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Mumbai (AFP) Nov 29, 2010 Building work has been halted on India's newest hill station, developers said on Monday, after the government claimed that some construction had taken place illegally and parts of it may have to be razed. "We have stopped all construction work as per the notice," a spokesman for Lavasa Corporation Limited, a unit of the giant Hindustan Construction Company, told AFP. The stoppage comes after India's environment ministry said last Thursday that the company had not obtained the necessary legal permission for some developments on the site 200 kilometres (125 miles) southeast of Mumbai. Indian federal police on Friday also named Lavasa as one of 21 companies it was investigating in relation to a bribes-for-loan scam that has seen the arrest of eight executives from state-run banks and a top insurer. Lavasa has denied involvement. The ministry warned that "the unauthorised structures erected without any environmental clearance... be removed forthwith in entirety" if the company did not respond satisfactorily within 15 days. The firm's lawyers issued a strongly-worded response on Monday, claiming the show cause notice -- a document requiring a party to explain why a certain course of action should not be taken -- was "drastic" and "issued in haste". The 27-page response also said the ministry had acted in bad faith, under pressure from political activists opposed to the project and with an ulterior motive to stall the company's planned flotation on the stock market. The initial public offering -- due in the coming months -- is expected to be in the region of 20 billion rupees (454 million dollars), the company has said. Lavasa said in its response that either permission had been granted or was not needed for the disputed constructions and said 30 billion rupees of investment and thousands of new jobs were at risk if the project is mothballed. Lavasa has been billed as India's first hill station since independence in 1947 and hailed by its backers as a blueprint for building and managing future cities, as the country's population explodes and urbanisation increases.
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