Was Haryana CM Hooda, Robert Vadra’s political stooge?

Vadra3 (1) 
Vivek Kaul 
Crony capitalism has been alive and kicking in India for a very long time.
One of the original crony capitalists in this country was Sanjay Gandhi, son of the then Prime Minister Indira Gandhi. Sanjay was a Doon school drop-out and had apprenticed as a motor mechanic at Rolls Royce in Great Britain in the 1960s.
He wanted to build a low priced people’s car called Maruti. His mother was the Prime Minister of the country and her colleagues in the government and the Congress party went out of their way to fulfil Sanjay’s dream.
In November 1970, a letter of intent was handed over to Sanjay Gandhi by Dinesh Singh, the then minister for industries. As Vinod Mehta writes in The Sanjay Story “The letter of intent was granted ‘on the basis of a paper proposal with no tenders called for and no impartial study’ for the mass production of 50,000 ‘low-priced’ cars per year made entirely of indigenous materials. In short, Maruti was licensed to match the total output of the other three domestic car manufacturers.”
But just a letter of intent wasn’t enough to get the project going. Land was needed to build the factory where cars would be manufactured and before that money was needed to buy that land. In stepped Bansi Lal, the chief minister of Haryana. “To his credit it must be said that Bansi Lal was the first to spot Sanjay Gandhi as a man of the future, as a man to hitch your bandwagon to,” writes Mehta.
Bansi Lal offered land to Sanjay Gandhi for the Maruti factory and at the same time gave him a loan to buy that land. As Kuldip Nayar writes in Emergency Retold about Bansi Lal “He was unscrupulous; means never mattered to him, only ends did. From being a briefless lawyer he had risen to be chief minister in less than a decade, and he wanted to go still higher. It was he who gave Sanjay, a 290 acre plot for the Maruti factory at a throwaway price along with a government loan to cover the amount.”
Despite all the help from Bansi Lal and the union government, Sanjay Gandhi’s people’s car never got going till he was alive. Production started only when Japanese car manufacturer Suzuki was roped in after Sanjay’s death in 1980.
Something similar has played out in Haryana where the current chief minister Bhupinder Singh Hooda seems to have gone out of his way to help Robert Vadra, the son-in-law of Sonia Gandhi, the chairperson of the United Progressive Alliance (UPA).
The IAS officer Ashok Khema brings out this nexus in a 105 page reply to the report of the committee constituted by the Haryana state government (dated October 19, 2012) to inquire into the issues raised by Khemka when he was the director general of land records.
This is how the story goes. Sky Light Hospitality Private Ltd bought 3.531 acres (or 5 bighas 12 biswas) of land from Onkareshwar Properties Private Ltd for a consideration of Rs 7.5 crore. This sale was registered on February 12, 2008.
Publicly available data on the MCA 21 portal of Ministry of Corporate Affairs, shows that Sky Light Hospitality is a company that was incorporated on November 1, 2007. As on March 31, 2008, the company had a paid up share capital of Rs 1 lakh. Upto September 30, 2011, its total paid up share capital was Rs 5 lakh. Robert Vadra owned 99.8% of the company and the remaining 0.2% was owned by his mother Maureen.
The company selling the land i.e. Onkareshwar Properties was incorporated as a company on September, 28, 2004. Its paid up capital as on September 30, 2011, stood at Rs 25 lakh. Of this 98% was owned by one Satyanand Yajee and the balance 2% by Godavari Yajee.
Paid up capital is the total amount of the company’s capital that is funded by its shareholders.
Various media reports have clearly established the link between Yajee and Hooda. A report published in The Economic Times today points out that “Satyanand Yajee, director of Onkareshwar Properties, which sold 3.5 acre in Shikohpur village to Vadra’s Skylight Properties, is general secretary of the All India Freedom Fighters Organisation(AIFFO) and is in charge of constructing and maintaining a memorial in the name of Hooda’s father Chaudhary Ranbir Singh in Rohtak.”
