News: Google terminates lease deal with Vatika over 'delay'-02-03-2022
Google had signed the pact in June 2020, but the real estate developer has laid a counterclaim in a letter to the tech major suggesting that the company was already in possession of the building and currently was in process of fitouts when the agreement was abruptly terminated.
Technology giant Google has terminated an agreement to lease 7 lakh sq ft of office space in Vatika’s office complex in Gurgaon claiming delay in handing over possession and not following the terms of the contract. Google had signed the agreement in June 2020, but the real estate developer has laid a counterclaim in a letter to the tech major suggesting that the company was already in possession of the building and currently was in process of fit-outs when the agreement was abruptly terminated. “The purported termination has no contractual basis whatsoever and clearly demonstrates that in blatant and naked breach of the ATL, Google has failed and is unwilling to perform its legal obligations,” Vatika said in a letter to Google. The project, One on One, on national highway 8 is spread across 2.2 million sq ft being developed in two phases with an investment outlay of Rs 1,200 crore.
Google had sent the notice of termination on December 31, 2021. “The lessor had agreed to hand over the Phase I premises to Google in watertight condition in accordance with the handover conditions, along with the occupancy certificate, on August 15, 2020. In accordance with Clause 3 of the agreement, in the event of any delay in the handover of the Phase I premises beyond December 14, 2020, Google also has the right to terminate the agreement, including the proposed lease of the Phase Il premises,” Google said in the notice. Google also asked Vatika to refund the security deposit paid with interest. “Despite several discussions/meetings following up on the completion and handover of the premises and opportunities provided to the lessors to hand over, neither the Phase I premises nor the Phase Il premises have been handed over to Google. Therefore, in exercise of its right, Google intends to terminate the agreement,” Google said in the letter. "We don't comment on specific contractual agreements," a spokesperson for Google said. Gaurav Bhalla, managing director, Vatika Group, told ET that the company will take action against Google as per the law as the termination is against the contract.
“It is highly regrettable that notwithstanding the fact that the handover conditions had been fulfilled by Vatika and Vatika had offered the formal handover of the premises to Google on August 31, 2021, and on many occasions thereafter, Google, while being in possession of the premises and continuing with its fit-out works and instructing Vatika to remove alleged handover defects, unlawfully and unjustly refused to accept a formal handover,” Vatika has said in the letter. Google has also reportedly raised issues with the building. According to Vatika, all alleged handover defects communicated by Google were addressed and there were no deficiencies with respect to the fulfilment of the handover conditions. According to Vatika’s letter, Google's parent company in the USA had conceived a plan to cut down expenses by $1 billion by implementing a largely work-from-home arrangement with its employees. “Instead of being honest and transparent, Google has resorted to deceitful and unlawful machinations to somehow wriggle out of the ATL,” Vatika said. US banking giant Goldman Sachs invested Rs 610 crore in Vatika Group of which Rs 245 crore was used to expedite construction in the first phase of this project.
“If Google had not agreed to take four buildings together on lease, Vatika would have completed only one building initially and leased it, and completion of other buildings would have been financed from the rental income over a period of time”. “In fact, Vatika has incurred approximately Rs 213.46 crore on financing costs (excluding principal sum) till date. Further, Vatika has incurred an additional cost of Rs 54.70 crore on customisation of the Premises as per the requirements of Google, the developer said. Multiple investors have also lost money, as Vatika had promised assured returns. “We don’t know whether Google had taken the building on lease or not, but over 250 investors are feeling duped as we are not getting returns,” said Ravi Luthra, President, Vatika Investors Welfare Association. Bhalla said that the company is trying to lease the property again and the rental income should commence soon. Industry sources said that Google is also on the lookout for office space of the same size.
