Pawan Kumar Ruia (left) with a local MP at the inauguration of the Dunlop India factory at Ambattur

Calcutta, Aug. 7: Move over strikes, “land wars” are now shutting down factories.

Dunlop India today suspended operations at its Ambattur plant in Chennai after a real estate company “forcefully” acquired a part of the tyre-maker’s factory land with alleged complicity of a section of the workforce.

The Calcutta-headquartered Dunlop informed the Bombay Stock Exchange that VGN Enterprise “demolished” its compound wall, carved out an eight-acre plot and erected its own boundary wall on the factory premises after paying Rs 15,000 each to a large number of employees.

VGN, on its part, claimed it was the rightful owner of the land it wrested on July 30 and that the eight acres are part of the 60.84 acres it bought in June 2004 from the Chhabrias, Dunlop’s former owners who later sold the company to Pawan Kumar Ruia. The real estate company said it has all the legal documents for the 60.84 acres but had physical possession of only 53 acres.

The development has come as a setback for the current Ruia-led management, which is struggling to revive the ailing tyre-maker after taking over the company’s reins from the Chhabria family in December 2005.

Dunlop has another plant in Sahagunj, Bengal, but neither has started regular production, though the new management had promised to do so from this month.

The trial production at the Ambattur plant started last August.

Dunlop officials said the erstwhile management had permission to sell “only unused land” to revive the company. “But the land VGN usurped had our plant and offices on it,” an official said.

Under BIFR rules, a company can sell only surplus land for revival.

VGN’s “illegal” act made it impossible to carry out normal manufacturing activities, a Dunlop release said.

VGN said it was willing to swap the eight acres with equivalent land within the same premises, but the Dunlop management rejected the offer.

Sources said the Dunlop management has initiated legal proceedings and challenged the sale of the entire 60.84 acres in 2004. It is learnt that the Chhabria-run management did not seek permission for the sale of the plot.

Sources said VGN did not attempt to snatch the land earlier as it was not sure about the reaction of Dunlop employees.

But with discontent brewing among the 1,000-odd employees, the real estate company won over a section of the staff, the sources alleged.