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Rediff News  All News  » Business » Multi-crore DB Realty project in Pune scrapped

Multi-crore DB Realty project in Pune scrapped

July 18, 2011 16:00 IST

Pimpri-Chinchwad New Town Development Authority, a local government body in Pune district, has cancelled a multi-crore township project of Mumbai-based DB Realty saying it had annulled "bidding for the selection of the developer". The authority has refunded the deposit of Rs 50 crore to the developer.

Opposition parties in Maharashtra such as the Shiv Sena and BJP have been demanding scrapping of the project for showing ''undue favour'' to DB Realty. The project was to come up at Bhosari, 14 km from Pune.

The news comes at a time when the Rs 10,000 crore Bandra Redevelopment Project, awarded to DB Realty and two others, is yet to take off and DB Realty's two key promoters — Shahid Balwa and Vinod Goenka — are in jail in connection with the 2G scam.

DB Realty had formed a joint venture with Man Ajwani under the name DB Conwood Man Ajwani to develop the project. In August 2009, it got the letter of intent from PCNTDA. According to a television channel, the project was valued at Rs 400 crore.

In a statement released to the stock exchanges, DB Realty said the authority had informed the joint venture that the  "'bidding for the selection of a developer stands annulled and hence letter of allotment (LoA), dated August 25, 2009, issued in the name of venture stands cancelled".

"The joint venture partners and the SPV had from time to time complied with the conditions of the said LoA and deposited the upfront payment with PCNTDA and also bank guarantee was provided/renewed from time to time. The SPV was awaiting the consent of PCNTDA for execution of the development agreement," DB Realty said.

The promoter said it would seek professional advice to "challenge the annulment of award of tender".

When contacted, a DB Realty spokesman said, "There are three partners and our stake is 48 per cent. Since the project was set to take off three years from now, it will not impact our cash flow."

BS Reporter in Mumbai