Row over land sale hits JK Mills' revival

Proceeds to be invested in Kanpur-based company

The suspension of Kanpur Development Authority Vice-Chairman Hiramani Yadav has imparted a new twist to the proposed sale of Lakshman Bagh, the surplus land owned by JK Cotton Mills.

No official reason has been given for Yadav's removal, who has been transferred to the revenue board in Lucknow.

The common perception is that Yadav's exit has to do with the change in land use of Lakshman Bagh from horticulture to housing. The 24.8 acre plot of land has been converted into free-hold at a nominal cost of Rs 6,366.

After its conversion into free-hold and the change in land-use, the Asset Sale Committee appointed by the Board for Industrial Finance and Reconstruction (BIFR) came out with an advertisement for its sale at a reserve price of Rs 51.50 crore. The BIFR wants the proceeds invested in the revival of JK Cotton.

With Yadav's suspension, the whole exercise has come to a standstill. But the advertisement has not been withdrawn and and there has not been any formal decision on the ASC's future steps.

ASC members told Business Standard under the present circumstances it would be hard to find bidders as the earnest money of above Rs 5 crore would get blocked for an indefinite period.

On October 16, 2003, the government had come out with an order that provided for the conversion of land use to facilitate the rehabilitation of sick industrial units.

The order permits such industrial units, whose revival decision has been taken either by the state-level high power committee or by the BIFR to sell their surplus land.

The order also says units set up in a planned industrial area or as per the Master Plan, can only sell their surplus land as per the landuse mentioned in the Plan.

In the earlier Master Plan, the Lakshman Bagh property is shown as a green belt, where no encroachments are possible. Thus, the land cannot be sold as housing land and any change in its land use will be considered illegal. Yadav's departure is being linked to this very fact.

But this has led to an impasse over the land sale. According to sources, as the sale deed has been executed between JK Cotton and the KDA, it cannot be revoked unless the government gets it stayed by court. As it may lead to prolonged litigation, the state government is likely to avoid it.

With no solution in sight, the workers of JK Cotton have been left in the lurch as the revival package can only be implemented after the land sale.

Revival trouble

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• The 24.8 acre Lakshman Bagh land has been converted into free-hold at a cost of Rs 6,366

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• The BIFR invited bids for the sale of Lakshman Bagh land at a reserve price of Rs 51.50 crore

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• As the sale deed has been executed between JK Cotton and KDA, it cannot be revoked unless the government gets it stayed by court

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• The workers have been left in the lurch as the revival package can only be implemented after the land sale