A report published in the Business Standard in October 2012, goes into even greater detail about the relationship between Hooda and Yajee. It points out the strong ties that Hooda has with the All India Freedom Fighters Organisation i.e. AIFFO. “Haryana Chief Minister Bhupinder Singh Hooda, too, has strong ties to this organisation. Before his death in 2009, Ranbir Singh, Hooda’s father, was working president of AIFFO. And, Hooda is a founder-member and working president of AIFFO’s sister body, All India Freedom Fighters’ Successors’ Organisation(AIFFSO), according to his profile in the Haryana Vidhan Sabha website.”
The report also mentions that AIFFO had spent lakhs of rupees in full page advertisements which praised Ranbir Singh’s contribution to the freedom struggle. As mentioned earlier Ranbir Singh was Hooda’s father.
Of course, just because Hooda and Yajee share a relationship does not mean that Yajee could not have sold land to Vadra.
So let’s get back to the land deal between Yajee and Vadra. Yajee’s Onkareshwar Properties sold 3.531 acres of land to Vadra’s Sky Light Hospitality. The price of the land was worth Rs 7.5 crore and over above this there was a stamp duty cost of Rs 45 lakh, for registering the sale.
As per Khemka’s reply, Vadra’s Sky Light Hospitality issued cheque number 607251 of Corporation Bank on February 9, 2008, to pay Yajee.
The question is how did Vadra’s Sky Light Hospitaliy with a paid up capital of just Rs 1 lakh(as on March 31, 2008) manage to pay an amount of Rs 7.5 crore for the land and Rs 45 lakh as stamp duty?
The answer lies in the fact that Sky Light Hospitality’s balance sheet as on March 31, 2008, shows a book overdraft of Rs 7.944 crore. This is almost equal to the amount of Rs 7.5 crore that needed to paid for the land, plus the Rs 45 lakh that needed to be paid as stamp duty for registering the sale.
What this basically means is that even though Sky Light Hospitality issued a cheque to Onkareshwar Properties, but the latter never got around to encashing it. As a report in the Business Standard dated October 16, 2012 points out “A book overdraft is not an overdraft at a bank but an excess of outstanding cheques on a company’s books over its reported bank balance.”
The notes to the account of Sky Light Hospitality also mention the same. “The overdraft shown in Corporation Bank account is book overdraft due to cheque issued before balance sheet date but not presented up to balance date, which is cleared after balance sheet date,” it is stated in serial no. 6 of the Notes To Accounts.
This can be confirmed from the balance sheet of Onkareshwar Properties as well. “Onkareshwar’s balance sheet as on March 31, 2008, showed an entry of Rs 7.95 crore under ‘sundry debtors’. This corresponds to the entry of Rs 7.944 crore book overdraft entered in Sky Light’s books. The land price was Rs 7.5 crore, and the balance Rs 45 lakh could have been registration and stamp duty costs. It appears Onkareshwar happily footed even these costs,” a report in the Business Standard dated Ocotber 27, 2012 points out.
So not only did Yajee’s Onkareshwar Properties not encash the cheque (it would have bounced if it tried to do so), it also happily paid the Rs 45 lakh stamp duty that needed to be paid to register the transaction.
The question of course is that if money did not change hands can the sale of the land to Vadra’s Sky Light Hospitality by Onkareshwar Properties be considered as a sale at all? This is something that Khemka points out in his reply. “If there was no payment as alleged in the registered deed, can it be said that the registered deed No. 4928 dated 12.02.2008 conferred ownership title over the said land upon M/s Sky Light Hospitality by virtue of the sham sale? Section 54 of The Transfer of Property Act, 1882 defines “sale” as a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. There was no promise to pay in the future in the registered deed. No price was paid as claimed in the registered deed No. 4928 dated 12.2.2008. The “sale” registered in the said deed cannot, therefore, be called a “sale” in the true sense of the term, legal or moral, and it cannot be said that M/s Sky Light Hospitality became owner of the land in question by virtue of the “sale.””
