The firm is also accused of giving false information to obtain a coal block in Chhindwara, Madhya Pradesh, and two of its directors, Atul Jain and Sanjay Jain, are named in the FIR filed by the CBI. The agency had in April this year raided the premises of Pushp Steel in Chhattisgarh, Delhi and other states in connection with alleged irregularities in the allotment of coal blocks.
S K Sarawagi & Co, the rival company, has also challenged the fairness of announcing a policy change on the day of the grant of coal blocks, alleging it was done to favour Pushp Steel. A bench headed by Justice RM Lodha adjourned the matter to September 2 after Pushp Steel informed the court about filing a cross-appeal in the matter.
S K Sarawagi & Co, which had applied for a prospecting licence (PL) in the state in November 2003, also alleged that directors of Delhi-based PSML managed to get a multi-crore iron ore mine in Chhattisgarh by fraud. The two brothers in 2004 had pooled together Rone lakh to set up the tainted company, which on the same day applied for a PL for an iron ore mine in Chhattisgarh. After six months, the company had signed an MoU with the state government to set up a sponge iron plant with the proposed investment of R380 crore.
The MoU said the company will set up a 3.15 lakh tonne per annum sponge iron plant worth Rs 80 crore, a Rs 75-crore 24-MW captive power plant to feed the iron plant and a Rs 225-crore unit to produce automobile parts. Within two days, the Chhattisgarh State Industrial Development Corporation (CSIDC) had provided it with 29 acre of land in an industrial estate in Durg district.
Five months later, among 26 applicants for a PL in iron ore bearing areas in Michagoan-Lohatar forest range in Kanker, the government gave Pushp Steel preference, granting it licence to explore 705ha.
According to the S K Sarawagi &Co's petition filed through counsel Rishi Agrawal, the company without any prior experience in mining and almost having no capital - both pre-requisites for a licence was granted both PL as well as a mining lease. Even on the state government's recommendation, the Union government approved the grant, he stated, adding that the government policy gives preference in mineral concessions to those companies that have either already set up an iron ore-based plant in the state or those who had taken effective steps towards setting up one.
The allotment of iron ore reserves to Pushp Steel in Chhattisgarh became the basis for the company getting coal blocks in Madhya Pradesh. the petition stated.
S K Sarawagi &Co has challenged the Delhi High Court's order which quashed the Chhattisgarh governments recommendation for prospecting lease (PL) on the basis of fraud and incompetence, but declined to interfere with the balance area on the ground that Pushp Steel did not have an overlapping area with that of S K Sarawagi &Co for 354 hectares.
Slamming both the state and the Central government for overlooking the credentials of PSML, the HC termed the actions of both governments unsustainable in law and set aside the PL of PSML for 354 hectares and asked the state to begin afresh the process of giving the PL.