military purposes.
The DEO even paid rent for it till December 1981 but later no rent was paid as the state government did not send bills.
In June 1994, the Mumbai Suburban District collector informed the army that a private party had applied for that land to construct a residential building and sought a no-objection certificate (NOC).
In Aug 1994, the COD strongly objected to the proposal of any multi-storied building in the vicinity of a sensitive defence installation, and even apprised the DEO about the matter.
However, later in August 1994, after meeting a representative of the company, the DEO gave a NOC and intimated the collector that there was no objection to allotting the land to the company, provided no multi-storied construction was allowed.
The CAG pointed out that although the COD was also informed of the NOC by the DEO, it took no steps to confirm its tenancy on the land or get boundaries clearly demarcated in its favour.
Nearly 13 years later, in June 2007, a representative of the private builder who was granted rights to develop the land by the state government approached COD with copies of two letters issued by the collector.
The CAG pointed out that "with unusual speed," the collector released the 5,166.50 sq metre of land to the private company at a market price of Rs.5.94 crore, and handed over possession July 9, 2007.
That month, when the DEO requested the collector to cancel the land sale, the collector said the then revenue minister had verified the status of the land, and after it was confirmed that it belonged to the state government, it was allotted to the company.
Two months later, the company informed the DEO that its claim (over the land) had been accepted and they would start work on it, but the COD put up guards on the land.