AP high court to ask CBI to probe Emaar MGF deal

A division bench comprising Chief Justice Nisar Ahmed Kakru and Justice Vilas Afjal Turkar of Andhra Pradesh High Court today indicated that it would take the Central Bureau of Investigation (CBI)'s assistance in establishing prima facie case in the alleged Emaar MGF-APIIC land deal irregularities.

The court made these comments while hearing a suo motu case based on a letter written by state textiles minister P Sankar Rao, who alleged that Emaar MGF had committed largescale irregularities with the connivance of the officials and persons in the government, causing a huge loss to the state.

The controversy centres around dilution of APIIC’s equity from 49 per cent as agreed in the original memorandum of understanding (MoU) to 26 per cent and also Emaar roping in its group company Emaar MGF Land Limited as a co-developer for the township component of the project.

“The equity of APIIC has fallen to as low as 6.5 per cent in the case of the township project,” APIIC chairman, S Sivarama Subrahmanyam, had told Business Standard, adding this would result in a loss of Rs 1,000 crore to the state-owned corporation.

Emaar Properties PJSE and APIIC had entered into a joint venture agreement for developing an integrated project during the regime of the Telugu Desam Party in 2002.

According to the agreement, APIIC was to hold 49 per cent equity and the remaining 51 per cent stake was to be held by Emaar.

After the Congress came to power in the state in 2004, the project was restructured and a revised agreement was signed by Emaar and APIIC in April 2005.

Taking cognisance of these allegations the judges said they would issue interim orders tomorrow.