On March 28, 2008, department of town and country planning of the Haryana government issued a letter of intent to Vadra’s Sky Light Hospitality for grant of commercial colony license for 2.701 acres out of the total area of 3.53 acres. This was done within a mere 18 days of application, writes Khemka.
He further points out that “Sub-section (2) of section 3 of the Act of 1975 mandates that an enquiry will be conducted by the Director of Town & Country Planning, particularly with respect to the title to the land and the capacity of the owner-applicant to develop a colony.”
The phrase to mark here is the capacity of the owner-applicant to develop a colony. In order to check this capacity the owner-applicant (in this case Vadra’s Sky Light Hospitality), under Rule 3 of The Haryana Development and Regulation of Urban Areas Rules, 1976, needs to furnish among other things, particulars of experience as colonizer and particulars about financial position as to determine the capacity to develop the colony, Khemka points out.
So what experience did Sky Light Hospitality have in developing colonies? If one looks at the memorandum of association of the company, stamped by the Delhi government as on October 27, 2007, the main objects to be pursued by the company on incorporation were as follows:

So this makes it very clear that building colonies was not among the main objects of Vadra’s Sky Light Hospitality, when it was incorporated. As the Memorandum of Association clearly shows the main object of the company was to be in hospitality business, as was suggested by its name.
Nevertheless that did not mean that the company could not build colonies. Just that it did not have any previous experience in doing so.
As far as the financials of the company go, as I have previously pointed out as on March 31, 2008, the paid-up capital of the company was Rs 1 lakh. The company did not earn any income upto March 31, 2008. It had an expenditure of Rs 43,380 which was met through borrowed money. Hence, the company really did not have any capacity to build a colony.
As Khemka puts it “The “capacity” of the applicant-Company was nothing else other than Mr. Robert Vadra. The man became the measure of everything and the entire statutory apparatus a castle of sand.”
Once Vadra’s Sky Light Hospitality got the letter of intent from the Haryana government for a commercial colony license on 2.701 acres out of total 3.53 acres of land, things got even more interesting. Vadra’s Sky Light Hospitality now had the land title as well as the letter of intent for grant of colony license in its possession. This made it possible for it, to enter into a collaboration agreement with with M/s DLF Retail Developers, on August 5, 2008.
After this Sky Light Hospitality received a huge amount of advance or interest free loan from DLF. The balance sheet of the company as on March 31, 2009, clearly points out entries of Rs 15 crore and Rs 10 crore as advances received from DLF.
And this money paid by DLF was finally used to clear the dues of Onkareshwar Properties. As Khemka points out “this funding from the DLF Group was used to clear the dues of Rs 7.95 crores, i.e., Rs7.5 crores towards cost of land plus Rs 45 lakhs towards stamp duty, to M/s Onkareshwar Properties, the vendor-company in registered deed No. 4928 dated 12.02.2008.”
This is how the transaction was completed. This could not have happened without the Haryana state government granting a commercial colony license within 18 days of application to Vadra’s Sky Light Hospitality, which had no previous experience of developing a colony. The license was renewed on 18th January, 2011 for a further period of two years up to December 14, 2012, Khemka points out.
Vadra’s Sky Light sold off the 3.53 acres of land to DLF for Rs 58 crore on August 18, 2012.
In doing this Bhupinder Singh Hooda turned out to be Robert Vadra’s Bansi Lal. The moral of the story is that behind every successful crony capitalist there is a successful politician.

The article originally appeared on www.firstpost.com on August 13, 2013
(Vivek Kaul is a writer. He tweets @kaul_vivek)

There’s little doubt: Vadra gained from DLF’s benevolence

Vivek Kaul
Arvind Kejriwal led India Against Corruption (IAC) unleashed the second round of its attack on the relationship between Robert Vadra and DLF on October 9,2012. Vadra is the son-in-law of Sonia Gandhi, president of the Congress party, and the Chairperson of the United Progressive Alliance which governs the country. DLF is India’s largest listed real estate company. IAC has raised several issues in its media release, some of which I try and explain here.
