Karnataka JSW Land Deal: Scam or Political Tool?

Two Congress ministers have raised their objections to the deal. 

Published04 Jul 2019, 06:20 AM IST
Explainers
5 min read
Snapshot

When Karnataka Congress MLA Anand Singh tendered his resignation on Monday, 1 July, the JD(S)-Congress coalition government’s initial fear was another attempt by the BJP to topple the government.

But by the afternoon, Anand Singh made it clear that his resignation was a protest against the government’s decision to sell 3,666 acres land to Jindal group’s JSW Steel Ltd, in Ballari for iron ore mining.

Anand Singh was the second Congress MLA to oppose this land deal. Senior Congress leader and former Minister for Rural Development and Panchayat Raj HK Patil too, had raised his objection with it.

There are three major points of contention raised against the JSW land deal. First, why the land is sold instead of just leasing it; second, the allegation that the price offered is too low; and third, that JSW owes money to state run Mysore Minerals Limited (MML).

So is JSW land deal a scam or just a controversy created for political reasons?

Karnataka JSW Land Deal: Scam or Political Tool?

  1. 1. What is the JSW Land Deal?

    JSW Steel. 
    JSW Steel. 
    (Photo Courtesy: Twitter/@jswsteel)

    The deal was originally proposed in 1996, by then Deve Gowda-led government.

    The deal came to life in 2006, when JD(S)-BJP coalition government approved it and it was signed by the then deputy chief minister and industries minister BS Yeddyurappa, the current BJP state president.

    The first deal in 2006 provided JSW 2,000 acres in two villages in Ballari for a lease period of six years. Subsequently, in 2007, 1,666 acres in three more villages were brought under the deal for a lease period of 10 years. As per the agreement, at the end of the lease period this land would be sold to the company.

    The Karnataka cabinet had recently decided to convert the lease of 3,667 acres to JSW Steel at Ballari into sale, in accordance with the initial agreement, as it was overdue. The company was asked to pay Rs 18 crore ie 2,000 acres at the rate of Rs 1.22 lakh per acre and the rest of 1,666 acres at Rs 1.5 lakh per acre.

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  2. 2. The Delay in Sale

    Even though the lease period for the first 2,000 acres had finished in 2012, the sale of the land was kept on hold after the JSW steel’s name appeared in the 2011 Lokayukta report on illegal mining in Ballari.

    In 2013, a sub-committee was formed under HK Patil to implement Lokayukta recommendation on illegal mining and on the advice of the committee in 2014, the land was kept on hold, pending legal opinion.

    But the High Court of Karnataka quashed allegations against JSW steel, citing it was outside the scope of investigation. Later in May 2019, the JD(S)-Congress government, after seeking legal opinion, decided to honour the 2006 deal and sell the land.

    However, this decision was opposed by the BJP and HK Patil citing several reasons.

    Expand
  3. 3. Why Sell Instead of Lease?

    One of the arguments raised against the deal was the decision to sell the land instead of leasing it. In 2014, the Karnataka government had decided to discontinue the practice of selling land and the decision was made to allot it on a long-term lease basis for a period of 99 years, which was increased from the existing 30-year lease.

    However, this argument was struck down by the government, since this deal was signed in 2006-07 and rules can’t be enforced in retrospect.

    Expand
  4. 4. Dues Owed by JSW to Mysore Mineral Limited

    In his list of arguments against deal, HK Patil also raised the case of JSW’s pending dues. A Lokayukta Special Investigation Team (SIT) had recommended recovery of dues from JSW for causing loss to exchequer in supply of minerals from the state-owned Mysore Mineral Limited (MML).

    JSW Steel Ltd has been accused of supplying iron ore to Mysore Minerals at a low premium between 2000-01 and 2009-10. The Comptroller and Auditor General’s report in 2013 states that 9.25 million tonnes of iron ore valued at Rs 1,059.89 crore was mined by JSW and Mysore Minerals got only Rs 63.17 crore as premium, while JSW Steel Ltd made a profit of Rs 876.9 crore.

    But JSW, which claimed the SIT argument was false and purchase was done as per agreement, has approached the court. Karnataka industries minister KJ George had said that since the matter was in the court, legal opinion and the opinion of the revenue departments were sorted and green signal was given to the government, as it was directly linked to lease-cum-sale deal.

    Expand
  5. 5. The Amount Paid is Too Low

    Another argument raised by the BJP was the value for which the land was being sold. Citing a recent purchase of land by the National Highway Authority of India (NHAI) in the same region, BJP alleged the land was being sold at a throw away price.

    However, Karnataka government argue that the price renegotiation was conducted. In his explanation, industries minister KJ George said: “In all the cases, sale deeds were for the same price mentioned during the lease. However, after the Law Department gave its opinion that the government can fix the rate, we increased it (price) from Rs 92,000 per acre, when the lease-cum- sale deed was signed, to Rs 1.22 lakh. Again, it was increased to Rs 1.5 lakh,” he said.

    He also added that the price negotiation took long since the government was in the process of attracting investors and industries, and not honouring the deal approved by three different governments would affect the image of the state.

    Expand
  6. 6. The Politics of Deal

    While HK Patil was part of the sub-committee which implemented Lokayukta’s recommendation to stop illegal mining, Anand Singh’s displeasure over the deal had come as a surprise. However, reports later revealed that he had vested interests in the deal.

    Reports in The Deccan Chronicle and Prajavani say Singh was ‘patron’ of a mining lease in the name of Rama Rao Poal, which was operational between 2009 and 2011. In 2013, when the Supreme Court cancelled the leases of 51 iron ore mines in Karnataka for gross irregularities, even Poal’s lease was scrapped. This lease was later won in the court-ordered auction by JSW steel. It is alleged that Singh had posed hurdles for JSW to operate this lease, with the hope of retaining it.

