AP govt cancels allotment of 4731.15 acres of land to KIPL

Dealing another blow to infra major Navayuga Engineering Company, the Andhra Pradesh government has cancelled allotment of 4731.15 acres to Krishnapatnam Infratech Private Limited, promoted by the firm, to set up a multi-product special economic zone in SPS Nellore district.

The AP Industrial Infrastructure Corporation Limited, a state government undertaking, issued an order to this effect late on Saturday, stating it was resuming the entire land as KIPL "failed even after 10 years to get even a basic notification for the Multi Product Special Economic Zone.

Navayuga is the promoter of KIPL.

The state government had in July cancelled the contract awarded to Navayuga for the Polavaram irrigation project headworks and also the hydropower project attached to it.

In August, it cancelled the Machilipatnam Port development contract awarded to the Navayuga consortium and took back 412 acres of land allotted as part of the project.

The SEZ project was initiated way back in 2007 by Jagan's father, the late Chief Minister Y S Rajasekhara Reddy.

The Commerce Minisgtry had granted formal approval for the SEZ in March 2010 only for an extent of 2,527.88 acres.

The 26-page order issued by the APIIC listed out all the alleged lapses and violations on the part of KIPL.

"It brings out the intent of KIPL of taking huge extents of land on the pretext of MPSEZ and using these lands as cash cows for its promoters' other business needs while keeping the lands vacant and idle, depriving the local communities from utilizing the lands for their needs," the report claimed.

Citing a Performance Report and a Search Report, the order alleged that KIPL created huge financial encumbrances on this land by offering this property as collateral security without APIIC's consent and raised loans from various banks to the tune of Rs 1,935 crore.

Most of the money was allegedly used for its promoters personal business purposes, it claimed.

Axis Bank, ICICI Bank, Central Bank of India and Allahabad Bank were the prime lenders to KIPL,the report said.

KIPL failed to raise another Rs 250 crore as the lender IFCI sought a no-objection certificate from APIIC, which the latter declined, it said.

Major amounts of the capital drawn using mortgage was funneled to other Navayuga Group companies by giving advances to firms like Navayuga Engineering Company Limited and Krishnapatnam Port Company Limited and also EPC contract to Navayuga Engineering Company Limited, the report said.

KPIL said the loans were availed by various group companies, pledging the land as collateral, from various banks from time to time to meet the groups business requirements.

It then requested for allotment of a further 6,200 acres from APIIC for completion of both phases of the project when they had not even completed one per cent of the 4731.15 acres of land available with them.

APIIC has chosen not to allocate any further land as this was a clear case of land grabbing," the order added.

It noted that KIPL has failed even after 10 years to get a basic notification for the Multi Product SEZ.

KIPL did not get obtain the basic environmental clearance necessary to develop this parcel of land into industrial area, the report claimed.

Citing a Supreme Court judgment in a similar case, APIIC said the conditional transfer of 4731.15 acres through three sale deeds was "null and void" because of widespread and willful violation of the conditions of transfer.

"And, as per Section 9(o) of Sale Agreements, APIIC hereby resumes the land with immediate effect. As per the terms, KIPL will be treated as 'Encroacher' and 'Trespasser' if it tries to enter the land," the order added.

The APIIC maintained it was under no obligation to bear any financial encumbrances KIPL created as the financial institutions did not seek no-objection certificate before extending loans, with the said land as collateral.

"Though the financial institutions did proper legal due diligence, they knowingly and willfully disregarded the covenants and conditions governing the transfer of land," the order said.