In a verdict of unique nature, the Karnataka High Court on Thursday recalled its 13-year-old order of winding up of NGEF Ltd, a state-owned company, and allowed the state government to make use of company’s properties for public infrastructure projects of the Bengaluru city.

The High Court directed the Official Liquidator to hand over all the records and assets of NGEF Ltd, which is free of all debts now, to the board of management as soon as it was constituted by the state government.

Govt plea allowed

Justice Vineet Kothari delivered the verdict while allowing the state government’s plea, filed in 2015, to revive only the company but not the NGEF factory, and utilise around 119 acres of land, present value of which is more than ₹2,000 crore, belonging to the company for public infrastructure projects.

If the winding up process was continued despite NGEF’s all debts having been cleared, the 119 acres of land would have faced auction and landed in the hands of real estate developers who had attempted to purchase the lands of NGEF through auction during the initial stages of winding up process. The court had on August 3, 2004 ordered the winding up of NGEF as per the Board for Industrial & Financial Reconstruction suggestions as attempts to revive the company by clearing the debts had failed.

Objection

In his verdict, Justice Kothari termed as “misconcieved” the objections raised by EHG Elektroholding GmBH, which is a minority shareholder with 10 per cent shares in NGEF. The minority shareholder had claimed that there was no provision in law for recalling a wind-up order and there was no scheme placed by the state for revival.

The court held that though there is no specific provision in the Companies Act for recalling of a wind-up order, the law does not restrict the court from it either.

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The judge said that the plea for using assets for public infrastructure projects can be accepted as a reason for recalling the wind-up order.

Referring to the the plea of around 400 former employees of the NGEF, who opposed the revival of the company on the ground that they should have been given better retirement packages and sought more monetary benefit, the court said they could approach the company’s management or the state government with their grievance as the government had agreed to look into their demands.

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