The Uttar Pradesh State Industrial Development Corporation Limited suffered a loss of Rs. 6.49 crore, due to an unprofessional approach.
Loss to the Company due to unprofessional approach. The Company initiated the land acquisition proposal without entering an agreement with Bharat Electronics Limited and consequently suffered a loss of Rs. 6.49 crore on account of the cancellation of the acquisition process.
As per Section 39 of the LAA, an agreement is required to be executed by the proposing agency in case land is to be acquired for a company.
Bharat Electronics Limited (BEL) intimated (April 2012) its requirement of 200 acres of land and requested Company to initiate the process for the same. BEL had also categorically asked Company for certain information such as the location of land, the approximate cost involved, time to be taken, etc. before commencing the acquisition process. The Company, however, initiated the acquisition process for 394.32 acres of land in three villages (Dehra, Rawli, and Udayrampur) located in the Industrial Area of Masoorie-Gulawati in district Ghaziabad without furnishing the required details to BEL. This proposal was in fact a revival of an earlier proposal which was modified to include the requirements of BEL. An acquisition proposal was accordingly sent (April 2013) to the District Authorities, Ghaziabad. The Company also requested (October 2013) the District Authorities to adjust the amount of Rs. 37.10 crores which were deposited by the Company towards its previous land acquisition proposals that could not materialize, towards meeting out the 10 percent acquisition charges and 10 percent compensation ( Rs. 18.55 crore each) pertaining to the BEL proposal. The notification u/s 4(1)/16 of the LAA was published on 28 December 2013.
The District Authorities further demanded (June 2014) Rs. 203.04 crore for the issue of notification u/s 6/16 of the LAA. The Company raised a demand notice with BEL (July 2014) for a total amount of Rs. 305.11 crores. BEL however refused (December 2014) to provide the necessary funds to the Company stating that the rates were very high. In the interregnum, as the notification u/s 6/169 could not be issued within one year after the date of publication of the notification u/s 4(1)/16 of the LAA, the acquisition proposal lapsed (22 January 2015) as per section 6(1)(ii) of the LAA. In between, since no decision could be reached, the Company had also decided (January 2015) to drop the proposal.
Audit noticed (April 2018) that the Company had initiated the land acquisition process without entering into an agreement with BEL as required under LAA. The Company had also failed to address the concerns raised by BEL before proceeding ahead with the acquisition process. Further, against the due amount of Rs. 137.07 crores, the Company had raised a demand for Rs. 305.11 crores which were in excess of BEL’s portion. As a result, the BEL expressed (December 2014) its unwillingness to proceed ahead with the land acquisition process citing budget constraints and the high cost of land acquisition.
As the proposal lapsed before the notification under Section 6/16 of the LAA could be issued, the Company suffered a loss of Rs. 6.49 crore. This loss has to be borne by the Company as it had not entered an agreement.
The Management stated (March 2019) that the Company is a commercial entity, and that in anticipation of potential loss in the acquisition of a particular land, the proceedings were withdrawn by it. The fact remains that the Company had to suffer loss as it failed to execute an agreement with BEL as per the provisions of LAA before initiating the land acquisition process. Execution of such an agreement would have addressed BEL’s concerns on the viability of the proposal and also safeguarded Company’s financial interests.
The matter was reported to the Government (December 2018). The reply is still awaited (September 2019).