The road to nowhere

Road to nowhere

Frontline

Land acquisition controversies stall the Bangalore-Mysore Infrastructure Corridor Project.


IT began more than 20 years ago as an expressway that would speed up travel between Bangalore and Mysore and graduated 10 years later into an infrastructure corridor that would also decongest Bangalore. But since then it has been a bumpy ride, in the courts and on the ground, for the Bangalore-Mysore Infrastructure Corridor Project (BMICP), following controversies over land acquisition. Now the Karnataka government is contemplating bringing legislation during the coming Assembly session aimed at taking over the project "in public good" from the private company that is executing it.

Arbitrariness in land acquisition for the project is a widely acknowledged fact. The Framework Agreement (FWA) signed in April 1997 between the Karnataka government and Nandi Infrastructure Corridor Enterprises Limited (NICE) put the entitlement of land at 20,193 acres (1 acre is 0.4 hectare). But the extent of land notified is 29,258 acres (one acre is 0.4 hectare). In fact, the FWA-specified entitlement is itself the result of an arbitrary increase made by the then Secretary of the Public Works Department, from the 18,313 acres specified in a 1995 State government order (G.O.), which is also the figure stated in the project's original technical report.

Naturally, affected landowners and farmers along the proposed corridor, which goes through at least 178 villages, including 44 in the rice-bowl taluks of Maddur, Mandya and Srirangapatna, have labelled it a real estate scam. They were served preliminary land acquisition notices "years ago" but are not sure whether the project will ever reach them. If and when it reaches them, they ask, will the compensation be the "fair market value" specified in the FWA?

G.S. Puttaraju, who grows ginger, mangoes and coconuts on his 14-acre family holding in Gonipura (Bangalore South taluk), says the compensation that NICE is offering is a pittance. "We will resist moves to take over our land," he said. There are numerous similar voices, especially in the wetlands of Mandya and Mysore districts, and a number of them are beginning to organise themselves through their panchayats in a bid to thwart the project. Some affected people even dug up a portion of the completed peripheral ring road near Bangalore.

But not all are averse to giving up their land if the price is right because bad monsoons, a falling water table and inadequate compensation for produce are making agriculture less and less profitable. For most, however, it is a fait accompli. "What can we do? We can't fight the government and even the Supreme Court has upheld the project," they say.

In April 2006, the Supreme Court upheld two Karnataka High Court rulings, of September 1998 and May 2005, that the project be implemented in the "letter and spirit" of the FWA. The court came down heavily on the flip-flops of the State government and fined it Rs. 5 lakhs. The apex court agreed with the Karnataka High Court that the BMICP was "an integrated project intended for public purpose and irrespective of where the land was situated, so long as it arose from the terms of the FWA there was no question of characterising it as unconnected with public purpose". But questions on logistics still remain.

In November 1997, H.T. Somashekar Reddy, a retired Public Works Department (PWD) chief engineer, contended in a petition under public interest litigation (PIL) in the Karnataka High Court that the project was opposed to public policy; that the construction of a 162-km road, including the 111 km expressway between Bangalore and Mysore, would need only 2,775 acres of land; that the construction of five townships was not an obligatory function of the state and could never be for the public good within the meaning of the Land Acquisition Act; and that the government had bound itself to pass certain enactments or effect amendments which are opposed to public policy in the existing Acts.

Both the State government and NICE refuted these arguments and the court ruled in favour of NICE on its need for 6,999 acres and on the construction of five townships which would make the project financially viable. The court also ruled that clauses in the FWA "cannot be construed to have the effect of binding the legislature which can reject the proposal of the executive to enact any law as agreed to by the government".

The High Court ruling of May 2005, by a Division Bench, came on a batch of almost 100 petitions and it upheld the Somashekar Reddy judgment, holding that the BMICP was an integrated project intended for the public good.

Though the FWA specifies that 13,237 acres of private land should be notified, the number kept growing exponentially. The first major violation of the FWA was in October 1998 when Shankaralinga Gowda, Chief Executive Officer and Executive Director of the Karnataka Industrial Areas Development Board (KIADB), which is the nodal agency to notify and acquire land for the BMICP, entered into an agreement with NICE to "make available about 21,000 acres [of private] land" and notifications subsequently followed.

By March 2004, the total land under notification, as indicated by Anees Siraj, the KIADB's Special Deputy Commissioner for the BMICP, was 29,258 acres.

As a letter from Siraj indicates, "land acquisition notifications were issued on the requirement indicated by the promoter company... and not on the basis of any technical drawings as approved by the government or a project report."

