Calcutta, Nov. 27: The Bengal government's decision to withdraw its appeal challenging the validity of the Singur Act, 2011, has put the spotlight back on the leadership of Tata Motors as it prepares to grapple with issues of compensation and write-off arising from the decade-old misadventure.

Ousted Tata Sons chairman Cyrus Mistry had started cleaning up the balance sheet of the Rs 2.75-lakh-crore automobile behemoth by providing for losses from Singur and booking a Rs 309.88-crore write-off in the last fiscal.

However, in its second-quarter results for the period ended September 30, the company did not make any provision for Singur. This is significant as the results came out well after the Supreme Court struck down the acquisition of land from Singur's original owners as "illegal", thereby wrecking Tata Motors' hopes of wresting control of the 997-acre plot.

The second result was published on November 14 just when the battle for leadership at the Tata group between patriarch Ratan Tata and Mistry had come to a boil. Although Mistry chaired the board meeting that cleared the results, Tata Sons, the group's holding company and promoter of the automaker, has now called an extraordinary general meeting on December 22 to remove him and Nusli Wadia as directors of Tata Motors.

Fresh look

The development at the apex court may now put more pressure on the management and board of the company to take a fresh look at the losses arising from the decision to relocate the Nano factory from Singur to Sanand in Gujarat in 2008 following the violent protest against land acquisition that was led by Mamata Banerjee, then in the Opposition.

In a petition submitted earlier to Calcutta High Court, Tata Motors had pegged the loss at around Rs 1,400 crore.

Mistry had been aggressively writing down assets across group companies such as Tata Steel, Tata Chemicals and Tata Motors among others.

In a letter to the Tata Sons board on October 26, he warned that the group may need to take a further $18-billion write-down going forward, a claim trashed by all the companies separately.

After the August 31 judgment, Tata Motors suggested that all was not lost for it as the company continued to maintain that the case relating to the Singur Act was still to be heard by the Supreme Court.

The act was passed in 2011 to take the land back from the Tatas who had challenged the Mamata Banerjee-government's move in Calcutta High Court and won an appeal before the division bench.

The state appealed against the order before the Supreme Court which, however, decided to look into the legality of the land acquisition by the erstwhile Left Front government first before dealing with the constitutionality of the act.

Last Friday, the apex court allowed the Mamata Banerjee -government to withdraw the appeal as it had become "infructuous", severely undermining Tata Motors' official position that it still had a case on an unanswered question.

"We do not have any comment at the moment," the company said after it was pointed out that its case relating to the Singur Act 2011 had now ceased to exist at the Supreme Court.

Compensation buzz

Corporate circles have been agog with rumours that Tata Motors might seek compensation for the losses it suffered at Singur after the August 31 judgment but the company has declined to comment.

Chief minister Mamata Banerjee also held out an olive branch, albeit indirectly, to the automobile company offering 1,000 acres of land at Goaltore in West Midnapur and urged it to build a project there. The Tatas, then under Mistry's leadership, did not respond to that overture.

The Trinamul Congress-government then entrusted industries and finance minister Amit Mitra to liaise with the company. The state asked Tata Motors whether the company would tear down the sheds at the Singur factory after the apex court order.

The company, then under Mistry, declined to intervene and left the decision with the state government which immediately proceeded to execute the job.

Tata Motors has still not said whether it intends to take back the material that have piled up after the demolition.

Legal circle said it might have a case against West Bengal Industrial Development Corporation that leased the land to company.

A clause in the lease deed, signed on March 15, 2007, stated that the lessor, in this case WBIDC, would "indemnify and compensate" the lessee (Tata Motors) for any loss suffered if the courts find fault with the "acquisition proceedings" and issue an adverse order.

The Supreme Court held the procedure followed by the then Left Front government contravened the prevalent Land Acquisition Act of 1884. "The acquisition of land of the landowners/cultivators in the instant case is declared illegal and void," the division bench of Justice V. Gopala Gowda and Justice Arun Mishra said and ordered returning land within 12 weeks.

After the withdrawal of the case against the Singur Act, Tata Motors would need to file a fresh appeal to enforce an agreement.

Only time will tell whether Ratan Tata, who had famously described Banerjee as "Bad M", will take on the might of the fourth-largest political party of the country at a time every bit of support may come in handy as he wages the toughest corporate battle of his life.