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The Mamata Banerjee government is likely to issue a show cause notice to C K Birla Group's automobile company, Hindustan Motors, for allegedly understating by Rs. 200 crore (Rs. 2 billion) the sale of excess land at its factory site in 2007.

Government sources say they also believe the company gave a false picture of what it proposed to do with the money from the sale.

HM says the charges are untrue.

According to government sources, the state was informed of a Rs. 85-crore (Rs. 850 million) projected revenue from the sale of excess land in the country's oldest automobile factory, though HM had allegedly sold the land to Bangalore-based Shriram Properties for the development of an integrated information technology township for Rs. 285 crore (Rs. 2.85 billion).

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This was for 314 acres at its Uttarpara plant in Hooghly district, an official said.

The development seems linked to Chief Minister Mamata Banerjee's decision to seek details of all unused land in the possession of various government departments and industrialists, to create a land bank in Bengal.

"The chief minister has examined the file. She has asked the departments concerned to take necessary action.

"As of now, it has been decided to send a showcause notice. Prior to that, the government will meet the company officials to discuss the matter," a source said.

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"The allegations are not only about projecting lower revenue. According to the company's proposal, the fund was supposed to be utilised for revival of the plant and payment of workers' dues, which did not happen."

An HM spokesperson said: "What they will do is up to the government. A meeting will take place some time this week.

"Whatever the government asks, we will tell them. There is no showcause notice as of now."

He also denied any irregularities in transfer of land.

"Whatever information had to be given, we have given it to the state government. It is not proper to discuss it in the public domain. It is strange that questions are being raised four years after the deal has happened.

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"Had we done something wrong, the (earlier) government would have taken some action," he said.

HM's Uttarpara plant, which produces the Ambassador car, is built on 427 acres. It had a total of 741 acres in its possession till the sale.

The proposal to sell the remaining 314 acres was pending before the state government for more than three years.

Since the Uttarpara land had been vested with the West Bengal government, the company needed approval for alternative usage.

Finally, in 2006, it got approval from the Left Front government to sell the land. HM entered into an arrangement in 2007 with Shriram Properties to develop a township.

According to government sources, HM, in its proposal, projected Rs. 85 crore (Rs. 850 million) revenue from the sale, of which Rs. 70 crore (Rs. 700 million) was to be utilised to revive the plant and Rs. 15 crore (Rs. 150 million) to repay dues to its workers.

The township has not taken off, as the developer is yet to receive clearances from the government.