On March 16th this year, Jairam Ramesh, the Union Minister of Environment and Forests released a report on water conflicts and underlined three incidents in his speech. One of the three confict situations was a controversial hydropower dam whose construction was stayed when his ministry issued stop work orders last year.

The minister reiterated that he was compelled to stay the construction since the pari passu rehabilitation, which was one of the conditions attached to clearance, had not taken place and construction outpaced rehabilitation by leaps and bounds.

Less than two months later, he reversed his earlier decision by lifting the stop work order. He posted the decision bearing his signature promptly on the Ministry of Environment and Forests (MOEF) website). It mentioned a series of review meetings convened by Prime Minister's office and the correspondence from the ex-chief minister of Madhya Pradesh Digvijay Singh.

What happened?

Unconstitutional mediation

Welcome to the wonderland Manmohan Singh, the PM who is allowing the PMO to become an office of mediation that entertains the grievances of corporates which cite personal hurt more than any legally and constitutionally valid arguments.

In early nineties, quizmasters often asked students to 'name the hydropower project which was scrapped when Prime Minister of India decided that the biodiversity rich rainforests of Kerala cannot be sacrificed at the altar of development'. In doing so they hoped that the environmental consciousness of a Prime Minister would register in young minds and stay there for a long time to come.

However, quizmasters today have more reasons to ask this: name the unviable hydropower project which was allowed to go on despite complete failure of rehabilitation and resettlement and a maze of financial irregularities, because the Prime Minister decided to play a role of an office of mediation.

Answer: The 400 MW Maheshwar Hydro-electric Project in Madhya Pradesh. Consider the plain facts.

By the end of 2009, the S Kumars' company Shree Maheshwar Hydel Power Corporation Limited (SMHPCL) which owns the private sector Maheshwar Project in the Narmada valley had completed over 80% of the project work. However, not even 3% of the affected people had been rehabilitated and resettled by that date. No one had been provided agricultural land at all. The oustees were repeatedly questioning the governments on the continuing construction of the dam without rehabilitation and resettlement (R&R). Yet, there was a total silence about violations.

In October 2009, Jairam Ramesh wrote a letter to the Chief Minister, Madhya Pradesh expressing his grave apprehension that oustees of the Maheshwar project would be left in the lurch without R&R. In November 2009, the Madhya Pradesh CM replied confirming that not more than 3% of the R&R measures had been completed. In this light, on the 17th February 2010, the MOEF issued a show cause notice under Section 5 of the Environment Protection Act to the company. After receiving their reply, on 23rd April 2010, the MoEF issued a direction to stop the ongoing construction.

As soon as the process for enforcing rules regarding protection of the oustees began, political lobbyists became busy on behalf of the company. In March 2010, Congress leader Digvijay Singh met Prime Minister Manmohan Singh and briefed him about the project. He wrote to the PM to “kindly intervene in the matter and prevail upon the Environment Ministry to withdraw their order of work suspension order, and allow the project to be completed at the earliest.”

On December 9th 2010, the S Kumars represented by their head Mukul Kasliwal had written an urgent letter to Digvijay Singh. Digvijay Singh readily wrote a letter on the lines suggested by Kasliwal to the PM within just four days. Singh also reminded the PM in his letter that the project had been re-started in 2005 and the public financing of the project had been achieved in 2007, on the intervention of the PM.

It must also be remembered that exactly a year before this, Shivraj Singh Chauhan had written to Jairam Ramesh promising: “In any case submergence would not take place and gates would not be lowered without prior consent of MoEF”.

What the Prime Minister 'did not know'

However, what Digvijay forgot to tell the Prime Minister is that it was during his regime as Madhya Pradesh CM, that the Madhya Pradesh State Industrial Development Corporation (MPSIDC) gave Rs.44.75 crores to the S Kumars companies, in excess of the legally allowable limit of Rs.3 crores, and without proper securities. However, after having obtained the loan, the S Kumars defaulted on the repayment, or even to reply to the notices of the MPSIDC, despite being in profits.

Cases were filed by the Economic Offences Wing of the State government against Mukul Kasliwal, under charges of criminal conspiracy, cheating and fraud under Sections 420, 467, 120B of the IPC. The Comptroller and Auditor General severely censured this in 1999 report. When the S Kumars refused to pay back, in September 2001, the MPSIDC declared the S Kumars company - Induj Enertech alias Entegra as a willful defaulter, and took over the Maheshwar dam site lands and properties belonging to the S Kumars, thus bringing the work on the project to a complete halt for five years from 2001 up to November 2005.

