Descendants of BICO's founder demand their share back from SR Rungta Group

BHUBANESWAR: The descendants of Bonai Industrial Company’s founder Harishchandra Deo are demanding their share back from the SR Rungta Group, which they claim acquired it illegally 35 years ago.
Rajshree Devi, 54-year-old granddaughter of Deo, has filed a petition in western Odisha court, alleging that her grandfather’s majority shares were "deceitfully transferred” to the Rungta Group, one of India’s oldest and largest iron ore miners.

The Rungta Group operates two iron ore mines along with a manganese and a bauxite mine held by Bonai Industrial Company (BICO).

Deo held 54 per cent shares in BICO, which was registered on April 6, 1939, qualifying as Odisha’s second oldest company. As permitted by the Companies Act then, he appointed Managovinda Mohanty as managing agent.

Mohanty went on to become a director when the Article of Association was readopted post-independence. BICO retained its leases granted to it by the erstwhile ruler of Bonai, Sundargarh, three of which it holds to this day.

The MB Shah Commission, appointed by the Centre to investigate illegal mining, had in its report said that "on 31.03.1981 all the original directors had been replaced…hence the entire lease which was in possession with Kumar Harishchandra Deo has now been captured by Shri Mukund Rungta, ML Rungta and Siddhartha Rungta and others,” terming it Rungta Group’s "backdoor entry” into BICO.

The commission said that the Rungta Group owned more than 3,600 ha (or more than 36 sq km) of mining lease area at one time. The wealth of the Chaibasa-based group surged during the China-driven commodity boom. Director Siddharth Rungta, past president of the Federation of Indian Minerals, did not respond to ET’s messages.

Although the scale and shareholding of BICO has changed considerably since 1981, company returns continue to attribute 10 shares to two Deo members who are no longer alive.

In their petition before a court in Bonai, Rajshree Devi and 18 others are seeking 54 per cent of profits earned by BICO since 1981. They estimate this will run into a few thousands of crores of rupees. The two parties engaged in discussions but could not reach a settlement.

Raj Singh Deo, one of the petitioners, said the family was too preoccupied fighting land ceiling cases to attend to this matter earlier. "The transfer took place after my great-grandfather took ill, in 1962. He died in 1970. In 2009 one of my cousins found some company papers but it was only after the Shah Commission report that we woke up to the fraud,” he said.

Rungta acquired Harishchandra Deo’s shares from his agent Mohanty. But, according to the petition, the state’s mining department and the ministry of corporate affairs have said in replies to applications filed under the Right to Information Act that they have no proof of the transfer of Deo’s shares to Mohanty, or change in directors in BICO.