Textile Scam in Assam

Now it has created a doubt in the mind of the conscious readers that why such an important news was discontinued in the midway? Since I know the naked truth about the news and multi-crore scam hidden in this news item which remained unpublished, I would like to disclose the truth for the benefit of your readers and well wishers of this project.

M/s. Assam Polytex Ltd., Jagiroad was privatized as late as on 3rd January, 1994 against the total consideration of Rs.478 lacs to M/s. Assam Yarn Suppliers having their Registered Office in Mumbai but carrying their main business in Guwahati, Assam. The main person for the negotiation of this deal is one Mr.M.P.Jain though the MOU was signed with the Govt. of Assam as one part and Mr.Kamal Kumar Jain was second part on behalf of M/s.Assam Yarn Suppliers.

In the MOU it was agreed that Assam Yarn Suppliers will pay one crore to Govt. of Assam within 60 days from the date of taking over the possession and the said payment shall be treated as payment of first installment. [Vide clause 4©(i)] out of the total agreed sum of Rs.478 lacs the balance 378 lacs was agreed to be paid in equal yearly installments of Rs.94.50 lacs at the end of each year.

Assam Government gave possession of the entire mills, factory machineries for the purpose of running the mills to Assam Yarn Suppliers on 16.5.94 in terms of the Memorandum of Understanding.

The first installment fell due and payable on 17.7.94 i.e. on the expiry of 60 days from the date of possession given on 16.5.94 but no payment was made in respect of the said sum of Rs.100 lacs by 17th July 1994.

The said M/s. Assam Yarn Suppliers thus committed breaches of the terms and conditions of the said Memorandum of Understanding by non-payment of the amounts agreed to be paid by them.

The interpretation of the ground of the MOU was put up by M/s. Assam Yarn Suppliers before the Government is that the payment will become due and payable only after expiry of 60 days from the date of handing over management which plea is not tenable in law. There is a specific agreed term in the MOU vide clause 4 ©(1) that payment is to be made within 60 days from the date of possession and the possession took place on 16th May, 1994.

However, despite contrary to the spirit of the MOU M/s. Assam Yarn Suppliers did not bother and failed to start the Mill at the cost of the sufferings of hundreds of employees of Assam Polytex Ltd. Many times news appeared in many leading news papers of Assam that due to starvation a few numbers of workers died and a number of them even compelled to pull rickshaw and sell vegetables to earn a days meal for their dependants. It is most astonishing that despite the fact the Govt. of Assam was maintaining a silence on the whole affairs. It is learnt that due to a particular clause in the MOU i.e. Clause 10 which lays down the condition that under no circumstances whatsoever. The Government or Assam Yarns Suppliers shall be entled to terminate and /or cancel the MOU. It is further stated that in case of any violation of the terms of the MOU the other party may refer the same to the arbitration and the award made therein shall be binding upon both the parties. It is further stated that the Government has no right to cancel and/or treat the MOU as cancelled and/or terminate.

However, this Clause is not tenable as it puts a ban on the legal right of cancellation available in law to the contracting party to exercise the right of cancellation of a contract on account of breach of the terms of the contract. This restriction is illegal and is contrary to the provisions of the contract act and is also against Equity.

Despite all above facts the Mill continued to remain close. A new ray of hope was again generated among the workers of the Mill when they learnt that finally the Mill was going in operation as the Govt. of Assam entered into a new agreement with M/s. Assam Yarn Suppliers on 4th April, 2001 - 7 years after signing the first MOU (3rd January, 1994). As per this new Agreement the total liability of Assam Yarn Suppliers was fixed for Rs.516.58 Lacs against the purported Rs.38.58 Lacs excess than the previous accepted purchase consideration of Rs.478.00 lacs as per the MOU dated 03/01/94. As per this new agreement it appears as if the Govt. is going to get 38.58 lacks more against their previous agreement and this way the Govt. have penalized M/s.Assam Yarn Suppliers for making delay in starting the Mill. From the above it appears, as if finally everything has been set right but truly speaking not at all. Again M/s.Assam Yarn Suppliers has failed to re-start the Mill and still as on to-day the Mill is lying closed and the workers are feeling cheated for no fault of theirs.

As per the agreement the Govt. had decided to invite private sector participation for running the said Unit so as to achieve the object of rapid growth of Textile Sector. In the State of Assam and also for revival of the sick textile Mill and to ensure continued employment to the employees. But could the Govt. of Assam achieve the said objective by signing this agreement?