Ashok Kheny, managing director, NICE, said the excess acquisition was because no one was sure until the final notification "how much land would actually be required", and also since in many instances the entire land under a survey number was mentioned when only a portion of it was actually going to be acquired. But experts say that even if the entire land under a survey number was taken it would not amount to an excess acquisition of over 9,000 acres. There was also the question why entire villages were notified when they were not in the FWA.

The excess acquisition is even more surprising since the alignment had been scientifically identified in 1998 and there was little room for excess acquisition. This alignment was approved by the State Cabinet and subsequently by the 12-member Empowered Committee (EPC) and even submitted to the Supreme Court. The EPC, set up under the terms of the FWA with the Chief Secretary as its chairman and key Secretaries as members, had to facilitate and expedite the project and ensure that the government and its instrumentalities, and NICE comply with the provisions and obligations of the FWA.

According to informed sources, the reasons for the KIADB to notify lands that were not in the project's alignment were simple enough: notify lands far in excess of what was required with the hope that the project's requirement could surreptitiously and periodically be increased and a window of opportunity opened to a few politicians and officials to make a fast buck by denotifying lands for a fee.

In February 2004, NICE indicated to Siraj's office that 2,728 acres of the 29,258 acres were not needed. Though the denotification process was initiated, no government order has been issued so far. But the sources say NICE's request was strategic: most of the denotified land is away from Bangalore, the company preferring to have most of its entitled 20,193 acres as close to Bangalore as possible, where land costs can go up to even around Rs.2 crores an acre.

Toll roads and townships

According to Annexure R-7 of NICE's affidavit in the Somashekar Reddy PIL, 6,999 acres are required for the construction of toll roads - a four-lane, 90-metre right-of-way-wide, 111 km expressway (4,528 acres); a 75-m, ROW-wide 41 km peripheral road (2,193 acres); and a 60 m ROW-wide 9.8 km link road (278 acres), 17 interchanges and service roads - and 13,194 acres for five townships, including 7,300 acres for common facilities and infrastructure within the townships and 5,894 acres for township development. Of the 13,194 acres, NICE by its own submission can sell only 45 per cent, or 5,937 acres.

The land required in and around Bangalore, which will have only the peripheral and link roads and eight interchanges, is 2,471 acres as per Annexure R-7. But documents with Frontline show that by 2004 the KIADB had issued final acquisition notifications for 2,569 acres of private land and also transferred 1,117 acres of government land to NICE. That is, 1,215 acres in excess of what has been specified in Annexure R-7 and in the FWA.

Says Ashok Kheny: "I am not a PWD contractor just to build a road. The project as upheld by the Supreme Court is an integrated project. There is bound to be a lot more infrastructure around the city than in the boondocks. The FWA allows me to sell land in the interchanges... . Around Bangalore I need to provide around 4,000, 60 ft. by 40 ft. sites for landowners who lose an acre of land. This works out to 400 acres. No land-loser near Bangalore will take a site in Mandya."

Besides truck and bus terminals, NICE is planning convention centres, hospitals and shopping malls and even rehabilitation of land-losers in the interchanges. As per the FWA, the promoter company is to build, own and operate the toll roads and its allied activities and transfer them back to the government after 30 years.

In a letter to the government dated December 8, 1997, titled `Modalities of payment for land acquisition to the KIADB', NICE stated that it would return 14,255.7 acres [70 per cent] of the land including the entire 6,999 acres [being used for the expressway] with the development carried out, back to the government after 30 years. The toll from the roads and the sale of 45 per cent of the land in the townships would give NICE a long-term return per annum of around 18 per cent.

The acquisition of land involved several stages. First, NICE placed its land requirements with the Project Coordinator (BMICP), who in turn sought the approval of the PWD prior to placing it before the EPC. Once the EPC cleared the proposal the KIADB acquired the land and handed it over to NICE.

While the excess acquisition, admitted to in November 2003 by R.V. Deshpande, Minister for Large and Medium Industries, was a violation in itself, the other violations included the waiving of deposit on land cost as per KIADB norms before the preliminary notification was issued, and the failure to ensure that the promoter company as well as government departments adhered to the FWA.

Reliable sources said the EPC, instead of safeguarding the rights of the government, had turned a blind eye to many of NICE's transgressions of the FWA. They said that in May 2003, when the Revenue Department imposed a condition that no extra land should be handed over to NICE in Bangalore that was not in consonance with the FWA, the EPC's stand was that it was "not correct to impose new and fresh conditions".

