Subhas Chandra Pattanayak

The Government cannot act in a manner, which would benefit a private party at the cost of the State. This mandate was issued long back in 1980 by the Supreme Court of India, in M/s Kasturi Lal v.State of J&K, reported in AIR 1980 SC 1992. The State Government, under Chief Minister Naveen Patnaik, has been stripped layer by layer by the Orissa High Court for having tried to contravene this very mandate in order only to serve the interest of a private industrial house.

The Government had done everything to help Jindal Strips Ltd, a private concern, plunder away 500.26 hectares of Orissa’s Chromite deposit at Tangarpada in the district of Dhenkanal, through the backdoor. State owned Industrial Development Corporation (IDCOL) was used as a pawn by people in power in this respect, which the High Court has frustrated.

A cursory look into the matter reveals that people holding high office had taken such steps that M/s Jindal Strips Ltd (hereinafter called Jindal) could have bagged 89 per cent equity in Tangarpada Chrome Mines under occupancy of IDCOL as its partner in a Joint Venture Project besides a spectacular gain of 2500 Acres of land in a highly industrial belt as well as cash to the recurring tune of 20 thousand crores through exemption of taxes. Naveen Patnaik’s Government had unhesitatingly approved this anti-people plan.

Holding that this was done by the Government “in a most mechanical manner without applying its mind”, the High Court of Orissa, has done a “judicial review” of the Government order and quashed the deal “for the sake of public interest and for preventing further denudation of the State Exchequer”.

Unless it is quashed, public exchequer “will lose revenue to the extent of rupees 20 thousand crores over a period of 20 years on this score alone”, the High Court has observed.

Use of the word “alone” with the words “on this score”, makes it abundantly clear that the Court was conscious of the enormity of loss the State were to incur on other scores too, such as mineral, forest and environmental wealth, by this arrangement.

What had happened and why the High Court took this step?

As we gather, IDCOL had occupancy over 500.26 hectares of Chromite ore deposit at Tangarpada, which it had kept barren since April, 1986, without even executing the lease. Jindal set its eyes on this unexplored incomparable wealth.

A top Jindal executive met the Minister for Industries Mr. Kanak Vardhan Singdeo as well as his uncle and Minister for Steel & Mines Mr.Anang Uday Singhdeo in the first week of June, 02. A strategy was formulated on how to grab this wealth. Accordingly the Industry department, vide letter No.12704 dt.29 June 02 wrote IDCOL to rise to the necessity of exploring the Chrome ore deposit at Tangarpada.

Immediately thereafter, on 2nd July 02, the Company’s Deputy Managing Director R.G.Gar, contacted Asit Tripathy-Managng Director, IDCOL. A team of Jindal executives also met S.P.Nanda-Principal Secretary, Industry Department, R.N.Bohidar-Principal Secretary, Steel & Mines Department and Jugal Kishore Mohapatra-Chief Minister Naveen Patnaik’s the then closest Secretary at Bhubaneswar the same day. According to Ratan Jindal, all these officials “were quite positive”. He apprised of this to the Chief Secretary (CS) of Orissa on 14 Aug.2002.

In a letter, Ratan Jindal, who wrote it after discussing with the CS, introduced his proposal to set up a 1.8 million tons per annum integrated Stainless Steel Plant in Orissa. He wanted the CS to patronize his Plant by ensuring allocation of “captive mines”. The CS entertained him to a personal audience on 8th Sept.02.

Only a day after this discussion, in a fresh letter to the CS on 10 Sept.02, he laid down a list of 10 incentives, which he underlined to be prerequisite to setting up of his “world class size Stainless Steel Plant” in Orissa.

It included, besides 2500 Acres of land at Duburi (that too, opposite to the Nilachal Ispat Nigam Ltd) to be used by the plant in phased manner (has he a plan to grab this public sector Plant eventually? If not, why this particular site?), exemption of stamp duty and registration fee for registration of this land, exemption of factory license fee, exemption from payment of sales tax, central sales tax, entry tax, electricity duty, and all type of local development charges for 20 years.

Over and above this, he also required coal blocks for captive power generation, mining lease for iron ore, Manganese ore and Limestone.
As on Chrome ore, he stressed on mining lease in the unallocated areas. He also asked the government to work out a “mechanism” whereby “sub-lease from Government agencies like O.M.C.” (mark the dexterity: IDCOL was not mentioned!) could be available to Jindal.

