DB Hospitality wants to pay by 1970 rates: BMC chief

MUMBAI: The BMC has issued a stop-work notice to DB Hospitality's hotel project at Charni Road for failing to pay Rs 200 crore in arrears. Civic sources said the demand of Rs 460 crore was reduced to Rs 212 crore when portions of the building were included in the floor space index (FSI), the ratio of total built up area vis-a-vis plot size.
DB moved the Bombay high court (HC), saying the premium was Rs 20 crore.It urged the court to save it against "unwarranted cost escalations due to illegal stop work" and "save loss to the national GDP".
DB Hospitality is part of the DB Group, whose chairman Vinod Goenka and MD Shahid Balwa are in jail for alleged involvement in the 2G scam. The hotel will be operated by the Hyatt chain and will also have service apartments and a shopping arcade.
"The court will strike down BMC's demand. We are on the right side of law," said N Shridhar, DB's group director (strategy and finance).
The BMC said the premium was levied on non-habitable areas. Municipal commissioner Subodh Kumar said DB must pay the premium, calculated at 25% of the latest ready-reckoner rate. "DB wants the rate fixed at what prevailed in 1970, which is 10%," Kumar told TOI.
On March 7, 2011, the developer's architect approached the BMC to work out premium for deficiency of open space as per the development control (DC) regulation of 1967. A few weeks later, the BMC told the developer that the premium could not be considered. It said payment must be as per the prevailing ready-reckoner rate based on the DC rule of 1991, which is 25%.
The new rate worked out to Rs 2,200 per sq ft, as against Rs 500 per sq ft towards development charges under section 124 K of the MRTP Act, 1966, which was amended by the state government last year. On May 25, the BMC issued a stop-work notice as the building's commencement certificate was endorsed as per amended plans. "The permission will be granted only if the developer complies with all conditions and deposits the premium as per rules, regulations and policies in force," said executive engineer Sanjay Darade in an affidavit to the HC.
DB said the BMC levied a premium of 25% of ready-reckoner rates of 2010, as against 10% rates of 2009 "without authority of law and in clear contravention of a state government order". It said the certificate, withheld as it challenged the premium amount, should be endorsed as per amended approved plans "at least for construction of basements plus 30 floors". Over a decade ago, the plot was reserved for a civic school playground. But the BMC did not buy it because of high costs and reservation on the plot lapsed.
The 8,983 sq m property falls under Coastal Regulation Zone 2. Suresh Estates (the original owner) and DB Hospitality moved the high court in 2007, demanding higher FSI for a five-star hotel under the old development control regulations of 1967, which were applicable to development of lands in CRZ 2 areas under CRZ notification of 1991. The HC shot it down and the developer approached the Supreme Court. However, the apex court under the then chief justice K G Balakrishnan, directed the state government to take a decision on the developer's application for higher FSI.
The state government then approved FSI of 6.29 for DB's project and also opened up a flood of demands from other hotel developers in Mumbai.