Legal experts warned that the Cochin Port Trust (CPT) may lose 26 acre of prime land at Bolgatty island if the lease holder raises loan against the land and fails to repay it.
On July 26, 2011, the port authority leased out the land to a private developer by signing a lease deed.
According to the deed, the lessee may seek permission from the port authority to raise loan against the land from commercial banks and state and central financial institutions.
Since the land can be used as collateral security for loans, it is open to the banks to attach this piece of property if the developer fails to repay the loan.
The 26 acre of waterfront property off Marine Drive cost about Rs 500 crore in the open market. The port leased out this property to the developer for Rs 71 crore.
Interestingly, the agreement also permits the unauthorised sub-leasing of the land or buildings by the developer to third parties without even informing the port. The CPT has offered to make post facto approvals of such unauthorised deals by the developer.
According to Section 3 (b) of the deed, “in the event of the lessee effecting any such sub-lease without the prior consent in writing of the lessor for the same, it shall be open to the lessor to approve of the same if a request therefore is made, provided, the lessee pays the lessor during the subsistence of such unauthorised assignment, transfer or sub-lease additional amount.
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