In July 2004, in order to take back their dam properties, the S Kumars agreed to a settlement with the MPSIDC. However, a few months and a few payments later, they reneged on the settlement. Again, in its 2005 report, the CAG pointed out that the MPSIDC sacrificed Rs.26 crores of public money in making the settlement with the S Kumars, and withdrew their revenue recovery proceedings. However, after the obtaining the settlement, the S Kumars did not honor it.

Digvijay Singh's letter to the Prime Minister dated May 03, 2010 (accessed from the PMO under RTI by the Narmada Bachao Andolan) "Prior to meeting with you in March, I had been speaking to Shri Jairam Ramesh, Minister of State for Environment and Forests. I first spoke to him over the phone on the late evening on 16th February 2010, when I learnt that he is issuing a show cause notice for stopping the work. Despite assuring me that he will not do such a thing, he went ahead and issued a notice on 17th February 2010. The notice was replied to by the Project Company on 9th April 2010 and the Chief Minister of Madhya Pradesh took a meeting in Bhopal on 20th April 2010 to expedite the R&R works. As this had been brought to my knowledge, I mentioned this to Shri Jairam Ramesh on Thursday, 22nd April 2010 at 10.30 am when he came to see me at the AICC office. At that time he assured me that he would call all the parties concerned for a meeting on Wednesday, 28th April 2010 to resolve the matter. Surprisingly and contrary to the same, he issued a direction on the very next day, i.e. Friday 23rd April, 2010 evening to suspend the work immediately and circulated it to the media through the NBA activists I would have spoken to Shri Jairam Ramesh and requested reversal of the order but he is neither returning my calls nor answering my e-mails."

It was despite this track record, that in 2005, the public sector Power Finance Corporation was pressured to inject public funds into the project. That S Kumars was MPSIDC's single largest defaulter did not matter. The state government agreed to give a counter-guarantee to a guarantee to be issued by the Power Finance Corporation subject to the condition that the S Kumar’s would enter into a one-time settlement of its outstanding dues towards the MPSIDC.

On 16th September 2005, the S Kumars signed a settlement with the MPSIDC by issuing post dated cheques amounting to Rs.55 crores, collected the settlement certificate from the MPSIDC, and the counter-guarantee from the GoMP. However, when the cheques were presented at the bank by the MPSIDC, they bounced and the bank wrote back saying that the company’s account had been closed. The MPSIDC has filed 20 cases against the bouncing of cheques, under Section 420, as well as under Sections 138 and 141 of the Negotiable Instruments Act. A few weeks back Madhya Pradesh assembly saw uproar when Congress MLAs asked questions on the MPSIDC scam and the state government’s decision to grant counter guarantee to the Maheshwar Project.

What Digvijay Singh also forgot to tell the Prime Minister was that the Comptroller and Auditor General of India CAG had already indicted the PFC for having irregularly disbursed Rs.99.32 crores to the Maheshwar Project despite the non-fulfillment of pre-disbursement conditions. Yet, it is the PFC once again, which was bled, even after 2005, in order to benefit the S Kumars, despite the fact that it was the PFC’s largest defaulter.

What Digvijay Singh also forgot to tell the Prime Minister was that at the same time the public financial institutions had placed an embargo on public lending to the Maheshwar project because the S.Kumars had diverted Rs.106.4 crores of project funds to its group companies and other persons who had no contracts for the project. In March 2000, the lead institution for Maheshwar Project – the IFCI stipulated that no further monies would be disbursed to the Maheshwar project until the entire Rs.106.4 crores was brought back with interest.

Placing of public funds from public financial institutions into this project whose promoters are willful defaulters, and have charges of fraud, cheating and other serious financial charges against them is prohibited by the RBI.

There's more. The project lands and properties purchased by the S Kumars from the state government and its agencies in 1992, are yet to be paid for. And despite repeated censure by the CAG, in 2007, without any payment, the state government mutated the dam site lands in the name of the S Kumars, which were then mortgaged by the S Kumars to third parties. In the backdrop of admitted failture to resettle project oustees and massive financial irregularities, a stop order issued by the environment minister should have stayed on. Instead, "a series of review meetings convened by Prime Minister's office" ended it.