Duncans mulls legal fight over Centre's takeover bid

The company employs 18,000 people across its 15 gardens in north Bengal

Gouri Prasad Goenka is considering challenging in court the Centre’s move to take control of seven tea gardens of Duncans Industries in north Bengal.

“I am considering all options right now, including a full-fledged legal battle. I can’t allow the gardens to go,” Goenka said.

On Thursday, the ministry of commerce and industry directed the Tea Board of India to take immediate steps to take over the management or control of the seven tea estates in accordance with provisions of Chapter III of the Tea Act, 1953.

The Tea Act empowers the central government to assume management control of a tea undertaking or unit if: the it has made losses in three out of five years; the average yield of the tea has been lower than the district average yield by 25 per cent or more; the persons owning the tea garden have habitually defaulted on payment of wages and provident fund dues to workers and other employees, rent of land or duties of excise; and if the unit is being managed in a manner that is detrimental to the industry or to public interest.

The commerce and industry ministry’s notification said that a report on the status of stressed tea gardens in West Bengal was received from the Trinamool Congress-led state government, and that the central government had assessed the situation of the gardens on the basis of reports of the Tea Board, the state government and consultations with the stakeholders in the sector.

Duncans’ estates ran into trouble towards the middle of last year. During peak production months of June and August, there were hardly any workers in the gardens, which reflected in the paucity of the crops. Towards the end of the year, there were a series of reported deaths linked to the gardens although Goenka had said that most cases were not related to the gardens.

Duncans employs 18,000 people across its 15 gardens in north Bengal. The livelihoods of 50,000 people depend on the gardens. With Assembly elections round the corner, it’s not something that the West Bengal government  can ignore. In December, Chief Minister Mamata Banerjee had apparently written to the Prime Minister to look into the matter, sources said.

Sector observers felt that the Tea Board could hand over management of the gardens to public sector undertaking Andrew Yule. According to reports, the central government would be paying the wages of workers. However, Duncans has dues running into Rs 70 crore on various accounts.

“Who will pay the dues? If the gardens are not in my control, why should I pay the dues?” asked Goenka. The seven gardens have around 50 per cent of Duncans’ employees and half its production of 15 million kg.

There is yet another issue. Duncans is a BIFR (Board for Industrial and Financial Reconstruction) company. "BIFR rules suprecede," Goenka pointed out.