The mechanism was surreptitiously being worked out. Steel and Mines department invoked Sub-Rule 4 of Rule 22 of MCR,1960 and noticed IDCOL for personal hearing on “why the lease has not been executed” despite lapse of long 17 years. This was used as a ploy to expedite such an action of IDCOL, which would outwardly look genuine but internally help Jindal in capturing Tangarpada.

IDCOL was adroitly maneuvered to decide to go for a Joint Venture Project (JVP) “with only a token participation”. On 21 Sept. 02, IDCOL’s Board of Directors approved this idea and authorized its Chairman-cum-M.D. (CMD) “to take necessary action to select the party and finalize the terms and conditions”. As a follow up action, an advertisement was issued inviting offers from prospective parties, which was flashed by 24 Oct..02. The last day for expression of interest was fixed to 25 Nov.02. On 13 Nov.02 N.C.Mathur, Jindal’s Director-Corp.and International Marketing, put on records before the Chief Minister Naveen Patnaik his company’s need for “exemption from payment of sales taxes, entry tax, electricity duty etc for a period of 20 years along with exemption from the payment of local development charges, factory licence fee, stamp duty and registration fee for land registration etc”. Naveen was eager to help.

In response to the advertisement, four parties (VISA Industries, Tata Iron & Steel, Jindal Strips and Jindal Steel & Power ) expressed their interest. A Technical Committee (TC) was formed to “evaluate” the offers. Later Jindal Steel and Power Ltd. withdrew from the contest. The TC, instead of evaluating the three remaining offers, deliberated on technical bid submitted by the parties and “recommended to open the price bid of M/s Jindal Strips Ltd only”. The BoD of IDCOL approved this blatantly illogical recommendation on 23 Dec.02. Following which its CMD after a stage-managed feel-good-factor-negotiation with Jindal agreed to stay content with 11% equity in the JVP. What a patriotic work!

This great patriotic work was sent to the Industry department by the CMD of IDCOL vide Ref.No.325 on 15 Jan.2003 for approval of the Government. And the Government? It was eagerly waiting to approve it. Never before this occasion any Government in Orissa had acted in such a serious matter in such a record haste. On 18 January 03, vide letter No. 1374/I, IDCOL was informed that “the Government has been pleased to approve its proposal to form a Joint Venture Company with Jindal Strips Ltd” allowing the private party to control 89% equity.

The other two players- VISA And Tata Steel- raised their disputes in two separate Writ cases before the High Court of Orissa.

In deciding these two cases on 18 Nov.04, the High Court has not only quashed the decision of IDCOL to take Jindal as its Joint Venture partner but also the approval of the this decision by the Government.

“It seems the IDCOL authorities as well as the state Government were completely oblivious of their responsibility towards public interest and State exchequer”, the Court has observed.

The Court has preferred not to express any opinion on whether or not non-evaluation of the offers received by IDCOL was accidental or deliberate. But in no uncertain terms it has said, “The court has a constitutional obligation and duty to interfere xxxx as we cannot afford to sacrifice legitimate interest of the State and its people. Very object of the Scheme under the advertisement and brochure to generate revenue for the State and employment opportunities are bound to be defeated unless we interfere”.

Borrowing the language of the Supreme Court in 1991 Suppl.(1) SCC 600, it has reminded the State Government that “Individuals are not and do not become wise because they occupy high seats of power, and good sense, circumspection and fairness do not go with the posts, however, they may be”, the Court has underlined, “Rule of Law contemplates governance by Law and not by humour, whims or caprices of men to whom the governance is entrusted for the time being”.

Holding that “nothing should be done which may give an impression of favoritism or nepotism”, the Court has wanted Naveen Patnaik’s Government to understand that “the government cannot act arbitrarily at its sweet will where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or granting other forms of largess. There are two limitations imposed by Law, which structure and control the discretion of the Government in this behalf. The first is in regard to the terms on which the largess may be granted and the other, in regard to the persons who may be recipients of such largess. Unlike private individuals, the State cannot choose to deal with any person it pleases in its absolute and unfettered discretion”.

“Be you ever so high, the Laws are above you. This what men in power must remember always”, it has said.

In what sharper way a Government could have been stripped?

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