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Karnataka High Court stops NGEF land auction

Staff Reporter

BANGALORE: The Karnataka High Court on Thursday terminated the auction proceedings of the assets of New Government Electric Factory (NGEF) and gave the State Government time till March 16, 2006 to submit a comprehensive revival package for the unit.

The court directed the State Government to place before it the Cabinet note and proceedings and the names and addresses of Ministers and officials of the previous Government who were a party to the decision to wind up NGEF.

Names sought

The court sought the names and addresses of those in the current Government who had sought to revive the unit.

While terminating the auction, the court put the State Government on terms and said it would have to make good the loss occasioned to NGEF on account of terminating the sale proceedings.

In case the State is unable to place before the court sufficient and adequate material on the revival package and payment of debt, it will be liable to pay Rs. 1,599.66 crores, which was the highest offer received by the official liquidator during the auction.


The hearing began with Advocate-General (AG) B.T. Parthasarathy filing an additional rejoinder and submitting that the Government wants to revive NGEF and it will be dangerous if company land is allowed to be sold. To this, Justice Rammohan Reddy, who is hearing the liquidation proceedings, said that while the previous Government wanted to liquidate NGEF, another Government wants to save it.

When the Advocate-General said the disposal of assets will prove to be dangerous, the court pointed out that the company no longer belongs to the State.

The court is seized of the matter after it was referred to it by the Bureau of Industrial and Financial Reconstruction (BIFR).

Remarks irk judge

Taking exception to the remark that the disposal of assets will be dangerous, he said the court is above all such considerations and the methodology adopted by it is within the framework of the law and Supreme Court decisions.

He sought to know why the Government has not placed any revival package for NGEF.

He said there is not even a whisper about revival in the statement. Mr. Justice Reddy said some bureaucrats had steered the company towards doom.

"They must not be allowed to make hay and continue to make hay while the sun shines," he said.

The Advocate-General replied that the Government first intends to clear the debts and then come up with a revival package. To this, Mr. Justice Reddy wanted to know from where the State would get the money.


When the Advocate-General said the Government is keen on reviving the factory and sought more time to come up with a revival package, Mr. Justice Reddy said he is averse to setting aside the entire auction proceedings without imposing certain conditions.

In his order, Mr. Justice Reddy said: "Since the AG had submitted that concerted efforts were being made to revive NGEF, the State Government must be extended an opportunity to establish its claim for revival."

Saying that it may not be possible to pursue the sale of properties by auction, Mr. Justice Reddy terminated the auction proceedings and gave the State time till March 16 to place before him the revival package.

Since the auction bids were supposed to be opened on December 31, 2005, the official liquidator has been asked to return the earnest money deposit to the bidders along with interest.

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