Lavasa: The Controversial Lake City Project

With the completion of Dasve, the controversial Lavasa lake city project, undertaken by Mumbai-based Hindustan Construction Company (HCC), is all set to expand its operations to its second town, Mugaon, on the banks of Warasgaon Lake in Munshi Valley, 60 kms from Pune. The launch was marked on March 25, 2012 by Rajgopal Nogja, group president development companies at HCC.  


 Mugaon: Lavasa’s second town of Phase 1

  Mired in controversy in its first phase over the construction of its first town, Dasve, the 23,000 acres maiden city project comprising five towns is regaining color.  Tailed by MoEF for violating the environmental laws which put a hold on HCC’s plans since November 2010, long orders were the only thing they worked on for a year till November 2011, when respite from the environment ministry came in the form of a clearance for the first phase.  Until then, it was all hell breaking more than loose.  

 Where did it all begin?  

Touted as Independent India’s first planned hill city, Lavasa, developed on Western Ghats, 65 kms from Pune is India’s attempt at bringing alive the hills in the area. The project’s development had been divided in two phases— 2,000 hectares (Phase I) and 3,000 hectares (Phase II), which left the mounds in a hullabaloo.  Lavasa was caught amid controversy in 2010 when HCC, the construction company, was flaked by the MoEF for violating environmental clearances under the Environmental Protection Act, 1986. It had not sought clearance from the Union Ministry and had proceeded on clearances obtained from Maharashtra state’s environment department.  The show-cause notice, issued by the union environment ministry, termed all work unauthorized, stating that the construction was being done above 1,000 metres which was against policy and that HCC had not sought a clearance from the centre, which in their case was necessary.  The crux of the charge was that Lavasa had failed to obtain clearance under the Environment Impact Assessment Notification, 1994. As per the notice filed against the company, the developer had received approval from the state government’s environment department whereas the 1994 Notification rests such powers only with the central government through the environment ministry. Thus, the state department had issued permissions without statutory powers to do so. The broth got embroiled further when signs of land transaction irregularities started to flash.    

Lavasa’s Take

 The company had retorted by saying that the show-cause notice was issued ‘in haste” to attack the planned IPO in 2010. In its defence, LCL has stated in one of the reports, “work at the site began after we obtained environmental clearance from Maharashtra’s environment department in 2004 under Hill Station Development Regulation of 1996.”    




Lavasa didn’t get clearance under Environment Impact Assessment Notification, 1994

Project was exempted from clearance under Schedule 1, Serial 18 of 1994 notification

State’s environment dept issued permissions without statutory powers to do so

Being a tourism project, it did not require environmental clearance from Union government 

Construction crossed 1,000-m altitude threshold for tourism-related projects

No developmental work was carried out in areas notified as being above 1,000 metres

Project authorities forcibly relocated tribals and villagers from the project land

Company does not own any tribal land, but bought tracts from private owners

Suniti SR of National Alliance of People’s Movement, campaigning against the project, had stated that ever since began its construction work, it had violated state clearances, and indulged in hill cutting and construction in no-development zones. These accusations were confirmed at the meeting of the MoEF’s expert appraisal committee.    

What thereafter?  

After receiving the show-cause notice, private developer, and the then Lavasa Corporation Limited (LCL) sought post-facto environmental clearance in February 2011, for Phase I on the grounds of having invested Rs 3,000 crore in the project and that it had provided benefits like jobs and better road connectivity to people living near the site.  A post-facto clearance is when MoEF’s approval is given after the  construction has started.                                              

The discourse of post-facto clearance arose because the notice indicated the same: “The MoEF is prepared to consider the project on merits with imposition of various terms and conditions, including penalty, environment restoration funds and comprehensive environment impact assessment (EIA) and management plan.”                                                                  

 Conditions for environmental clearance

  • LCL will have to take up environmental restoration in the region to repair the damage caused to environment by its activities so far
  • An amount equal to 5% of the expenditure incurred so far by the company will be kept with state government, which will be used for environmental restoration if the company fails to do so in a time bound manner
  • The company will have to earmark 5% of the total cost of the project for Corporate Social Responsibility (CSR)
  • Development of Lavasa will have to comply with the hill station policy of the Maharashtra government.
  • It will have to clearly demarcate the no-development zone, including the water bodies, forest-like areas and areas having slope steeper than 1:3. The Floor Space Index (FSI) shall be worked out separately for each land use and will not be averaged for the entire area as the company has done earlier.

   In June 2011, after the assessment of the project by its expert appraisal committee (EAC), an order form MoEF stated that it was willing to clear Lavasa’s first phase, subject to five preconditions. The company, in a resolution sent to the ministry in July, accepted all the pre-conditions, but how many of them it kept is still under the carpet.  

 Activists Agitate

While the chairman and managing director of HCC, Ajit Gulabchand, welcomed MoEF’s decision, the green cadre was enraged. National Alliance of People’s Movement (NAPM) felt MoEF’s decision to be politically motivated and influenced by powerful leaders close to the promoters which left the violations of EIA Notification 1994 and 2004 ignored at the hands of MoEF while granting the clearance.