    It is also alleged that the deal, which was sanctioned by Yeddyurappa in 2006, resurfaced to provide a reason for Anand Singh and other MLAs to tender their resignation as part of Operation Lotus to topple the government. Unlike the previous three attempts by BJP, where the party went all out to poach MLAs, they want to keep the poaching low key, said sources. This, however, was denied by the BJP.

    The Quint reached out to Anand Singh for his comments. The story will be updated if and when he responds.

    Liked this story? We'll send you more. Subscribe to The Quint's newsletter and get selected stories delivered to your inbox every day. Click to get started.

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    Expand

What is the JSW Land Deal?

JSW Steel. 
JSW Steel. 
(Photo Courtesy: Twitter/@jswsteel)

The deal was originally proposed in 1996, by then Deve Gowda-led government.

The deal came to life in 2006, when JD(S)-BJP coalition government approved it and it was signed by the then deputy chief minister and industries minister BS Yeddyurappa, the current BJP state president.

The first deal in 2006 provided JSW 2,000 acres in two villages in Ballari for a lease period of six years. Subsequently, in 2007, 1,666 acres in three more villages were brought under the deal for a lease period of 10 years. As per the agreement, at the end of the lease period this land would be sold to the company.

The Karnataka cabinet had recently decided to convert the lease of 3,667 acres to JSW Steel at Ballari into sale, in accordance with the initial agreement, as it was overdue. The company was asked to pay Rs 18 crore ie 2,000 acres at the rate of Rs 1.22 lakh per acre and the rest of 1,666 acres at Rs 1.5 lakh per acre.

The Delay in Sale

Even though the lease period for the first 2,000 acres had finished in 2012, the sale of the land was kept on hold after the JSW steel’s name appeared in the 2011 Lokayukta report on illegal mining in Ballari.

In 2013, a sub-committee was formed under HK Patil to implement Lokayukta recommendation on illegal mining and on the advice of the committee in 2014, the land was kept on hold, pending legal opinion.

But the High Court of Karnataka quashed allegations against JSW steel, citing it was outside the scope of investigation. Later in May 2019, the JD(S)-Congress government, after seeking legal opinion, decided to honour the 2006 deal and sell the land.

However, this decision was opposed by the BJP and HK Patil citing several reasons.

Why Sell Instead of Lease?

One of the arguments raised against the deal was the decision to sell the land instead of leasing it. In 2014, the Karnataka government had decided to discontinue the practice of selling land and the decision was made to allot it on a long-term lease basis for a period of 99 years, which was increased from the existing 30-year lease.

However, this argument was struck down by the government, since this deal was signed in 2006-07 and rules can’t be enforced in retrospect.

Dues Owed by JSW to Mysore Mineral Limited

In his list of arguments against deal, HK Patil also raised the case of JSW’s pending dues. A Lokayukta Special Investigation Team (SIT) had recommended recovery of dues from JSW for causing loss to exchequer in supply of minerals from the state-owned Mysore Mineral Limited (MML).

JSW Steel Ltd has been accused of supplying iron ore to Mysore Minerals at a low premium between 2000-01 and 2009-10. The Comptroller and Auditor General’s report in 2013 states that 9.25 million tonnes of iron ore valued at Rs 1,059.89 crore was mined by JSW and Mysore Minerals got only Rs 63.17 crore as premium, while JSW Steel Ltd made a profit of Rs 876.9 crore.

But JSW, which claimed the SIT argument was false and purchase was done as per agreement, has approached the court. Karnataka industries minister KJ George had said that since the matter was in the court, legal opinion and the opinion of the revenue departments were sorted and green signal was given to the government, as it was directly linked to lease-cum-sale deal.

The Amount Paid is Too Low

Another argument raised by the BJP was the value for which the land was being sold. Citing a recent purchase of land by the National Highway Authority of India (NHAI) in the same region, BJP alleged the land was being sold at a throw away price.

However, Karnataka government argue that the price renegotiation was conducted. In his explanation, industries minister KJ George said: “In all the cases, sale deeds were for the same price mentioned during the lease. However, after the Law Department gave its opinion that the government can fix the rate, we increased it (price) from Rs 92,000 per acre, when the lease-cum- sale deed was signed, to Rs 1.22 lakh. Again, it was increased to Rs 1.5 lakh,” he said.

He also added that the price negotiation took long since the government was in the process of attracting investors and industries, and not honouring the deal approved by three different governments would affect the image of the state.

The Politics of Deal

While HK Patil was part of the sub-committee which implemented Lokayukta’s recommendation to stop illegal mining, Anand Singh’s displeasure over the deal had come as a surprise. However, reports later revealed that he had vested interests in the deal.

Reports in The Deccan Chronicle and Prajavani say Singh was ‘patron’ of a mining lease in the name of Rama Rao Poal, which was operational between 2009 and 2011. In 2013, when the Supreme Court cancelled the leases of 51 iron ore mines in Karnataka for gross irregularities, even Poal’s lease was scrapped. This lease was later won in the court-ordered auction by JSW steel. It is alleged that Singh had posed hurdles for JSW to operate this lease, with the hope of retaining it.

It is also alleged that the deal, which was sanctioned by Yeddyurappa in 2006, resurfaced to provide a reason for Anand Singh and other MLAs to tender their resignation as part of Operation Lotus to topple the government. Unlike the previous three attempts by BJP, where the party went all out to poach MLAs, they want to keep the poaching low key, said sources. This, however, was denied by the BJP.

The Quint reached out to Anand Singh for his comments. The story will be updated if and when he responds.

Liked this story? We'll send you more. Subscribe to The Quint's newsletter and get selected stories delivered to your inbox every day. Click to get started.

The Quint is available on Telegram & WhatsApp too, click to join.

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