Local firm objects to UDA plan to lease Chalmers Granary land
While objecting to Urban Development Authority (UDA)’s recent decision to call Requests for proposals (RFP) to lease Chalmers Granary land, Colombo Fort again, a local firm Multinational Property Developments Pvt Ltd (MPDL) has urged an amicable settlement of UDA‘s financial obligations pending since 1994 towards the company.
In a letter to the UDA Chairman, MPDL demanded the Authority to settle Rs. 72 million initial lease payment made by the company 23 years ago, before calling and accepting RFPs and/or tenders from investors both locally and internationally for the development of the Chalmers Granary land.
However UDA is pushing ahead with its plans to lease the 9-acre Chalmers Granary land opposite the Fort Railway Station to a local or foreign investor for a joint venture mega mixed development project, a top UDA official said.
The Authority will seek RFP’s from prospective international and local bidders to implement this mega project soon after obtaining the approval of the Cabinet of Ministers, UDA chairman, Dr. Jagath Munasinghe told the Business Times.
He said that President Maithripala Sirisena has directed the UDA to seek the cabinet approval to get clearance for the authority to go ahead with the project.
All legal issues with regard to the land have been cleared; he said adding that there was no land dispute whatsoever with any private investor or a company.
There were no legal or financial obligation to any private firm by UDA at present, he disclosed adding that he was unaware about any previous deal involving Rs. 72 million.
But the UDA has been entangled in a legal issue with a local firm MPDL 23 years ago, a company official said adding that he has documentary evidence and court submissions to prove their claim.
According to this MDPL who was involved in the deal, Chalmers Granary land had been offered to his company by the UDA to carry out a mega development project comprising shopping complex and a car park known as ‘Chalmers City’ and had collected 10 per cent of the lease premium, the legal fees, the stamp fee and the annual ground fee from the company.
This offer to the company was made by the then Director General UDA in a letter dated 25th February 1994 to MPDL on 99 year lease for a lease premium of Rs.142.84 million for the Chalmers Granary land at a rate (Lease Premium) of Rs.90, 000 per perch.
Thereafter, MPDL has invested Rs.72 million which consists of initial total lease premium for 5 acres, Legal Fees, Stamp Fees and Annual Ground Rent and Rs.56 million for preliminary work for the Chalmers Granary City project in 1994 as per request, approval and agreement with UDA.
In a letter dated 10th October 1994, the then Director General UDA informed MPDL that UDA has decided not to allocate the Chalmers Granary land to MPDL. The company then instituted legal action No.CA Writ 891/1994 in the Court of Appeal challenging the said decision of UDA, he revealed.
No action has been initiated by UDA as per the direction given by Court of Appeal after quashing the decision of UDA not to allocate Chalmers Granary land to MPDL by its judgment dated 07th May 1996 in the Court case.
While the matter is further pending, this land was included in the list of underutilised assets of Revival of Underperforming Enterprises or Underutilised Assets Act No.43 of 2011.
As per the Ministry of Finance Report 2011, the land was vested back to UDA without paying compensation to MPDL or any other party.
Since the land was transferred to UDA, the legal obligation of UDA towards MPDL in respect of Chalmers Granary land is still intact, he claimed.
Ignoring the legal issue with MPDL, the UDA has called for local and international bids previously for the land lease in 2013.
Kolante Corporation of Korea had emerged as the only contender for a mega development project at the 9-acre Chalmers Granary land.
Bids were open on March 27 during the request for proposals meeting held at the Ministry of Urban Development and only Kolante Corporation had made a bid when the deadline ended.
Kolante’s bid offer is worth Rs. 12.83 billion to lease the disused property including building a global branded 5-star hotel, apartments, food court, conferencing facilities, entertainment and retail space. But it has not materialised due to unknown reasons.