Bidders exploit lacuna in HMDA e-auction process
A shortcoming in the HMDA’s e-auction process is allowing bidders to bid high amounts for plots but walk away without completing the transaction.
In a recent case, the HMDA had announced that its auction of 189 plots had fetched it `210 crore. The actual amount realised was a mere `65 crore from the sale of 84 plots.
In the e-auction process, bidders can participate without even inspecting the site physically. Several realtors, with land parcels around the plots up for auction, participated in the bidding and offered huge amounts. Then, using the loopholes in the eauction process, 25 bidders did not pay even the mandatory 25 per cent of the bid amount — 10 per cent Earnest Money Deposit and 15 per cent as first instalment — to receive the allotment certificate. Of the 189 plots, the HMDA did not receive the mandatory payment for 25 plots. Then, the High Court ordered the HMDA not to finalise bids for 73 other plots as the Mayurinagar Welfare Association was claiming ownership of the land. Sources said that realtors who had participated in the bidding had not paid the mandatory amounts and enhanced the prices of adjacent parcel land by at least 20 per cent by showing e-auction bids.
Not learning lessons from this, the HMDA has again decided to use the same process to eauction 72 acres in a new venture at Uppal Bhagat where the average cost of land is around `25,000 per square yard. The notification is expected to be released next week.
An expert said that to eliminate the prospect of a similar default, the HMDA should ask bidders to physically enrol themselves for the eauction so that it would be easy to identify them. In the absence of this requirement. any benami of a realtor could participate in the auction and enhance the land price of their layout with false bids.
However, officials did not seem worried about the non-payment of the bid money. A senior official said the HMDA would receive at least `200 crore from the previous e-auction as the bidders cannot go back after paying 25 per cent of the cost of the plot.
He said the HMDA has issued notices to the 25 bidders who had not paid the initial amounts. On the court cases, the official said the petitioners did not have legal documents to back the claim.