What was Vadra doing owning a DLF subsidiary company?
Northern India IT Parks Private Ltd is a company with an issued capital of Rs 25 lakh. The company has issued 2,50,000 shares with a face value of Rs 10 each.  Robert Vadra owns 2,47,500 shares of the company. His mother Maureen owns the remaining 2,500 shares. This means Robert Vadra owns 99% of the company.
Both Robert and his mother Maureen were appointed as directors of the company on June 19,2008. The balance sheet of the company as on March 31, 2009, shows an investment of Rs 2,50,000. This investment was made to buy a 50% stake in DLF SEZ Ltd on October 13, 2008. This investment does not appear on the balance sheet of the company as on March 31, 2010. DLF bought back the stake from theVadra owned Northern India IT Parks in September 2009.
In its statement released to the press IAC had asked what role Vadra played in the period of almost one year during which DLF SEZ was in his control.
DLF issued a statement on October 9,2012, explaining the same.  “In the DLF SEZ Holdings Pvt. Ltd, 50% of shareholding was acquired by M/s. North India IT Parks Pvt. Ltd. in October 2008 at the face value of Rs 2.50 Lakhs. The said 50% shareholding was subsequently bought back from M/s. North India IT Parks Pvt. Ltd. in September 2009 fully at face value of Rs. 2.50 Lakhs, as the proposal for developing SEZs could not take off due to deep recession in the market in year 2009. No benefit or gain was made by Mr. Vadra or DLF, in this regard.”
So Vadra did not gain any money by owning 50% of DLF SEZ. But that does not mean he did not gain anything at all. He used money he got from DLF to buy apartments, land, plots etc, without having to pay any interest on it.
How did land valued at Rs 15.38 crore suddenly appreciate to Rs 58 crore?
Sky Light Hospitality Private Ltd is another company owned by Robert Vadra.  It has issued 50,000 shares with a face value of Rs 10 each and so has an issued capital of Rs 5 lakh. Of this Robert Vadra owns 49,900 shares and his mother Maureen owns 100 shares.
Sometime between April 1, 2008 and March 31, 2009, the company bought a plot of land of 3.5acres in Manesar, Haryana. This can be said because the balance sheet of the company as on March 31, 2009, shows this entry. But the balance sheet as on March 31, 2008, does not show this entry.
This plot of land is valued to be at Rs 15.38 crore in the balance sheet of Sky Light Hospitality. Against this plot of land DLF gave Sky Light Hospitality an advance of Rs 50 crore by valuing the land at Rs 58 crore. As the company said in a statement on October 6 “Skylight Hospitality Pvt Ltd approached us in FY 2008-09(i.e. the period between April 1, 2008 and March 31, 2009) to sell a piece of land measuring approximately 3.5 acres…DLF agreed to buy the said plot, given its licensing status and its attractiveness as a business proposition for a total consideration of Rs 58 crores. As per normal commercial practice, the possession of the said plot was taken over by DLF in FY 2008-09 itself and a total sum of Rs 50 crores given as advance in instalments against the Purchase consideration.”
So what does this mean in simple English? It means that Vadra’s Sky Light Hospitality approached DLF to sell the 3.5 acre of land it had bought at Rs 15.38 crore. DLF valued this land at Rs 58 crore and gave Vadra’s Sky Light Hospitality an advance of Rs 50 crore against this land. The point that arises here is this. Sky Light Hospitality bought the land between April 1, 2008 and March 31, 2009 for Rs 15.38 crore. They also approached DLF during the same period to sell the land. DLF in turn valued the land at Rs 58 crore. This is a little difficult to believe. What this means that the value of the land went up by 3.8 times between the period Sky Light Hospitality bought the land and approached to sell it to DLF, all within a period of one year. Just to remind the readers this was also the period during which the global financial crisis was starting. Lehman Brothers went bust on September 14, 2008 and so those were tough days. The deep 2009 recession that DLF talks about in its October 9 statement was starting.
Also where did Vadra raise the initial Rs 15.38 crore to buy the land from?
