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Mining investigation

A controversial Chhattisgarh mine leads to Haryana politicians of both Congress and BJP

In a special investigation, Scroll.in has probed the dense networks of a company that has managed to acquire and cling on to iron ore and coal deposits in central India, despite adverse court verdicts and a criminal investigation. The company has associations with politicians in Haryana, ranging from the BJP's national spokesperson to the Congress chief minister.

In April last year, sleuths of the Central Bureau of Investigation swept down on a nondescript office in the congested marketplace of Ajmeri Gate in Delhi. The office belonged to Pushp Steel and Mining Private Limited, a small company that has managed to edge out bigger firms to secure rights to iron ore deposits in Chhattisgarh and coal reserves in Madhya Pradesh. The CBI officers had come to search its office as part of the agency’s investigations into coal block allocations made to private companies under the United Progressive Alliance government.

While the CBI’s findings are yet to be made public, it is worth taking a closer look at the company’s antecedents and associations for insight into the intersecting world of business and politics in India.

Pushp Steel and Mining was incorporated with a seed capital of Rs one lakh on June 6, 2004, by Atul Jain and Sanjay Jain, brothers based in New Delhi, with family roots in Haryana's Rohtak district. The same day, the company applied for a prospecting licence to explore iron ore deposits in Chhattisgarh’s Kanker district. In its application, it said it required iron ore to manufacture sponge iron in a plant that it proposed to set up in the state’s Durg district.

On May 5, 2005, the Chhattisgarh government recommended the company over 25 other applicants, not just for a prospecting licence over 705 hectares of iron ore-bearing land, but also a mining licence over an additional 215 hectares. In October, the centre stamped its approval on Pushp Steel’s iron ore grant.  Pushp Steel had managed to get 920 hectares for a plant capacity of 0.4 million tonnes per annum. By comparison, in February 2007, Tata Steel was granted rights over 2,500 hectares of iron ore bearing land in Chhattisgarh for a proposed steel plant with the capacity of five million tonnes per annum. In July 2007, the centre also allocated the Brahmpuri coal mine in Madhya Pradesh to Pushp Steel.

But a rival company went to Delhi High Court and challenged the grant of iron ore to Pushp Steel. In July 2010, the court struck it down on grounds that Pushp Steel lacked both the financial base and technical experience required for mining. In a scathing order, the judge said, “It is inconceivable that a company which came into existence that very morning could furnish any information about its income tax returns or its experience…it is inconceivable how such a company could be considered for grant of PL when the criteria laid down indicates that the applicant should have some prior experience in mining." The single bench order was subsequently upheld by a division bench in April 2013.  

In 2010, a report filed by this correspondent on the Delhi High Court's order was carried by the Times of India on the front page of all national editions. The day the report appeared in the newspaper, the Chhattisgarh assembly was in session. Normally, the political opposition is quick to corner the government over adverse court verdicts and media reports. But Chhattisgarh's Congress unit chose not to raise the case of Pushp Steel in the house, sparing the Bharatiya Janata Party government any embarrassment. While the state Congress had raised the issue in the past, it had chosen to now bury it.

The next year, a letter surfaced that threw some light on the Congress party’s silence. The Indian Express reported that Motilal Vora, the treasurer of the Congress Party, had written to the Chhattisgarh government in June 2011, requesting it to expedite the mining lease of Pushp Steel. Vora did not deny writing the letter but claimed he had done it purely on merit of the company – a questionable claim given the observations of the high court. The letter deepened suspicions that the company had the backing of Congress politicians.

But if the company had the backing of Congress politicians, why had the state government of Chhattisgarh, a BJP-ruled state, recommended it over bigger, more deserving companies?

Here it is worth taking note of the shareholding pattern of another company, TRN Energy Limited, which is setting up a 600 MW power project in Chhattisgarh.

The latest annual returns filed by TRN Energy with the Registrar of Companies for the financial year 2012-2013 show that 80% of its stake is held by ACB India, the flagship company of the Aryan Group, which runs coal washeries and also publishes the Hindi daily Haribhoomi.

The rest of the shares are held by Atma Securities (13.36%), Jaisri Properties (5.30%), Anil Kumar Jain (0.78%) and Sanjay Jain (0.56%).

Anil Jain is the brother of Atul and Sanjay Jain. Both Atma Securities and Jaisri Properties are entirely owned by the Jains and their firms, according to the latest returns filed by the companies.

