Firm gets 1,387-sqm plot in Mumbai’s Malabar Hill for Rs14.8 crore

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For the first time since Maharashtra approved the conversion of leasehold plots to freehold ones, the Mumbai city collectorate granted ownership rights of its 1,387-square metre (sqm) plot at Malabar Hill to Hydra Trading Private Limited (HTPL) for Rs 14.79 crore, which is one-fourth of the ready reckoner value of the piece of land.

The ready reckoner value is always much lesser than the market value of a plot. In its order (a copy of which is available with HT) issued on April 18, 2019, the city collector, Shivaji Jondhale, granted ownership rights of the plot to HTPL, stating, “As per the ready reckoner rates of 2018 (Rs 3,20,600/sqm), the total value of the plot was calculated to Rs 59,18,27,600, and its one-fourth value comes to Rs 14,79,56,900. While calculating plot value, 1.33 base FSI available in the island city was also included as part of the plot following the state’s policy.”

The order further states that: “Floor space index (FSI) indicates how high a developer can build a project on a plot. It is the ratio of the total built-up area to the size of the plot.”

Jondhale said ownership rights have been granted in only one case so far. “We have 19 applications pending with us for the same which are under process,” he said.

The Malabar Hill plot was originally granted to Sultan Meherally Chinoy in 1936 for a lease period of 99 years for residential use. He was also the mayor of Mumbai in 1938-39. In 1972, the plot was transferred to Hindustan Lever Limited. Later, HTPL bought the property for Rs 166 crore. To regularise the transaction, the firm also paid Rs 41.91 crore as unearned income to the state in 2016.

The state, through a notification on March 8, has decided to grant ownership rights to plots allotted on leasehold and occupancy class II (conditional ownership) basis for residential, commercial, agriculture and industrial use to individuals and cooperative housing societies. According to the policy, the state government charges 25% of the ready reckoner value of the plot for converting leasehold plot to freehold. The same formula applies to an occupation class category plot too, but the amount already paid for converting the plot from leasehold to occupancy class II, gets deducted from the final charges.

Currently, leasehold tenants pay the government rents as low as 2% to 5% of the 25% ready reckoner rate. The plots allotted on lease can be used only for activities permitted by the government. Plots allotted under the occupancy class II category gives conditional ownership to the lessee, who will not have to pay an annual rent. Here too, the land can only be used for activities the government allows.

The state government has approximately 1.14 lakh leased out plots across the state, of which, are 5,000 are in Mumbai.