Tata Steel Counsel Says Its Not Liable To Pay Rs 137-crore Demand Note

Jamshedpur, Nov 14: | Updated: Nov 15 2003, 05:30am hrs
Tata Steel has requested the court of the East Singhbhum deputy commissioner (DC) to withdraw the demand note of around Rs 137 crore which it had levied recently on the steel major for alleged violations of lease terms regarding land falling under Schedule IV of the lease deed for the steel city.

Earlier, on November 4, a two-member Jharkhand high court bench at Ranchi, which is hearing contempt proceedings against the Jharkhand government for not renewing Tata Steels lease with respect to Jamshedpur, had suggested that the steel major attend the hearing before the DCs court on November 6, before coming back to it on December 10 for the next hearing.

The November 6 hearing was postponed till November 13 at Tata Steels request. However, this time, it was government pleader Rashbehari Prasad, who could not make it.

The DCs court, however, after hearing the counsel for Tata Steel, adjourned it till November 20, when it would be the governments turn.

A major portion of the Rs 137 crore is said to be "salami," or the amount that becomes due from time to time following upward revisions of the value of land, and interest thereon.

According to sources, while around Rs 45 crore forms the actual "salami" component in the Rs 137-crore claim, a sum of Rs 60 crore was interest on such "salami" and the balance amount payable by the company was "cess."

The issue of "cess" is pending before another court. The company has so far maintained that no "salami" is chargeable in respect of the companys acquired lands vested in the state under the Bihar Land Reforms Act; and therefore, no "salami" is payable by it.

Sources said that the counsel for Tata Steel, RK Jain, a Supreme Court lawyer, reiterated the companys stand before the DCs court that "salami" was not payable by it.

They said that Mr Jain also conveyed to the court that "salami" was only leviable in case of a new lease and that it was never leviable in case of violations.

"So if salami is not payable, there is no question of interest on it, and the matter of cess is pending elsewhere. Therefore, the entire demand is bad," Mr Jain conveyed to the court. Two court verdicts, one delivered by the Jharkhand high court (Indo-Asahi Glass in Hazaribag vs Jharkhand government in 2002) and another by the Bihar high court (ITC in Munger vs Bihar government in 1994), were also cited by the steel majors counsel to strengthen its argument that "salami" was not leviable in case of renewal of lease.