Raipur: General Manager of Essar steel J S Verma was on Tuesday arrested for allegedly conspiring in funding Naxal groups in Dantewada area of Chhattisgarh.

Verma is the third person to be arrested in the case filed by the Chhattisgarh police after they arrested a contractor B K Lala who was allegedly giving money to Maoists groups in return for 'protection' for its pipeline.

"We have arrested General Manager of Essar Mr Verma in the case of (alleged) passing of money to extremist groups," Superintendent of Police (Dantewada) Ankit Garg said over phone.

Verma was produced before a Dantewada court which remanded him to two days of police custody.

Police have registered a case under section 121 of IPC (waging war against the state) and other sections of Unlawful Activities (Prevention) Act.

Essar's documents were scrutinised and Verma was quizzed in the case after Lala, arrested for Essar's alleged money transfer to Maoists, gave a statement to police in this regard.

Lala, a building contractor with Essar Steel Ltd, and Lingaram Kodopi were arrested early this month.

In a written communication, Essar strongly refuted the allegations of making payments to Maoists groups.

"Essar would like to state that such baseless allegations are being made to hurt the image and reputation of the group which is a law-abiding corporate.

"Essar has been making meaningful contribution for the growth of the country for the last forty years. It has always put country’s interest first in all its dealings", the company said. The Steel major said it is the largest private sector investor in Bastar region and has been operating in that region for the last 10 years.

Essar Steel operates a Benefication plant and a 267km slurry pipeline from Bailadila to Vizag. The above facilities are located in Naxal-hit areas.

The steel major said unlawful activities of Naxal groups had damaged the pipepline at least 15 times from the date of its commission in October 2005 to till date.

The industries, which are working in that area, do not have access to security cover. As regards the current allegation which the Dantewada Police is making, Essar said "whatever work is being done in that area is being done through local contractors who have been paid as per their contractual terms in cheque."

The company said it was engaging in a lot of social acitivities which include promotion of education, medial camps, self help programme, infrastructure, community development etc to uplift the people of that region and provide basic amenities.