This means that TRN Energy is jointly owned by the Aryan Group and the Jain Group. The Aryan Group's chief promoters are Rudra Sen Sindhu and Captain Kuldeep Solanki.

Rudra Sen Sindhu is the son-in-law of the late Sahib Singh Varma, a BJP leader and former chief minister of Delhi. Rudra Sen is also the brother of Captain Abhimanyu Singh Sindhu, a retired military man who rose to prominence as BJP’s Jat face in Haryana and is now the party’s national spokesperson.

In 2004, Abhimanyu Singh Sindhu contested and lost the Lok Sabha election from Rohtak against Haryana chief minister Bhupinder Singh Hooda. Hooda and Sindhu are known to be political rivals. What is less known, however, is that their families are related by marriage. Sindhu’s nephew is married to Hooda’s niece, the daughter of his elder brother.

In Rohtak, the base of the Hooda family, a municipal councillor, on the condition of anonymity, recalled the close association of the chief minister and his brother with Sulekh Chand Jain, a trader in Anaj Mandi, the local grain market. Sulekh Chand Jain came from the once-prosperous Gandharwal clan. Subsequently, the clan’s fortunes declined, and Sulekh Chand Jain was reduced to a small-time shop owner in Anaj Mandi, known for his proximity to Hooda, who was then a local Congress leader, until Jain’s sons – the promoters of Pushp Steel – Sanjay and Atul Jain – moved to Delhi, around the same time as Hooda’s political graph rose. Three other people – another local councillor, a neighbour of the Jains, and a prominent shopkeeper – offered similar accounts of the family's history.

This web of associations – old ties between the Jains and the Hoodas, current business links between the Jains and the Sindhus, and Sindhu’s family connection with Hooda – does not offer any clinching evidence of illegality. But it might help explain why a small firm managed to edge out other players both at the Congress-ruled centre and in two BJP-ruled states.

Denials

In an email response, BJP’s Captain Abhimanyu Singh Sindhu distanced himself his brother’s business links. “I strongly deny and condemn any alleged mischievous, indirect or unrelated inference drawn out of any professional or business dealings of any of my relatives. I do not have any idea about any mineral concessions or anything else whatsoever to any Jains as mentioned in your query,” he said.

Sanjay Jain, the director of Pushp Steel, in email denied that the company had “benefitted from any association with a Senior BJP leader or for that matter with any leader of any political party…Yes, Rohtak has been our hometown and Sh. Bhupinder Singh Huda also belongs to the same district. However, it is nothing more than a coincidence.” 

Queries were faxed to the office of the Haryana chief minister, followed by phone calls and text messages to his secretaries. But the queries remained unanswered.

Controversy has not dented mining grants

Pushp Steel and Mining continues to retain rights over 566 hectares of iron ore bearing land in Chhattisgarh. The rival company's legal challenge in the high court, and consequently the court’s verdict, was restricted to 354 hectares for which it had applied for a prospecting licence but which were given to Pushp Steel instead.

As for the coal block allocated to the company in Madhya Pradesh, last month, an inter-ministerial group recommended that the government take it back by deallocating it. In January, on the suggestion of the Supreme Court, the government had agreed to deallocate those blocks where clearances were not in place and mining had not begun. Accordingly, the IMG, taking note that Pushp Steel had not obtained forest clearance for its coal block and the CBI had filed an FIR against the company, recommended the deallocation of its coal block.

But the coal ministry put the deallocation on hold, citing an interim order of the High Court of Madhya Pradesh. Perhaps anticipating the threat of deallocation, Pushp Steel had approached the High Court and pleaded that it had made significant investments which would be jeopardised if it was denied mining rights for the coal block. While not going into the merits of the case, the court, in an order dated January 17 2014, granted an interim order, stating “no coercive steps shall be initiated against the petitioner without leave of the court”.

But has the company really made any significant investments?

In January 2005, Pushp Steel signed an MoU with Chhattisgarh government, promising to invest Rs 380 crore in an integrated steel plant. Nearly a decade later, that plant has yet to come up. The company has acquired a small sponge iron manufacturing unit with an annual capacity of 30,000 tonnes per annum – a fraction of the four lakh tonnes capacity it proposed to set up. In an emailed response, the company claimed its project was “under implementation.”

 
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