EIA- A huge Ambiguity

 The controversy had brought under scanner the effectiveness of EIA, the most critical tool for regulating developmental process. The main reason LCL got away despite violating various laws can be attributed to the weak EIA process in India which harbors simplified rules for construction projects, adding to the problem.

According to the EIA notification 1994, all projects above 1,000 metres in altitude and requiring investment of more than Rs 5 crore needs to apply for an environmental clearance.

The company’s buuy-out is that Lavasa did not apply for the clearance because its development was between 600-900 metres, and it was approved by the state.

 But the investment was above Rs 5 crore!

In order to bypass requirements like lowest limits set at 20,000 sq m, companies like HCC develop their projects in smaller phases.

Moreover, there is no provision for public consultation in the process of giving an environmental clearance for buildings and townships.


An Incorrect Order?

An excerpt from The Hindu’s Dec 13, 2011 story “MoEF clearance to Lavasa illegal, says petitioner” shows that it is all a game of two wrongs making a right.

The environmental clearance granted by the Ministry of Environment and Forests (MoEF) to Lavasa is illegal as the MoEF is not a competent authority to grant the clearance, a petitioner argued during the hearing of the Lavasa matter in the Bombay High Court here on Monday.

 Suniti S.R., a petitioner who filed a Public Interest Litigation (PIL) against the project on behalf of the National Alliance for People’s Movement (NAPM), said in an affidavit filed before the court that the State Environment Impact Assessment Authority (SEIAA) was the competent authority to deal with environmental clearance.

 “The Environment Impact Assessment Notification and the Environment (Protection) Act, 1986 does not provide for any such post-facto clearance and what is warranted is the ‘prior’ environmental clearance, which the project proponent has failed to seek,” the affidavit stated.

 It said that by granting post-facto clearance to Lavasa, the Ministry had established a “disastrous precedent [that] projects don’t need a ‘prior’ EC [environment clearance]”. It also stated that though Lavasa Corporation violated EIA notification of 1994, 2004 and 2006, the MoEF “deliberately kept silent about the violation of EIA Notification 1994 and 2004.”


The post-facto clearance has indeed set preference of legalizing projects that have no prior EIA, which is an utter misuse of norms and policies designed to rectify such faults.



With inputs from Business Standard, The Hindu and NAPM.





One Response to Lavasa: The Controversial Lake City Project

  1. Lavasa Investor says:

    This is our first hand experience of Lavasa, Pune, India. When one decides to invest in Lavasa you should not expect anything that we so take for granted in a normal Indian City.
    Lavasa is a hotbed of City Sponsored Terrorism. We are sure you would have read enough news articles of them taking away tribal lands and villagers being cheated of their properties. Now a new trend is emerging in Lavasa. People who have invested in residential properties are being harassed and made to pay some obnoxiously high charges under various heads. In addition, no one is allowed to make legal income from their second-home property. Lavasa intervenes in every transaction of every residents. You would be given a red carpet welcome when you are investing but soon would be made to feel as if you are a criminal. For sure you would feel cheated sooner than later, as we have experienced ourselves and have seen many residents feeling the same. We have personally experienced mine and many other’s investments in Lavasa being taken over forcefully, with the use of guns and other weapons by Lavasa Corporation and have also known of locks of many personal houses of many residents being changed without the prior knowledge of the owner. The house owner is then forced to travel to Lavasa, cough up a tidy sum to get the house keys back. Then they are threatened that utilities would be cut-off should they disagree with Lavasa ever.
    Lavasa Hill City has also turned into a place where businesses are cheated and their assets and properties taken over forcibly by Lavasa Administration. In a democratic India , Lavasa is a unique city where fundamental rights of residents who are owners of businesses, villas, apartments and houses are massacred at will with full support of the Top Management. The Special Planning Authority – SPA – given to Lavasa is being used against the citizens at will. It is this Special Planning Authority that is the reason for such power going to the heads of Lavasa Management.
    In the documented words of Scot Wrighton, the American City Manager of Lavasa ” I have grown frustrated as I deal with a business climate poisoned by the government and a lazy media that depicts Lavasa as a place that is just a city for the wealthy, where environmental norms are flagrantly violated, and where we steal villager land.” What a wretched outlook to India.

    Remember that Lavasa is controlled by private security guards who are actually goons employed. No one dare raise an issue in Lavasa else the City management sends goons dressed in security uniform and takes over private properties of the complainer. Terrorizing people, manhandling them, profiling them, issuing threats of dire consequences and trailing people, all happens in Lavasa. That is Lavasa for you.

    We have invested in Lavasa and seen all our investments evaporate. Beware, before you meet the same end that we have met. If you are investing in Lavasa check with many who have done so and still waiting for years to get possession of their property. There are hundreds, if not thousands of investors who are in various stages of conflict with Lavasa. A great mutiny is on the anvil.
    Lavasa is place where the administration works against you and you have no one else to complain because they have absolute powers. Lavasa is a one way street, you can invest here by would not find any buyers later. Yes Lavasa helps – they simply send goons with guns and take over your property.
    For us we would like to recover our hard earned investments and move on. Please help us recover our investments.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s