The Tata Motors may turn the setback in the Singur land acquisition quashed by the Supreme Court on Wednesday into its advantage by demanding heavy damages from the West Bengal government of Mamata Banerjee under an agreement signed in 2007 at the time of transfer of land to it.
The agreement carries an indemnity clause that makes it incumbent on the West Bengal government to pay compensation if the land acquisition is struck down by a court. The telltale clause is in section V of the lease deed signed between the Tatas and the West Bengal Industrial Development Corporation (WBIDC) on March 15, 2007.
It reads: “If a court or any other authority holds/declares that the land acquisition or any part thereof for acquiring said land/or demised land has not been in accordance with the provisions of law or gives any adverse order which prevents the development/use of the said land or demised land by the lessee, then, notwithstanding what is stated elsewhere in this lease deed without any prejudice to the lessee’s rights in law, the lessor shall indemnify and compensate the lessee for any losses as may be suffered.
“The terms of settlement and amount of compensation in such an eventuality will be discussed and mutually agreed, which will be equal to the actual capital expenditure incurred by the lessee, on the said demised land.”
The lessor, in this instance, is the state-run WBIDC and the lessee Tata Motors.
A lawyer said that even if the compensation clause had not been included in the agreement, an investor has a case for compensation if a lessor had leased out land whose title is found to be bad in law. Since the compensation has to be mutually agreed, there is all likelihood of another dispute as Mamata Banerjee may not agree on the damages that Tatas claim.
Tata Motors had told the Calcutta High Court in 2011 that it had suffered losses of Rs 1,400 crore in Singur. It pulled out of Singur in 2008 in the wake of the farmers” protests led by Mamata”s Trinamul Congress and set up its Nano car factory at Sanand in Gujarat. Only last year, its balance sheet had written off the loss of Rs 309.99 in Singur.