DLF came into the picture only later when the company decided to buy the piece of land from Vadra’s Sky Light Hospitality. While I could not independently establish where this money came from, a story in the Business Standard does the necessary explaining. Sky Light Hospitality when it was incorporated had an issued capital of Rs 1 lakh. On this capital of Rs 1 lakh Corporation Bank gave it an overdraft of Rs 7.94 crore. This overdraft is clearly visible as a current liability in the balance sheet of the company as on March 31, 2008. As the Business Standard points out “He(as in Vadra) must also have had excellent relations with Corporation Bank, whose Friends Colony branch (located close to Mr Vadra’s companies’ offices in the capital) gave an overdraft of Rs 7.94 crore to Sky Light  Hospitality. The newly incorporated company at the time had total resources of Rs 1 lakh, being its paid-up share capital.” This took care of the part of the funding of the Rs 15.38 crore land. So this brings Corporation Bank in the loop also. Does the bank give overdrafts amounting to Rs 7.94 crore to companies with issued capital of Rs 1 lakh regularly?
Did DLF takeover the Manesar land in FY 2008-09 from Vadra’s Sky Light Hospitality?
DLF in its October 6 statement said that the “plot was taken over by DLF in financial year 2008-09 itself.” If that was really the case why does the land appear on the balance sheet of Sky Light Hospitality dated March 31, 2011, as a fixed asset valued at Rs 15.38 crore? Also, DLF’s statement issued on October 6 says the advance was paid in instalments starting in 2008-2009 (the period between April 1, 2008 and March 31, 2009). This advance has remained on the books of Sky Light Hospitality till March 31, 2011. This means that DLF had given an advance to Vadra’s Sky Light for a period of greater than two years.  So if both the land and the advance were on the balance sheet of Vadra’s Sky Light Hospitality at least till March 31, 2011, how did DLF take over the plot in financial year 2008-2009 itself?
IAC raises these questions. It asks whether it is normal business practice for DLF to give an advance as high as it had and on top of that let it remain with the seller of the land (i.e. Vadra) for more than two years without taking possession. Also is it normal business practice to let this advance remain interest free given that DLF borrows money at such a high rate? As on March 31, 2012, DLF had Rs 25,066 crore of debt outstanding. And it was paying an interest of 12.38% on this debt. So basically what DLF wants us to believe is an advance is actually an interest free loan to Vadra. An advance is typically short term and is settled in less than one year. On Sky Light Hospitality’s balance sheet this advance was listed as a current liability. A current liability is essentially a debt or an obligation of a company that needs to be paid up in one year. But this current liability was on the balance sheet for more than two years.
This was not the only advance that DLF gave Vadra
In fact there is another advance of Rs 10 crore from DLF which is visible on the balance sheets of Sky Light Hospitality as on March 31, 2010 and March 31, 2009. Again this implies that DLF gave Vadra’s company an advance for a period of greater than one year. DLF also said in its October 6 statement that “we wish to categorically state that the DLF has given NO unsecured loans to Mr. Vadra or any of his companies.” This doesn’t hold either. The balance sheet (dated March 31, 2010) of Real Earth Estates Private Ltd another company owned by Vadra shows a clear entry of Rs 5 crore as a loan from DLF. IAC points out that Real Earth Estates has specified this loan to be an unsecured loan in a filing with the Registrar of Companies. An unsecured loan is a loan in which the lender does not take any collateral against the loan and relies on the borrower’s promise to return the loan.
DLF also had advanced Rs 15 crore during the financial year 2008-09(during the period April 1, 2008 and March 31, 2009) to Sky Light Hospitality. As DLF’s October 6 statement says “Skylight Group of companies also offered us in FY 2008-09 an opportunity to purchase a large land parcel in Faridabad and accordingly, DLF agreed to advance Rs 15 crores in instalments simultaneous to the commencement of due diligence of the said land parcel. After concluding that the said land had certain legal infirmities, we decided against its purchase. Accordingly on DLF’s request, the Skylight group refunded the advance of Rs 15 crores in totality.” This entry can be seen in Sky Light’s balance sheet as on March 31, 2009. If one were to add up all this DLF essentially offered Rs 80 crore to Vadra’s companies at various points of time. It is safe to say that a large portion of this was interest free.
