UP to liquidate ten spinning mills

In compliance with the Mumbai High Court order, the UP government has initiated the process of liquidation of 10 spinning mills under the UP Co-operative Spinning Mills Federation, lying closed and defunct for nearly 10 years.

The other mill of the Federation in Etawah, also defunct, will be liquidated, subject to the orders of the Supreme Court. The proposal for the liquidation of the spinning mills has been approved by the Cabinet.

The proceeds from the liquidation of the mills will be used for clearing the dues of the Maharashtra State Road Transport Corporation (MSRTC), Union Bank of India and few others that had invested in the bonds and debentures floated by the Federation in 1992, 1994 and 1996.

The director of the handlooms department has been appointed as the official liquidator by the state government.

The total liabilities on the Federation as on March 2006, were close to Rs 500 crore, which includes the Rs 200 crore invested by the Maharashtra State road transport corporation, Union Bank of India and few other companies. These organizations had invested in the debentures and bonds floated by the Federation in last decade.

As per the contract the federation was to pay the 12% annual interest on the investment. Later in the wake of softening of the interest rates the Federation unilaterally announces to pay only 9% interest on the bonds and debentures. The investors initially resisted the returns at reduced rate of interests but agreed to the proposal.

The Federation defaulted in payment of returns even at reduced rates of interest in 1998 and by the end of 2000; the money of the investors was almost lost. The MSRTC after failing to get response from the UP government filed a petition in the Mumbai high court for the recovery of its dues.

The eleven mills of the Federation located in 11 districts dominated by the weaver's community were set up in the heydays of the socialism for providing the good quality yarn at affordable rates to the weavers. The Federation in its over three decade long existence could never achieve its basic objectives and the IAS officers running the cooperative body flourished while the impact on the lot of the weavers.

One spinning mills in weavers town of Ambedkar nagar has been converted into district jail.

The chief secretary NC Bajpai welcoming the high court order said the liquidation of the mills under the federation would clear a big liability on the government besides clearing the dues of investors.

It may be recalled that a senior IAS officer Vijay Shankar Pandey, MD of the federation in 1998, had spearheaded a campaign for identifying three most corrupt IAS officers in UP. Ms Neera Yadav, who was elevated by the present regime as chief secretary in 2004, was identified as one of the most corrupt officer through secret ballot.

As soon as Neera Yadav became chief secretary, Pandey was sought to be framed for alleged irregularities committed by him as MD of the Federation. Pandey challenged the `Vigilance report

As concocted in Allahabad high court. The court had stayed the proceedings. The attempts of Neera Yadav to frame Pandey proved to be her waterloo as soon after she had to be unceremoniously moved out on the orders of the Supreme court.