Corporate rivalry spilled into the open today as Samajwadi Party leader Amar Singh and Rashtriya Janata Dal leader Prem Gupta represented two sides of the same picture before the Rajya Sabha - the travails of the Essar group.
Amar Singh wanted to know whether, in view of the fact that the department of company affairs (DCA) was inquiring into the accounts of the Reliance group of industries, under Section 209 A of the Companies Act, a similar inquiry would be ordered into the Essar group, which he said, was also charged with a funds diversion.
Union finance minister Jaswant Singh said while he was not averse to an inquiry into the charge of diversion of finances by the Essar group, if the situation so warranted, he would consider sympathetically the difference between "inadvertant" and wilful default of loans by industrial houses.
Jaswant Singh said such situations would be prevented by the Ordinance on securitisation and reconstruction of financial assets. He also read out the Reserve Bank of India's definition of 'wilful default' in the House.
Jaswant Singh also said in his reply to Amar Singh that Prime Minister Atal Bihari Vajpayee was considering the issue of the continuance of Essar group chairman, Shashi Ruia, in his trade and industry advisory council.
Amar Singh raised the issue, but Prem Gupta, through a supplementary, pointed out that the House should not become a battleground for corporate warfare. He said the Essar group's plans for expansion had suffered a setback because Rs 6,000 crore due to it was stuck because of the negative signals caused by the fund-diversion charge and it had held up a refinery project for the last few years.
Jaswant Singh said the issue in question was whether the group had diverted the Rs 7,138 crore it had borrowed and not Rs 11,000 crore.
He told the House the government saw no difficulty in inquiring into accounts of the group under the Companies Act if it was warranted.
The finance minister also said information provided to him by financial institutions, including IDBI, showed that they had extended financial assistance to Essar for specific projects after due appraisal. He, however, declined to furnish details of lending by financial institutions to the group because such information would violate the secrecy guranteed in the Public Financial Institutions (Obligation as to Fidelity and Secrecy) Act, 1983.
Several members were seen nodding as the minister said: "I have been given an oath that requires me to be free and fair. I fear nobody, I favour no one. The ministry is not in corporate or any other war. I have no animus, though I have a view point."
Dipankar Mukherjee (CPI-M) wanted to know whether the Essar group had diverted funds meant for the steel sector and "whether this money would be brought back". He also pointed out that a former adviser to a former finance minister had raised certain issues about Essar's diversion of funds. While not referring to this, Jaswant Singh said he stood by former Union law minister Arun Jaitley's clean chit to Essar on issues relating to company law.
In a press release, Essar said the clean chit given by the DCA should put to rest all controversies being raised by certain vested interests.
Ramgopal Yadav wanted to know whether credit rating agency Crisil had named Essar as a defaulting company. The minister said IDBI had classified the account of Essar Power as non-performing on 31 March, 2001. But it was upgraded as a performing asset on 31 March, 2002, on the basis of payments made by the company towards clearance of dues during 2001-02.