Even the selective denotification of land was done apparently in violation of the process. It was only in November 2003, months after individual landowners filed petitions in court, that the EPC directed that no denotification should take place without its approval. Again, in November 2003, the EPC `advised' NICE to seek police protection directly to help it carry out its work, instead of following the FWA.

A number of government officials dealing with the BMICP were apparently keen to go the extra mile to help the company. The Finance Department is said to have shot down a PWD suggestion that government land be leased at Rs.10 per acre per annum and sold to NICE at a concessional rate of 10 per cent of the district average guidance value. It apparently held that there was no justification to offer concession for land that would be permanently alienated by NICE. It said it would have no objection to the land being given at a price 10 per cent higher than the guidance value.

In September 2000, the State Cabinet decided that the company could purchase government land for commercial activity at the guidance value prevailing in 1999-2000. Later, it made a further concession that the company could buy land within 10 years of financial closure. (The company achieved financial closure on March 29, 2004.)

K.C. Reddy Committee

With the criticism of the land acquisition process growing louder and given the ineffectiveness of the EPC, the Congress-led government headed by N. Dharam Singh set up the K.C. Reddy Committee in November 2004 to review the BMICP's design and technical reports, assess whether excess land had been acquired, review the FWA and suggest modifications, and acquaint the Cabinet on the progress and also expedite it.

One of the recommendations of the Committee, which submitted its report in December 2004, was a shift of the place of arbitration to Bangalore instead of London, by mutual agreement. While London as the place of arbitration could have been justified when the Memorandum of Understanding was signed with a foreign consortium, why was it not changed when the FWA was signed with NICE, an Indian company, ask critics.

Among the other recommendations were restricting the use of interchanges for only road crossovers and facilities for the benefit of road users; ensuring that no other commercial activity/real estate business takes place in the interchanges; pencilling in the actual requirement of land for Phase A of the project (4,467 acres); disposal of excess land acquired (2,450 acres); and starting of project work from the Mysore side. The Committee left the actual identification of excess land to the KIADB.

It is said the Committee was set up on the advice of former Prime Minister H.D. Deve Gowda, whose Janata Dal (Secular) was a partner in the ruling coalition in the State. Though the Cabinet accepted its recommendations, the Karnataka High Court quashed both the decision to constitute the Committee and its recommendations and the Supreme Court upheld the High Court's orders. Now, the Janata Dal (S)-led government headed by H.D. Kumaraswamy is contemplating legislation - the Karnataka Streamlining of Infrastructure Development and Utilisation of Land Bill, 2006 - to take over the BMICP. In the absence of legislation, NICE could claim that the State was in contempt of the Supreme Court's April 2006 directions.

The draft Bill in part states: "Notwithstanding anything contained in any other law or contract or judgement or any court, the FWA and all other subsequent agreements entered into by the State of Karnataka with NICE for the implementation of BMICP shall stand nullified in public interest with immediate effect"; and that "land handed over to NICE shall by virtue of this Act stand transferred to and shall vest absolutely in the State government free of all encumbrances".

The Bill also indicates the splitting up of the BMICP into two independent components - the construction of the toll roads by the State government, and the development of the townships by the town planning authority concerned. It also indicates the formation of a compensation determination tribunal headed by a retired High Court Judge, and the setting up of a streamlining committee headed by the Chief Secretary to oversee utilisation of funds and do a review of lands that were acquired under the KIADB Act for various economic and industrial activities but remain unutilised and direct reversion of such land to the State government for transfer to the land bank for auction.

Another point it makes is the dissolution of the Bangalore Mysore Infrastructure Corridor Area Planning Authority and the restoration of the position that existed before the Authority was formed.

Deve Gowda had, as Chief Minister in February 1995, inked the Memorandum of Understanding with the consortium that was to implement the BMICP. The consortium later passed on its rights to NICE. But since 2004, when farmers from Kanakapura, his then parliamentary constituency through which 70 per cent of the project traverses, complained of excess land being notified, Deve Gowda has raised questions about the project, especially the excess acquisition of land.

According to Deve Gowda, the directions of the Karnataka High Court and the Supreme Court that the project be implemented "as originally conceived" by implication reject "NICE's assertion, made on the basis of certain subsequent agreements between NICE and its sister concern, which somehow got ratified by the government, where NICE gave rights to its sister concern to sell lands near Bangalore, rights that it did not have in the first place in the FWA".

Not true, says Ashok Kheny. He said the Supreme Court had directed that the BMICP, being an integrated infrastructure development project and not merely a highway project, "may require the acquisition of land and transfer of land even far away from the main alignment of the road". What he did not say is that the court also ruled that the acquisition should arise "from the terms of the FWA".

