IDCOL moves HC for cancellation of SPA with Varsa Fabrics

The state-owned Industrial Development Corporation of Orissa Ltd (Idcol) has moved the Orissa High Court for cancellation of the Sale and Purchase Agreement (SPA) signed by it with the Kolkata-based Varsa Fabrics Private Ltd (VFPL).

The inter-departmental core group (IDCG) and the Public and Co-operative Enterprises Restructuring Committee (PCERC) had earlier recommended for cancellation of the SPA.

Based on this recommendation, the Cabinet Committee on Disinvestment (CCD), chaired by chief minister Naveen Patnaik, in its meeting on January 15, approved the cancellation of the SPA of the Hirakud Industrial Works and IDCOL Rolling Mills located at Hirakud.

Subsequent to that decision, Idcol has moved the Orissa High Court for cancellation of the SPA last month. The matter is likely to come up for hearing in June this year. The workers' unions launched sustained agitation alleging violation of the terms and conditions of the SPA by the company. The matter was raised by some legislators in the Assembly. The workers have been demanding the cancellation of the SPA as the new management failed to honour the stipulations of the Orissa High Court.

It may be noted, following the decision of the Cabinet Committee of Disinvestment meeting on 24 October 2008, the state government constituted a committee under the chairmanship of the principal secretary in the public enterprise department to negotiate with the VFPL management to sort out the issues relating to the functioning of Hirakud Industrial Works.

The committee, which had finance and industry secretaries as members, was to negotiate about the settlement of the legitimate claims of employees as per the terms and conditions stipulated in the SPA signed on 10 July 2006. However, the exercise proved futile and the stalemate continued.

Based on the recommendation of this committee, the CCD, in its meeting on 15 January 2009, decided to cancel the SPA signed with VFPL and directed Idcol to initiate the required measures in this regard.