The Hindu Business Line : Escorts deal plagued by land ownership issue

IN the wake of the recent controversy generated over Escorts Ltd selling its stake in Escorts Heart Institute and Research Centre (EHIRC) to Fortis Healthcare, ownership of the land on which the hospital stands could be yet another obstacle in the sell-off process.

The Delhi Development Authority (DDA), which had leased the land to the institution, has the option of either cancelling the lease agreement and claiming the land back or imposing financial penalties and regularising the transfer.

EHIRC had allegedly violated the lease norms not only when it was converted from a charitable institution into a corporate entity almost a year ago, but most recently when it got sold to Fortis Healthcare Ltd.

While DDA is yet to finalise its decision on the issue, sources said that the sale of land that was allotted to charitable institutions up to 2001 under `Nazul norms' could not be sold without the permission of the authority.

According to experts, till 2001, DDA allotted land under Nazul rules to institutions at a concessional rate, which was one-third or one-fourth of the prevailing market rates in the case of hospitals. In lieu of this concession, hospitals had to be registered as societies under the Societies Act and also establish their non-profit making character. They also had to offer free services to 25 per cent of the patients who belonged to the poorer sections. Post 2001, the authority started disposing land through open auctions and also did away with these conditions.

Industry sources said that in the recent Escorts transaction, the land had originally been allotted to a society of a non-profit making character. "It was subsequently merged with a Chandigarh-based entity and later converted into a company. It, therefore, changed the structure and violated the lease terms," the sources added. DDA had sent out a notice to Escorts a year back on the conversion. The Law Ministry is examining the company's response. In the past few years, private healthcare companies have built hospitals on land owned by charitable trusts.

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