INDORE BENCH of High Court on Wednesday directed the Steel Tubes of India (STI) to maintain status quo on its properties at Dewas. The order debarred the STI from selling off its land to Lord Swraj Paul’s Caparo group, which took over Dewas Steel Tubes plant spread over 9.05 hectare last month.
The court of Justice N K Mody issued the order in response to a petition filed by the MP State Industrial Development Corporation (MPSIDC) through its counsel Shekhar Bhargav after MP Board of Revenue quashed the issuance of Revenue Recovery Certificate (RRC) in July this year. The MPSIDC had claimed to recover Rs 35 crore from the STI against which it had filed a revision before the Board of Revenue.
After obtaining the status quo order, the MPSIDC filed an objection before the Sub Registrar, Stamps and Duty at Dewas this afternoon preventing transfer of the registry of STI property. In the objection, the MPSIDC stressed that it had attached the STI property in 2002 and therefore it could not be transferred to anyone.
In the objections, the MPSIDC also said the STI concealed the fact from the Board of Revenue that its petition against the RRC was already pending for disposal in the High Court. The STI thus got the RRC quashed keeping the Board in the dark, the MPSIDC alleged.
The STI had taken Inter Corporate Deposit loan of Rs 27 crore in 1999-2000 from the MPSIDC. Since the regular loan installments were not forthcoming, the MPSIDC settled the recovery amount at Rs 35 crore in 2005. Of this, the STI paid Rs 1.25 crore till March this year. The Board of Industrial and Financial Restructuring (BIFR) declared it a sick unit in March 2006 after pending its decision till five years whether to declare it a sick unit or dismiss its application.
The STI—Caparo group deal, which was mediated by the IDBI Bank, was inked on August 19. The Group had cleared all the accumulated losses of the company and promised no retrenchment.. The STI, founded in 1966, initially manufactured steel tubes for bicycle, automobile, transformer, general engineering industry, etc. In 1986, the company commissioned a cold rolling mill at Dewas.
However, for the past few years, the company was incurring heavy losses due to uneconomical scale of operation, substantial interest costs, higher fixed expenses due to low capacity utilisation and resultant high manpower cost of production. Attempts to contact STI Chairman Ramesh Baheti over the phone to find out whether he would appeal against the order proved fruitless as his mobile was “switched off”.