Google cancels its lease agreement with Vatika due to a ‘delay.’

Google has terminated an agreement to lease 7 lakh square feet of office space in Vatika’s office complex in Gurgaon, citing a delay in handing over possession and a failure to follow the terms of the contract.

The agreement was signed in June 2020, but the real estate developer has filed a counterclaim in a letter to Google, claiming that the company was already in possession of the building and was in the process of fitting it out when the agreement was abruptly terminated.

“The purported termination has no contractual basis whatsoever and clearly demonstrates that Google has failed and is unwilling to perform its legal obligations in blatant and naked breach of the ATL,” Vatika wrote in a letter to Google.

The One on One project on National Highway 8 is spread across 2.2 million square feet and is being developed in two phases with a Rs 1,200 crore investment.

Google had sent a termination notice on December 31, 2021.

“The lessor agreed to hand over the Phase I premises to Google in watertight condition, along with the occupancy certificate, on August 15, 2020, in accordance with the handover conditions.” In accordance with Clause 3 of the agreement, if the Phase I premises are not handed over by December 14, 2020, Google has the right to terminate the agreement, including the proposed lease of the Phase Il premises,” Google stated in the notice.

Google also requested that Vatika refund the security deposit with interest.

“Despite several discussions/meetings following up on the completion and handover of the premises, as well as opportunities provided to the lessors to hand over, neither the Phase I nor the Phase Il premises have been handed over to Google.” As a result, Google intends to terminate the agreement in exercise of its right,” Google stated in the letter.

“We don’t comment on specific contractual agreements,” a Google spokesperson said.

Vatika Group managing director Gaurav Bhalla told ET that the company will take legal action against Google because the termination violated the contract.

“It is deeply regrettable that, despite the fact that Vatika had accomplished the handover conditions and Vatika had offered the formal handover of the premises to Google on August 31, 2021, on several occasions thereafter, Google, while being in possession of the premises and trying to continue with its fit-out appears to work and advising Vatika to remove alleged handover faults, wrongfully and unjustly refused to accept an official handover,” Vatika wrote in the letter.

Google is also said to have had issues with the building.

According to Vatika, all alleged handover defects communicated by Google were addressed, and there were no deficiencies in terms of handover conditions fulfilment.

According to Vatika’s letter, Google’s parent company in the United States devised a plan to save $1 billion by implementing a work-from-home arrangement with its employees.

“Instead of being honest and transparent, Google has resorted to deceptive and unlawful machinations to elude the ATL,” Vatika said.

Goldman Sachs, the world’s largest investment bank, 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 consented to lease four buildings together, Vatika would have finished only one building initially and leased it, and the completion of the other buildings would have been financed over time through rental income.”

“In fact, Vatika has spent approximately Rs 213.46 crore on financing costs (excluding the principal amount) to date.” Moreover, Vatika has incurred an additional cost of Rs 54.70 crore for creating customized the Premises to Google’s specifications, according to the developer.

Several investors have also lost money because Vatika promised guaranteed returns.

“We don’t know if Google leased the building or not, but over 250 investors are feeling duped because we aren’t getting returns,” said Ravi Luthra, President of the Vatika Investors Welfare Association.

According to Bhalla, the company is attempting to re-lease the property, and rental income should begin soon.

According to industry sources, Google is also looking for office space of the same size.