The Urban Development Authority’s (UDA) recent call for proposals to lease out nine acres of the disused Chalmers Granary in the heart of Colombo for a joint venture commercial development has got drawn into a legal tangle due to an offer made by the authority to a local firm to develop this site,17 years ago.
A senior official of Multinational Property Developments Private Ltd (MDPL) told the Business Times that this had been offered to his company by the UDA to carry out a development project comprising shopping complex and a car park known as ‘Chalmers City’ and had collected 10 % of the lease premium, the legal fees, the stamp fee and the annual ground fee from the company.
This payment of Rs. 72, million is still lying with the Authority. The land in Colombo's Fort and Pettah area is now used (temporarily) as a parking lot. The UDA is also planning to relocate small shops around this site which has been valued at Rs 8 million a perch by the state valuer.
UDA Director General Nihal Silva told the Business Times that they are going ahead with the Chalmers Granary commercial development project as all legal issues with regard to the land have been cleared. There was no land dispute whatsoever and the MDPL case was dismissed by the Appeal Court and therefore the company has no claim on the land.
MDPL Chief Executive Officer Ranjan Arambewela said that by letter dated 28-02-1994, the then Director General of UDA had informed MDPL that they have decided to allocate 9 acres of Chalmers Granary land to the company on a 99-year lease for a total premium of Rs. 142.85 million at a rate (lease premium) of Rs.90,000 per perch. Having agreed with the terms and conditions to be included in the formal written agreement, to be signed by the two parties at a future date, the UDA had requested, received and accepted Rs. 72 million being 10% of the lease premium from MDPL on 12th July 1994, he revealed. Following this agreement and at the request of UDA the company invested a further Rs. 58.85 million for preliminary work on the Chalmers City project during 1994, he added.
In a major twist in the land deal, the UDA then informed the MDPL (on 10-10-1994) that they have decided not to allocate this land to the company even after a date was fixed to execute the lease agreement. In a letter dated 10-10-1994 the then UDA Director General noted that he was refunding the amount of Rs. 72 million paid to them by the company and two cheques for this amount were sent along with the letter. The company had refused to accept the cheques and returned it to the UDA in a letter dated 15- 10-1994. Later the MDPL filed a writ application No891/1994 in the Appeal Court challenging the decision.
The court by its judgment dated 07-05-1996 quashed the decision of the UDA not to allocate the land to MPDL upholding the legitimate expectations of the company.
Under these circumstances, the company says that it is legally incorrect to canvass, invite, or negotiate with any other party and /or company both here in Sri Lanka or abroad to offer Chalmers Granary land in Colombo Fort on upfront payment terms on a 99-year lease without tender procedure under the Government’s policy decision because the UDA has selected MDPL in accordance with the same policy.
The MDPL has been engaged in a legal tussle with the UDA since 1994 to win their legitimate claim and two judgments had been issued by the Court Appeal on this matter, one in favour of MDPL in 1996 and the other one against it in December 2010.
Four years ago, the MDPL filed a second writ application No 958/2006 in the Appeal Court against the UDA’s attempt to include the project proposal made by Premier Pacific International Pvt Ltd for Chalmers Granary land development ignoring the MDPL’s claim for the land. But the application was dismissed by the Court stating that the UDA’s action of not to proceed with the lease agreement with MDPL was made on a state policy decision and as such the Court cannot direct UDA to consider the MPDL’s entitlement. |
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