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Rs 12000 crore claim and how the MP Government surrendered its case

Newsroom24x7 Staff

BHOPAL: After the Madhya Pradesh Government had passed a “deed of assignment” on April 30, 2011 to acquire all 16 industrial units owned by state-run Madhya Pradesh State Industries Corporation (MPSIC), a private business house managing one of these units on a 20-year contract basis has filed a claim for Rs. 12000 crore (Rs. twelve thousand crore) before the sole arbitrator appointed earlier by the Supreme to resolve other matters linked with this case.

The case in question is linked to Dewas Udyog, an industrial unit originally valued at Rs. 58.24 lakh. Its owner Madhya Pradesh State Industries Corporation Limited (MPSIC) had given this unit to Indore based Bhagwati Enterprises on a 20-year management contract in 1998.

State Additional chief secretary Commerce and Industry P.K. Dash told this newspaper that the state Government is challenging the appointment of the sole arbitrator retired High Court judge Justice P.C. Agrawal in the Supreme Court. When contacted, an official source confirmed on Wednesday that a petition has already been filed in the Supreme Court challenging the appointment. When asked to explain the reason for this, he said Justice Agrawal had earlier awarded a compensation of Rs. 16.50 crore to Bhagwati Enterprises in a case against the state Irrigation department. The state Government challenged this before the High Court, which passed an order saying the arbitrator was not “fair and just” to have proceeded in this matter.

On probing further, it was learnt that In August 2002, the state government had ordered transfer of Dewas Udyog from MPSIC to Madhya Pradesh Laghu Udyog Nigam (MPLUN)—both state owned undertakings. Bhagwati Enterprises challenged this order in an Indore court, where the counsel for MPLUN took the stand that that since there is an arbitration clause and the managing director of MPSIC was the arbitrator, the court had no jurisdiction in this case. As the Indore court accepted this plea, the private business group challenged the order in High Court, which set aside the Indore court order in March 2005. After this the state Government went to Supreme Court challenging the High Court order. Even when the case was being heard in the apex court, the then state Industries commissioner Vinod  Semwal gave consent to a proposal by Bhagwati Enterprises to  appoint Justice Agrawal as arbitrator on August 5, 2010. On August 31, 2010 Bhagwati Enterprises filed an application in Supreme Court to include “other disputes” in this case. During hearing, the state Government totally surrendered its case by giving consent for appointment of an arbitrator and also did not oppose enlargement of scope of this case. On January 13, 2011 the Supreme Court issued the order to appoint the sole arbitrator in this case.

It has also been revealed that all state government departments were issued letters by MPSIC to give Dewas Udyog preferential treatment in purchase matters. But as Bhagwati Enterprises had been using MPSIC letter-heads to expand its business, it has been decided to file an FIR in this matter, said additional chief secretary Commerce and Industry P.K. Dash.