Calcutta, July 7: The Jharkhand government has threatened to start criminal proceedings against state-owned Steel Authority of India Ltd (SAIL) over the manner in which it has grabbed control of the famed Chiria mines.

The state government shot off a showcause letter to SAIL on July 6 ? a day before L.N. Mittal publicly expressed his displeasure over the delays that were dogging his Jharkhand steel project ? asking it to show cause why mining activity should not be stopped at Gua and Manoharpur mines, popularly known as Chiria. The government has given SAIL a week’s time to respond to the notice.

If the company’s reply fails to satisfy the government, there is a strong possibility that iron ore mining at Chiria will come to a standstill on July 13, rendering 3,600 people jobless.

The Jharkhand government has been keen to take back the Chiria mining leases that were given to the Indian Iron and Steel Company (IISCO), which was taken over by SAIL. The state-owned giant took over the mining leases after the takeover of IISCO. The state said this violated the Mineral Concession Rules of 1960.

If the leases are scrapped, it will deal a body blow to the IISCO plant in Bengal since Gua and Chiria mines primarily supply to Burnpur.

The letter, written by the district mining officer of West Singhbhum, says none of the companies took written permission from the state before transferring the mining leases.

IISCO was effectively dissolved into SAIL without being wound up on February 16 this year. SAIL informed Jharkhand about the merger on February 28 through a letter.

The company followed it up with another letter in April requesting the change of name on the mining leases from IISCO to SAIL.

But the government waited for four months and chose to reply to SAIL’s request just a day before Mittal decided to visit Bhubaneswar.

Mittal has been lobbying hard for mining concessions in Chiria to tie up iron ore supplies for his proposed plant in the state. Frustrated by the delay, Mittal has threatened to relocate his plant to Orissa.

The government letter also says SAIL had violated provisions of the Mining and Mineral Development Act of 1957. Moreover, it invokes the Company Act of 1956 saying the merger does not mean that IISCO’ s rights and titles are automatically vested with SAIL.

SAIL, however, rebuts the Jharkhand claim saying no prior permission from Jharkhand was required. Moreover, it says the merger meant that all estate, title, rights and liabilities of IISCO would now be vested with SAIL.