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Decks cleared for WB government takeover of two Ruia companies

The Dunlop India Limited (Acquisition and Transfer of Undertaking) Bill, 2016 and Jessop and Company Limited (Acquisition and Transfer of Undertaking) Bill, 2016, seeking to empower the West Bengal government to take over two Pawan Ruia group companies, were passed by the West Bengal Assembly on Saturday. The Ruia group declined to comment on the development.

In case of Dunlop, the Bill mentions failure on the part of the existing management to settle dues of the employees and also failure on the part of the existing management to pay statutory dues to the state government and its agencies. A declaration of "suspension of work" had kept the Sahagunj unit non-productive since October 2011 and the Ambattur unit had been closed in 1998, are also part of the objects and reasons behind bringing in such a Bill.

Post-vesting of the company in state government, all assets, rights, lease-holds, powers, authorities and privileges, and all property, moveable and immoveable, including lands, buildings, cash on hand, reserve funds, investments, book debts would be transferred to the new government undertaking. Dunlop is known to have surplus land at Sahagunj and Ambattur.

Ruia had taken control of Dunlop in 2005 from Manu Chhabria with liabilities in excess of Rs 650 crore. The Bill, however, says that proprietors would be liable for prior liabilities.

For the transfer and vesting in state government, the Ruia group would be paid an amount as determined by the Commissioner of Payments appointed by the state government for the purpose. However, the Bill also says that the amount to be paid would be reduced to the extent of liabilities of the proprietors.

Judicial cases relating to a winding up petition against Dunlop are, however, under way. January 31, 2013, the Calcutta High Court directed winding up of the company, which was reaffirmed by the Division Bench. The matter is now before the Supreme Court.

The reason cited for bringing the Jessop Bill was that the government felt that the management would not take any further step for restoration of its operation. A team from the West Bengal Legislative Assembly had visited the Dum Dum factory after employees sought immediate intervention by the state government.

Jessop was a 100 per cent central government undertaking, which was declared sick in May 1998. "The state government also extended support to it by way of sanction of a soft loan of Rs 30.66 crore to liquidate its sales tax arrears in January 1999," the Bill said.

However, the government later divested its 74 per cent in favour of Ruia after a BIFR sanctioned scheme failed.

"A modified revival scheme submitted by the new management was approved by the BIFR on September 20, 2002. In view of the modified revival package, the state government rescheduled the payment of sales tax loan and the company failed to repay the loan and interest thereon to the state government and the company has failed to settle statutory dues and other dues," the Bill said.