CSE plans to recover Rs 2-crore advance paid to landlord

Jaidev Majumdar & Arpan Mukherjee

Kolkata, Aug 21: THE Calcutta Stock Exchange (CSE), looking for funds since the March payments crisis depleted its reserves, is trying to recover Rs 2 crore that it had parked as an interest-free advance with the landlord of its premises at 6, Lyons Range.

With the cash-strapped bourse not in a position to buy the premises as planned earlier, it has asked the owners, Turner Morrison, to refund the advance given in 1994.

The Turner Morrison building is next to the CSE main building at 7, Lyons Range, and the space in question is on the first floor, which also has a 3,000 sq ft office occupied by Coal India Ltd.

The CSE has used this space to house its market operation (MOP), contingency pool, arbitration, depository and bad delivery cells since 1995. The CSE also occupies 5,300 sq ft on the fourth floor for its administrative department.

When contacted by The Financial Express, Turner Morrison’s company secretary and vice-president KK Biyani, declined to comment on the matter. “This is a very private matter and I do not want to comment on it,” he said.

Mr Biyani declined to confirm or deny the demand raised by the exchange. On the contents of the agreement he said: “It may be partially correct or incorrect.”

In March 1994, Turner Morrison entered into an agreement with the CSE to sell 9,395 sq ft on the first floor, at the then market price of Rs 5,000 per sq ft.

The CSE was to shell out Rs 4.70 crore, of which Rs 2 crore was given as an advance, with the rest to be paid on the completion of the deal. Meanwhile, the sale of the property was challenged by Mr NS Hoon, in a case filed by him against Turner Morrison. Following protracted litigation, the high court set aside the sale agreement.

While the litigation was on, Turner Morrison entered into a three-year tenancy agreement with the CSE for the same first floor space. According to this deal, CSE was to pay a monthly rent of Rs 50 per sq ft for 2,000 sq ft and Rs 23 per sq ft for the balance 7,395 sq ft.

The difference in rent was to compensate the CSE for the Rs 2 crore stuck as interest-free advance with Turner Morrison since 1994.

However, according to CSE officials, when the three-year tenancy deal expired in 1997, the auditors had pointed out to the then broker-dominated CSE management that it should take steps to recover the Rs 2 crore advance given to Turner Morrison.

It is understood that Mr Tapas Dutta, who lost his job as the bourse’s executive director on August 11, had refused to overlook the auditors’ comment and decided to start the recovery exercise.

The exchange had also decided to vacate the first floor and save on the monthly rentals, which was part of the cost-cutting drive taken up after the funds base was eroded by the March payments crisis.