Deve Gowda claimed the BMICP's financial closure was "based on rights not available to NICE under the FWA and contrary to what it itself produced before the High Court on affidavit in the Somashekhar Reddy case".

"Do you mean to say that 11 financial institutions are foolish to give the project financial closure?" asks Kheny. "We have only mortgaged the leasehold rights. And as per the FWA, NICE is well within its rights to sell land near Bangalore," he said.

Consortium and committees

The genesis of the BMICP goes back to 1985 when the Karnataka government decided to form the Bangalore-Mysore Expressway at an estimated cost of Rs.161.11 crores and issued tenders in September 1988. But the project failed to take off. Then, in February 1995, during the visit of William Weld, the Governor of Massachusetts, the government signed an MoU with a consortium of the Kalyani Group and two American companies, Vanasse Hangen Brustlin and SAB Engineering and Construction, for an integrated infrastructure corridor consisting of residential, industrial and commercial facilities and estimated to cost Rs.1,583.76 crores.

The government modified the Karnataka Industrial Areas Development Board Act to allow the KIADB to acquire land and hand it over to the consortium. It also constituted a High Level Committee, an Empowered Committee and the Bangalore Mysore Infrastructure Corridor Area Planning Authority, which superseded the Bangalore Development Authority, Mysore Urban Development Authority and 54 gram panchayats between Bangalore and Mysore. Meanwhile, the consortium established a separate company, NICE, to implement the project, which then signed the FWA with the government in April 1997.

In December 2003, a single-Judge Bench of the High Court, hearing a batch of petitions filed by landlords, ruled that while the acquisition of land for roads was valid, land meant for the townships was invalid. NICE filed an appeal, but the State, which hitherto had been a respondent along with NICE and had held that only the barest "minimum of land" calculated by a "scientific method" had been given to NICE, decided not to contest the ruling and addressed no argument. The State's volte-face came after the Congress-Janata Dal (Secular) coalition came to power in 2004.

The High Court, hearing NICE's appeal in May 2005, upheld its contention that the BMICP was not just a road project but an integrated project and also quashed the setting up of the K.C. Reddy Committee and its findings/recommendations.

Subsequently, the Supreme Court, while upholding the quashing of the K.C. Reddy Committee, did not allow NICE's plea that it had to be given the 2,450 acres that the Reddy Committee had identified as excess. It also did not allow NICE's plea to sell land or undertake commercial activity in and around Bangalore, or to regularise agreements it had entered into subsequent to the FWA.

Environmental angle

There is an environmental angle as well to the project, which also brought out the inconsistency in the government's policy on land acquisition. In December 2005, after initially stating that there was no rare, endangered or unique flora and fauna and securing in-principle approval from the Union Ministry of Environment and Forests (MoEF) for diverting 4.05 hectares of land in the Handigundi Reserve Forest for the carving of a Buddha statue on an ancient 1,050-foot (315-metre) rock, the State changed its views in June 2005. Claiming that there was indeed a large variety of flora and fauna, including endangered species of birds and mammals, the State government requested the MoEF to withdraw the permission accorded for the statue.

This reversal has raised questions about the State's stand on the 3.2-kilometre stretch of the BMICP expressway that cuts through the Handigundi forest and for which the State had successfully requested the diversion of 77.34 acres in 2003. A letter from the Chief Conservator of Forests, MoEF, to the State government last December asks: "Since the information now provided reveals the presence of critically endangered bird and mammalian fauna and also the presence of an elephant corridor, this office may kindly be informed at the earliest whether the State government would like the MoEF to withdraw approval granted to the diversion of forest land towards the BMICP in Handigundi forest." The Karnataka government is yet to respond.

There are other environmental issues as well. According to Leo Saldanha of the Environment Support Group (ESG), NICE has violated many of the environmental conditions. "Stone crushers have been set up on government land without the requisite permission; the Hemmigepura tank has been destroyed partly by locating a crusher there; in many instances NICE has not bothered to protect the entry and exit points of village roads thereby denying villagers access; at Kommaghatta (south of Bangalore), the Ramasandra tank has been destroyed since the NICE road goes right through it."

Villagers in Gottigere claim that the "changes in alignment of the peripheral ring road near Gottigere to suit a few influential landowners" have violated both environmental specifications and the FWA, "where the road is shown as going straight". Kheny denies this and claims that the alignment was as per the PWD drawings submitted to the Supreme Court.

"People are going to work, live and celebrate on the expressway": This could be the new mantra for the promoters of the BMICP. But given the criticism and legal hurdles that have plagued the project over the last decade, the celebrations may have to wait a while longer.