The allotment of 1.37 lakh acres of iron ore-rich area in Khammam and Warangal districts to a private company, Rakshana Steels, whose executive director is Anil Kumar, son-in-law of former Chief Minister Y.S. Rajasekhara Reddy, rocked the Assembly on Monday.

The Opposition alleged that when YSR was the Chief Minister in February 2009, the land in notified tribal area of Khammam district was leased out to A.P. Mineral Development Corporation, although the State government had no right to do so without the Centre's approval.

The land is estimated to have reserves of 13 lakh crore tonnes of iron ore deposits. The APMDC formed a joint venture with Rakshana Steels.

K. Sambasiva Rao (CPI), who tabled a question on the issue alleged “a shady deal”, urged the government to resume the land spread over Bayyaram, Nelakondapalli and Garla mandals.

Although Chief Minister K. Rosaiah assured during a recent visit to Khammam that the allotment would be cancelled, he could not do so as a parallel administrative machinery was at work.

Members of the Telugu Desam, CPI, CPI(M) and Praja Rajyam later staged a dharna in front of Chief Minister's chambers in the Assembly demanding probe by a House Committee into the allotment.

Mr. Rosaiah promised to make a detailed statement in the House on Tuesday.

Mr. Sambasiva Rao said the Union government approved the State government's proposal to lease out the land to APMDC only 15 days ago. He criticised the allotment to a private firm when Visakhapatnam Steel Plant and Sponge Iron Factory, Palwancha, were suffering for want of raw material.

Rejecting the demand for constituting a House Committee, Mines & Geology Minister B. Srinivas Reddy denied any irregularity in the allotment and maintained that the government acted transparently.

He said another firm, Pioneer Torsteels had also participated in the bids but its application was rejected as it did not provide EMD amount. The government sought lease rights of the land to APMDC because the area fell within the notified tribal area. He said Rakshana Steels would establish an integrated steel factory in the area.

Following repeated stalling of the proceedings by the Opposition, Deputy Speaker N. Manohar adjourned the House an hour ahead of the scheduled time. Earlier, the House was adjourned four times.