ITC luxury hotel hits CAG hurdle

CAG pulls up Odisha general admin dept for alloting 5.12 acres to ITC without ascertaining land use zone

ITC Hotels, which runs a chain of premium hotels across the country, has hit the audit hurdle for its luxury hotel proposed in Bhubaneswar.

The Comptroller & Auditor General of India (CAG) has pulled up the Odisha general administration (GA) department for allotting 5.12 acres land to ITC Sonar Bangla Sheraton Hotels & Towers-Kolkata without ascertaining land use zone.

Though the land site was earmarked for horticulture use with restriction in construction up to 10 metres in height, the land was leased out to the hotel developer in violation of land use zone plan, pointed out the CAG report.It may be noted, the Bhubaneswar Development Authority (BDA) had declined to allot the land in favour of ITC since it was meant for horticulture. The GA department, however, overruled the BDA direction and went ahead with land allotment disregarding zonal regulations.

Besides, the GA department also charged premium at a lower rate of Rs 35 lakh per acre against the market value of Rs 1.5 crore. This resulted in a loss of Rs 5.90 crore. According to the CAG report, the land was still vacant (as on June 2012).In reply to audit, the GA department stated in January 2013 that the land was allotted to ITC on the basis of recommendations of the site selection committee in which planning member of the BDA was a member.

The CAG did not find the reply to be tenable as deviation from zoning regulation on the basis of the individual views of Planning member- BDA cannot be the basis for carrying out changes in land use plan per se since it creates scope for arbitrariness.

Similarly, a one-acre plot was allotted to Laxmi Franklin Hospitality Pvt Ltd in December 2006 in the city for establishment of a budget hotel without knowing the zone admissibility from BDA. In May 2007, BDA had intimated to the GA department that the area was meant for open space use zone in the comprehensive development plan (CDP) for Bhubaneswar and hotel construction was not permissible.

While extending this benefit to the hospitality player, the government also sustained a loss of Rs 1.29 crore as market rate was not considered for allotment of land.