MMRDA cancels bids for two plots after Jet, Starlight fail to pay.
More than a year after Jet Airways and Starlight Systems shook an already overheated realty market by offering staggering bids for three plots at the Bandra-Kurla Complex, two of the plots will be re-auctioned with the companies defaulting on payment.
In March 2008, Jet had quoted Rs826 crore for a 24,000-sq-mt plot while Starlight had made a winning bid of Rs248 crore each for two 7,050-sq-mt plots.
However, the economic downturn took its toll. Neither company could meet the extended deadline of September 30 for payments, forcing the Mumbai Metropolitan Region Development Authority (MMRDA) to cancel their bids for two of the plots.
The sum of Rs10 crore each paid by Jet and Starlight to MMRDA as earnest money will stand forfeited.
MMRDA is, however, considering a proposal by Starlight of making staggered payments for one of the two plots.
Kamal Khetan, the managing director of Starlight, said he was keen on retaining both the plots.
“I will give half the money for both the plots by November-end and the balance by instalments,” he said. The balance will be paid along with an interest of 14% in a year’s time.
MMRDA commissioner Ratnakar Gaikwad said: “There is a provision in the MMRDA Act which permits us to give concession (payment in instalments with interest) as a special case. The authority will decide whether Starlight’s request can be accepted.”
But MMRDA is unlikely to give a similar concession to Jet Airways.
“We have not given Jet any extension to make the payment. The company could not make the payment due to the global economic meltdown. We will re-invite bids when the property market improves. Currently, the property rates are down by 25%. Even office rentals in BKC, I believe, have dropped by almost 40-50% in the past 14 months,” Gaikwad said.
Sources say that Jet’s proposal was rejected as it entailed paying the amount in five years. “No fresh proposal has been submitted in black and white,” a senior official said.
The Jet Airways, however, declined to comment on the development. Sources said Jet officials have approached the chief minister’s office, seeking his intervention in the matter.
The sources also said that Jet has been under tremendous pressure from financial institutions to sell or back out from the BKC deal as the aviation industry was among the sectors badly hit by the meltdown.
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