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Indrani Dutta

KOLKATA, Feb. 22

AN agreement signed between Jessop & Company and the West Bengal Government is being seen as a trump card that might throw a spanner in the Centre's efforts to divest 72 per cent stake in the nearly 100-year old engineering company.

Company sources said that as part of a Rs 95-crore BIFR (Board for Industrial and Financial Reconstruction) package, an agreement was signed on March 16, 1999 between the West Bengal Industrial Reconstruction Joint Sectretary and the then Jessop Managing Director to pave the way for a soft loan to be given by the West Bengal Government to the company for adjusting Jessop's Rs 30.7-crore sales tax (ST) dues.

As per the agreement, which creates a second charge on Jessop's assets in favour of the State Government (the first being that of the banks and FIs), the company will not be able to sell or dispose of its assets or put its land into any other use or lease it out without the prior consent of the State Government.

Sources said that Jessop, which was supposed to begin paying interest on the ST loan at a rate of 8.75 per cent from March 2000, has defaulted on its payments and two instalments were already overdue. Union sources said they hoped to use this document in their fight to stop the privatisation of the company. "We will also approach the State Government and urge them to fulfil their obligations towards the employees,'' Mr Alok Brahmachari, the joint convenor of the Joint Forum of Unions and Associations of Jessop, said, adding that preparations were underway for a legal battle.

Confirming the existence of such an agreement, board- level sources at Bharat Bhari Udyog Nigam Ltd (BBUNL) — Jessop's holding company — pooh-poohed the whole affair, saying that in this case, the shares of Jessop were changing hands and the company wanting to acquire the stake would have to fulfil all the contractual obligations. "The agreement will not be a hurdle in the handover,'' they said. However, this was not the only problem that was threatening to add a measure of controversy to the entire deal.

The Customs Department, in a letter dated February 15, has slapped a Rs 33.15-crore demand on Jessop for non-compliance of duties on account of project imports threatening to initiate necessary action in this regard.

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