Germany’s Metro AG, has been caught in an ownership dispute over the land it has leased from the West Bengal government for its debut in the state. The construction of its first outlet in the city, slated to open in July, was halted last month.
Germany’s largest retailer moved the Calcutta high court on 5 March, challenging an injunction from the Alipore civil court to the company to stop construction at its site, located besides the Eastern Metropolitan Bypass.
In its petition, Metro has divulged that to date it has invested Rs46 crore, of which Rs16 crore went into paying for the land lease. The company’s submission before the court is that with each passing day, it was losing money, now that progress on the project has come to a complete standstill. However, hearings are on in both the courts and it’s not clear when the issue will be resolved.
Metro could not be reached for comment. But Ansu Nath Banerjee, the lawyer who is pleading the case for the state government, shared the details of the case with Mint.
Metro, which signed the lease agreement only last May, has found itself dragged into a 45-year-old litigation being fought between 227 people in the civil court over the ownership of the 7.53 acres of land it has leased. A part of this land was acquired by the state government in 1954, about eight years before the litigation began. Last year, after Metro showed interest in setting up shop, the state government acquired the remaining land required for the project through the West Bengal Industrial Development Corp. (WBIDC). This land was under litigation.
In May, the state government and WBIDC gave 3.09 acres and 4.44 acres, respectively, on a 99-year lease to Metro. WBIDC, aware of the ongoing strife, deposited the compensation package (for the land acquired) with the civil court for disbursement after the litigation is resolved.
Last month, some of the land owners won an injunction in the civil court restraining any third party from changing “the nature or character” of the land. This injunction was used to stall the construction of Metro’s outlet.
Metro challenged the injunction in the civil court and asked for it to be vacated. WBIDC too stepped in to ask the court to speed up the process. To accelerate the process, Metro has filed a ‘revision’ petition in the high court to push the civil court. While the main respondents are the private owners of the land, it has also made WBIDC and the state government pro-forma (friendly) respondents. The high court has asked Metro to ensure that all the 227 private respondents get a copy of the petition. This done, the hearing of the case has been going on since 14 March.
Metro currently has stores in Bangalore and Hyderabad. Under Indian laws, because of its foreign ownership, it is barred from selling its goods directly to individuals, and has to sell it to businesses.