Jet Airways and Starlite Systems have failed to pay the full amount for plots purchased from the Mumbai Metropolitan Regional Development Authority (MMRDA) in 2008, prompting the authority to recommend cancellation of the land deals. Analysts see this as an indication of how difficult corporate India is finding the current economic slowdown.
“Despite two extensions to both these companies to pay the instalment and conclude the deal, they have failed to do so. It is no longer feasible for us to give another extension and wait for the funds,” said a senior MMRDA official.
In March last year, Jet Airways bought a 344,000 sq m commercial plot for Rs 826 crore for developing its global headquarters in the central business district of Bandra-Kurla complex. At the same auction, Starlite Systems bid for two residential plots with a buildable area of 7,050 sq m each for Rs 496 crore. The three plots fetched a much lower price than MMRDA’s expectation of Rs 2,480 crore. The MMRDA had failed to sell 2 other plots.
The companies had to make an upfront payment of the full amount. However, they made a part of the payment in March and sought an extension until mid-October. Both failed to honour their commitment and sought another extension until March 15. This date was also lapsed.
“Even this deadline has expired and there is no indication from either on whether they are interested in keeping the deal alive,” said an MMRDA official. The authority would present the case before the board and argue in favour of cancelling the deals, sources said. The MMRDA, however, is yet to figure out what to do with the plots if the deal is cancelled.