By the Clause No.2H the Govt. has allowed the private party even to sell/lease and rent out the Mill to any 3rd party. This is totally against the spirit of the privatization policy. Now one can well imagine why the private party is not taking any interest in running Assam Polytex Ltd. The Assam Polytex Ltd which was set up at Jagiroad covering 58.34 acre of land and at a distance of 58 KM only from Greater Guwahati. Since Guwahati city is fast expanding and Jagiroad being adjoining to Guwahati, it is quite natural to attract quite high appreciation in the cost of land and building in Jagiroad also. If the party can make huge profit by selling the Assets, land and building, why they should go for running the sick unit? Probably the party lingered the final agreement on one excuse or the other for last 7 years to have better return at a better time. It is not understood that on the one side the Govt. of Assam is claiming APL privatization in the interest of its employees on the other side have allowed the private party to sell off APL.

In the Clause 20 it is mentioned that the private party cannot dispose off major plant and machineries without prior written consent of the 1st party i.e. Govt. of Assam. Does not it mean that the 1st party can sell the machineries with the consent of the Govt.?

As per Clause 2H of the MOU the Govt. of Assam has also agreed the terms of the Private Party that the officers, workers and staffs of Assam Polytex Ltd., can not claim any past liability from Assam Polytex Ltd., or the new Co. The workers and other employees will be entitled to get their monthly wages/salary for future work only on the basis of new agreement of employment signed by them with the new Management of the said Co. Now there is a question that if the private party will not entertain the arrear salary/wages/gratuity etc., claims of the employees then whether the Govt. of Assam will entertain their claim or not?

As per Clause 25 the Govt. of Assam has also gratiously agreed not to force the new Management for implementation of any incentive or allowance to the employees under any circumstances. How could the Govt. is so much concerned for the protection of the interest of the private party at the cost of sacrifice / interest of workers of Assam Polytex Ltd. It is doubted that whether all the workers of this ill fated Public Sector Undertaking are aware of all these conditions mentioned in this new agreement?

As the Clause 13 speaks that the Govt. will not bear other than the agreed and unforeseen past liabilities, any future liabilities, future losses arising out of running the Mill or entertain any re-starting cost of Rs.212 lacs incurred after the date of signing of the agreement.

Now this Clause No.13 again raising a doubt that what is this re-starting cost of Rs.212 lacs whether it is to be born by the private party or by the Govt. of Assam? The reply is hidden in Clause No.17. From this clause it is evident that the re-starting cost of Rs.212 lacs is also going to be born by the Govt. of Assam. It is also surprising that the Govt. of Assam has also considered to bear the cost for setting up a new Dying House as a part of re-starting cost.

Further in the list of outstanding liabilities under Annexure-I it has been reflected that Assam Polytex Limited has taken a loan of Rs.144.65 Lacs from some M/s. S C M L and a sum of Rs.133 lacs has been shown as interest payable to M/s. S C M L on this loan of Rs.144.65 lacs paid as an advance to Assam Polytex Ltd. Now there is a question who is M/s.S C M L? When M/s. Assam Polytex Ltd., took this loan from M/s.S.C.M.L? Prior to signing of the MOU in January, 1994 or after? If after the signing of the MOU why M/s.Assam Polytex Ltd., should borrow such a huge amount from a Private Party after its privatization? Further whether this party M.s.S.C.M.L is an associate, sister concern of the private party M/s. Assam Yarn Suppliers? Whether this money shown in the Schedule as loan and interest has been show by M/s.S.C.M.L in their books of accounts and tax return? Now if we look into the A/c it will reflect as follows:

The total purchase consideration - - - - - - -Rs.516.58 Lacs

Payable amount of SCML Loan … Rs.144.65 lacs

Payable amount for interest
On SCML’s loan … Rs.133.00 lacs

Purported re-starting cost allowed
To Assam Yarn Suppliers by Govt.
Of Assam … Rs.212.00 lacs

Misc. liabilities to be born by
Assam Polytex Ltd … Rs. 26.93 lacs
Rs.516.58 lacs

It is evident from this account that the Private party who had purchased Assam Polytex Limited on outright purchase basis against the purchase consideration of Rs.516.58 Lacs and since the similar amount of Rs.516.58 Lacs is receivable by the private party i.e. M/s. Assam Yarn Suppliers from the Govt. of Assam the private party need not pay a single penny to the Govt. of Assam. On going through the above account one can easily understand that the private party has grabbed this project without paying even a single rupee to the Govt. of Assam and the Govt. of Assam has very kind heartedly made the sacrifice of Rs.516.58 lacs at the cost of the State exchequer and poor workers of this Mill. Now the readers may very well understand the reason of discontinuation of this news item in the next issue of THE NORTH EAST TIMES daily which might have created a furor in the State otherwise.

By Mr. A.K.Das, Guwahati.