Dunlop seeks to reclaim land, to move court

Dunlop India (DIL), which suspended operations at its Ambattur unit near Chennai indefinitely on August 7, will move the Madras High Court very soon to reclaim eight acres of land on its premises, which the company said was illegally encroached by realty developer VGN Enterprises on July 31.

"The legal process is already in motion and we expect hearings to start shortly," a DIL official said.

The unit had a total of 1,046 employees on its rolls, when the lockout was declared earlier this week.

In its affidavit, to be filed with the high court, DIL will also contest the sale in June 2004 of 60.86 acres of land adjoining the Ambattur unit by the previous management under the Jumbo Group to VGN Enterprises to raise money to revive the bureau of industrial and financial reconstruction (BIFR)-notified unit.

VGN has claimed that the eight acres is part of the 60.86 acres, which it purchased from the Jumbo Group. The present management of Dunlop India, the Ruia Group of Kolkata which took over the company in 2005, has called the sale illegal.

Last week, VGN had produced sale documents to support its ownership claim over the land at DIL's Ambattur premises. However, DIL rejected the same, arguing that under the terms of purchase of the land from the government in 1963, the land could not be sold to a third party. "While acknowledging the end result of the sale and transfer of ownership thus far, we also contend that the process was not legal and plan to move the high court to declare the same null and void."

Terming the land sale as an "oversight" by the previous Jumbo Group management, a DIL official said, "The land was bought under the condition that it will be either used by the company or returned, if it was not used for manufacturing or other operational purposes. However, the Jumbo Group, proceeded with its sale on the plea that it was imperative to revive the sick unit. Any contention on title, sale or transfer of the land to VGN Enterprises is invalid. What's worse is that VGN forcefully occupied an additional eight acres on July 31, leading to practical difficulties in continuing with operations at the unit."

The deed of assignment for part of the lands at Ambattur, which was sold by the Jumbo Group for Rs 24.34 crore as surplus assets, contained various restrictive and prohibitive covenants, which had not been fully understood or appreciated by that company at the time of the sale, DIL said. DIL alleged that the previous management had suppressed the information from the BIFR about non-transferability of the land at the time of sale.

Rejecting VGN's offer for a land swap, DIL said the "incurable infirmities" inherent in the sale were compounded by what it called VGN's act of trespassing the Ambattur premises and usurping its various units. "The land assigned to Dunlop by the government of Tamil Nadu (in 1963) cannot be sold or swapped under any circumstances," DIL officials said.

The Ruia Group of Kolkata had acquired the controlling interest in DIL in December 2005 from the Jumbo Group. DIL, then under the M R Chhabria-led Jumbo Group, was referred to BIFR after the erosion of its capital and reserves in 1998.

DIL has also plans to set up a radial tyre plant at Ambattur in collaboration with an overseas tyre major in the long term, but declined further details on the same. The DIL official said the company intends to recover the land legally before drawing up further plans for its tyre plant.