You are here: Home » Companies » News
Business Standard

Idco flouted LA act to benefit private companies, says CAG

Idco irregularly issued NOCs to 26 MoU based industries for mortgaging 13,846.23 acre land in order to raise loans from financial institutions

BS Reporter  |  Bhubaneswar 

State-owned land acquisition agency Industrial Infrastructure Development Corporation (Idco) has violated several rules related to Land Acquisition (LA) Act to provide benefit to private companies, the Comptroller and Auditor General (CAG) of India said today, while publishing audit reports for the financial year 2011-12.

irregularly conferred mortgage rights in the lease deeds executed with 52 MoU based and 54 non-MoU based industries while handing over of possession of 46,732.894 acre land even though such as power was not vested with by the state government,” said the report,which was tabled in the assembly today, said.

Besides, irregularly issued No Objection Certificate (NOC) to 26 MoU based industries for mortgaging 13,846.23 acre land in order to raise loans from financial institutions. Based in the NOCs issued by Idco, 12 availed loans worth Rs 52,423.50 crore by mortgaging 8,489.89 acre land allotted to them. Data from the financial institutions showed that out of the sanctioned loan amount, Rs 8,625.89 crore has been released so far.

“IDCO unauthorisedly issued such NOCs, thereby enabling industries to raise loans on the basis of land allotted for industrial purpose, without adequate safeguards to ensure that such capital would actually be used in the industrial projects concerned,” the auditing agency observed in its report.

Contesting the audit’s observation that Idco has no powers to issue NOC for land mortgage to industries for securing loans, the state government had earlier said that without such provision no industry can be created. Last year, defending the move of Idco, it had said, Idco was competent enough to issue NOCs, even though it had not been vested with such powers.

“Idco has the inherent power to mortgage the land and with that in view and in order to achieve the legislative intention of creating industrial infrastructure, the corporation has been giving no-objection certificate (NOC) for mortgaging the land to the industrialists. It is to be mentioned here that by granting NOC for mortgage, the land does not become a freehold land. This concept of granting mortgage for securing loan is a standard practice followed all over the country,” Nirupama Mallick, joint secretary (industries) had said in a letter to the Accountant General-last year. The auditing agency also criticised the state-owned agency and the revenue and disaster management (RDM) department for acquiring land for industrial purpose in the name of pf public purpose.

“RDM department approved acquisition of 14296.56 acre private land for 33 industries (non-Government Companies) at Rs 912.45 crore during 2002-12 under ‘public purpose’ clause, even though the circumstances did not permit the land to be acquired under public purpose,” the report noted.

In its reply sent in April 2013, the state government has said that Idco was acquiring private land for industrial purpose, which is very much a public purpose under section 31(1) of OIIDC Act 1980. “The reply is not acceptable since Idco was acquiring land for private promoters and the entire cost of acquisition was borne by the promoter concerned. Thus, land for these industries acquired under ‘public purpose’ to by-pass the legal provisions and procedures,” said the report.

During verification of records pertaining to idco, the central auditors also found that the clause of emergency provision mentioned in the LA act has been used arbitrarily to benefit the promoters of some Between 1995 and 2008, 7,025 acre land was acquired under emergency clause for 20 at a cost of Rs 205.65 crore though there was no grounds for invoking the provision. “Emergency provision was arbitrarily applied, contrary to the provisions of LA Act and the landowners were deprived of the rights to contest the land acquisition and protect their property due to inappropriate application of emergency provision,” the report said. The state government passed the buck to district collectors concerned saying the special provision was invoked by them. The CAG, however, rejected the reply of RDM department saying it could have altered the decisions made by the collectors being the final authority in land acquisition.

First Published: Mon, June 23 2014. 20:20 IST