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Cyrus Poonawalla in a property tussle

Sources confirmed the development and said that the Ministry of External Affairs had sought Rohatgi's opinion in the matter

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The deal of, what could easily have been, the third most expensive property in the country seems to have fallen through. Almost two years after he paid a staggering sum of Rs 750 crore to buy Mumbai's plush Lincoln House, industrialist Cyrus Poonawalla may not be able to possess the magnificent sea-facing property.

This is because the government has decided to cancel the purchase deal made by Poonawalla with the American government, saying the American government has no right to sell off the property that was leased to it by the Indian government. Interestingly, the Centre arrived at this decision by dismissing the recommendation of the country's topmost law officer — its Attorney General Mukul Rohatgi. Earlier this week, Rohatgi resigned from his post saying he does not want an extension as the country's top law officer and there have been a lot of speculations about why Rohatgi decided to not serve the government.

Sources confirmed the development and said that the Ministry of External Affairs had sought Rohatgi's opinion in the matter. Sources said that Rohatgi had okayed the deal between the American government and Poonawalla but the Centre recently conducted a high-level meeting in the matter and decided to cancel the purchase deal.

Lincoln House was home to the US Consulate for decades before the American government decided to move its offices to a more secure campus at Bandra Kurla Complex in 2011.

The sale of the Lincoln House in September 2015 to the billionaire chairman of the Pune-based Serum Institute, Poonawalla, could have been the biggest ever real estate deal in the country. Poonawalla had purchased the iconic property in the Breach Candy area of south Mumbai for Rs 750 crore and reportedly, the price was Rs 100 crore lower than the reserve price quoted by the seller, the US Consulate. The reason for this lower valuation was apparently the restrictions on redevelopment on such heritage properties. The property is a 2-acre Grade-III property and has a built-up area of around 50,000 sq ft. Poonawalla reportedly wanted to use the Lincoln House as a family residence and had no plans to redevelop the property.

In October last year, the registration of the property in Poonawalla's name was stalled as the Army staked claim to two-acre plot that the palace sits on. At that time, the Union Defence Ministry had blocked the property transaction, saying the deal cannot proceed as the land belongs to it. Ministry officials had even complained to city authorities that they were not alerted when the deal was struck and subsequently, the city collector refused to grant a no-objection certificate (NOC) for the registration. The defence ministry even wrote a letter to the city collector. The letter reportedly stated, "It is requested that the transaction between the US government and Cyrus Poonawalla may not be entertained for mutation. The concerned sub-registrar's office may please be directed accordingly to safeguard government interests."

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