The Karnataka High Court today allowed the state government to use state-owned company NGEF Limited's properties only for public infrastructure projects and recalled a 2004 order for winding up of the company.
Justice Vineeth Kothari said if the company's lands, estimated to be worth more than Rs 2,000 crore presently, were not used properly for public needs, they may be encroached upon, resulting in further litigation.
"The plea for using assets for public infrastructure projects for larger public interest can be accepted as a reason for recalling the winding-up order as no adverse material is placed before the court to establish that the state will not adhere to its undertaking," he observed.
Hence, it is appropriate that the idle immovable properties of the government-owned company is best utilised for larger public interest, Justice Kothari said.
Justice Kothari also ordered the government to set up a management board to receive the records and assets of NEF from the official liquidator. The records and assets of the company were free of all debts.
The court gave the ruling allowing the government's plea, filed in 2015, that it should be allowed to use around 119 acres belonging to the company for public infrastructure projects.
The court had in 2004 ordered winding up of the sick firm on a recommendation by the Board for Industrial and Financial Reconstruction after several attempts to revive it by clearing its debts had failed.
The judge overruled the objections raised by minority stakeholders - EHG and Electroholding GmBH - in NGEF, which submitted that there was no provision in law for recalling a winding up order and there was no scheme placed by the government for revival.
Justice Kothari observed the law does not restrain the court from recalling winding up order despite the absence of specific provision in the Companies Act to do so.
He also directed around 400 former employees of the company to approach its management or the government on their demands for voluntary retirement settlement.
Disclaimer: No Business Standard Journalist was involved in creation of this content
