Hindustan Motors Ltd has informed the Bombay Stock Exchange that the company has agreed to settle claims of the West Bengal Government worth Rs 194.47 crore for “additional profit” on the sale of 314 acres of surplus land in its plant in the State in 2006-07.

It would transfer to the Government of West Bengal rights to the “non-compete fee” that it was to receive from Bengal Shriram Hitech City Pvt Ltd (BSL) as a part of the land sale consideration.

The company said the agreement provides for assignment of the entire right of 4 per cent non-compete fee receivable from BSL in favour of the State Government. Hindustan Motors said this would settle the claim of the State Government that arose out of the September 2006 land sale permission-related conditions.

The West Bengal Government and Hind Motors have been at loggerheads over the claim for the last couple of years. The company, which had earlier disputed the claim, finally relented to Government pressure, sources told Business Line .

The State Government had asked the company to “return” the “additional” sale proceeds from its Uttarpara land development deal in 2006.

The Government had allowed the land sale under the provisions of the Land Reforms Act, 1955.

The State Government argued that the company had not followed the agreed terms on utilisation of the sale proceeds — revival of the Uttarpara unit — and made “additional profit”.

The West Bengal Government had also raised objections to the Kolkata-headquartered HML’s plan to hive off its Chennai manufacturing asset to its promoter group company Hindustan Motors Finance Corporation Ltd.

Hind Motors had sold the land for a total of Rs 295 crore. The company had projected to make a profit of Rs 18 crore and a turnover of Rs 644 crore in the sixth year from 2006.

The unit never turned around and is currently under suspension of work since May this year.​