So what did Vadra do with this money?
Let’s start with Real Earth Estates. This company as we saw earlier had got an unsecured loan of Rs 5 crore from DLF. This was a part of the balance sheet of Real Earth Estates as on March 31, 2010. What is surprising is that how can a company with an issued capital of Rs 10 lakh be given an unsecured loan of Rs 5 crore? This Rs 5 crore was used to part fund fixed assets of around Rs 7.09 crore. This includes a plot in Greater Kailash II in New Delhi, and land in Bikaner, Gurgaon, Mewat and Hassanpur.
Now let’s take the case of Sky Light Hospitality which shows an advance received of Rs 50 crore from DLF as on March 31, 2010. In the balance sheet as on March 31, 2010, a series of tax deducted at source(TDS) for interest earned on fixed deposits can be seen. There are 19 such entries with a total TDS of Rs 4.95 lakh. TDS is cut at the rate of 10.3% when the interest earned on fixed deposits with a bank during the course of one year crosses Rs 10,000. This means that Vadra earned a total of Rs 48.06 lakh (Rs 4.95 lakh/10.3%) between the period April 1, 2009, to March 31, 2010.
This interest would have been earned on a part of the interest free Rs 50 crore advance from DLF which would have been invested in fixed deposits with banks. So the interest free money from DLF was invested into fixed deposits by Vadra’s Sky Light Hospitality and money was made in the process.
Sky Light Hospitality had a Rs 25 crore advance from DLF on its books as on March 31, 2009. A small portion of this was used to pick up a stake of 50% in a hotel joint venture with DLF. This company called Saket Courtyard Hospitaliy runs one hotel in Saket, New Delhi.
The balance sheets of Sky Light Hospitality also show the company giving advances to other Vadra companies. The balance sheet as on March 31, 2009, shows an advance of Rs 3.5 crore to Sky Light Realty Private Ltd. It also shows an advance of Rs 2.05 crore to Blue Breeze Trading Private Ltd. Both these companies are owned by Robert Vadra. Since they got an advance it was interest free.
This advance was used by Sky Light Realty to fund agricultural land in Palwal and land at Hayyatpur in Haryana. It also used around Rs 9 lakh to book flats with two builders. Sky Light Reality also managed to earn an interest of around Rs 31 lakh (TDS of Rs 3,18,656 divided by 10.3%) on fixed deposits by placing a part of these advance in bank fixed deposits.
As on March 31, 2010, Sky Light Hospitality had given a loan of Rs 6.61 crore to Sky Light Reality Private Ltd. This was used to fund seven flats in DLF’s Magnolias project and which are shown to be worth around Rs 5.23 crore. It was also used to buy a Rs 89 lakh apartment in DLF’s Aralias apartments.
How much did Vadra make in the end?
It is very difficult to estimate one number but some calculations can be made. As a Business Standard story points out “The Aralias and Magnolias flats together would fetch Rs 130 crore or thereabouts, and by DLF’s calculation Mr Vadra’s share in the hotel project would be in excess of Rs 50 crore. His total asset base from the two Sky Light companies — all made by rolling over transactions with DLF, and helped by real estate value appreciation — would be in the vicinity of Rs 200 crore, made in five years.”
That is not a bad going given that Vadra had very little of his own money at stake.
So it is very clear that Robert Vadra benefited from his relationship with DLF. Whether DLF benefited from their relationship with Vadra will be very difficult to establish. But that still raises the question why was DLF so meharban on Vadra? That is the billion dollar question they need to answer.
The article originally appeared in a slightly different form at www.firstpost.com. http://www.firstpost.com/business/theres-little-doubt-vadra-gained-from-dlfs-benevolence-485471.html
(Vivek Kaul is a writer. He can be reached at [email protected]