Chhabrias misled BIFR/AAIFR on Chennai land, says Dunlop India
11 Aug 2007
Chennai: Tyre company Dunlop India Limited has charged its erstwhile promoters, the Jumbo group belonging to the Chhabrias, for concealing and misleading the Board of Industrial and Financial Reconstruction (BIFR) to obtain permission for the sale of surplus land at Chennai, in 2004.
The company had auctioned off 60.86 acres in 2004 and V N Devadoss, managing director, VGN Enterprises, bought the land for Rs24.34 crore. (See: Dunlop India disputes its land sale and Dunlop India suspends Chennai operations)
In December 2005, the Kolkata-based Ruia group acquired Dunlop India and had announced its plans to restart operations at its plants in Kolkata and Chennai. But that has not been done on a consistent manner.
Now Dunlop India says, its erstwhile management had asked BIFR permission to sell part of the land at Ambattur to tide over funds crunch suppressing the vital information that land cannot be sold to an outsider as per the deed of assignment by the Tamil Nadu government in 1963.
As per the deed, the land has to be used either by the company (Dunlop India) or has to be returned to the government.
According to Dunlop India, the BIFR and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) sanctioned the sale of assigned land in a routine manner.
In view of the incurable infirmities in the decision of the erstwhile management and orders of BIFR/AAIFR, the purported sale becomes void and VGN Enterprise cannot claim any legal ownership. The purported sale is null and void ab initio, claims Dunlop India.
Curiously, company secretary Ashok Kumar Agarwal, who was one of the two persons who signed the sale deed for the 60.86 acre land in favour of Devadoss, still remains with the company.
Dunlop India's vice president corporate communications Dhrubajyoti Nandi, however, affirmed that the `purported land sale and the infirmities connected with that' were made known to the Ruia group by its due diligence auditors at the time of acquisition.
Asked why it took two years for the company to wake up to dispute the land sale, he had no convincing answer except that the management was under impression that the land sold was a separate piece and not within the factory's boundary wall.
As to the legal course of action the company is contemplating, he said the company's lawyers are charting the path to take.
He also denied any plan to by the promoter group to seek compensation or take legal action against the Jumbo group for concealing the information from BIFR/AAIFR.
Dunlop India, he said, has plans to make radial tyres partnering with a foreign company and for that it would require around 150 acres of land.