HC restores to gov land mortgaged by Mafatlal Group

'Financial institutions should have been more careful', says court.

The Bombay High Court has ruled that the over 26 hectares of land in neighbouring Thane district, which was given to the Mafatlal Group, be restored to the government.

The court said that the land could not be mortgaged without intimating the government as it was given to the group for a specific purpose.

Justice Roshan Dalvi of the High Court also remarked that financial institutions such as ICICI and Industrial Investment Bank should have been more cautious while accepting the land as security when it was known to them that the land was government-acquired one.

The land, situated in Kalwa area, was acquired by the government in 1,949 and was given to Mafatlal Engineering Ltd to build residential quarters for its workers.

However, since it was not utilised by the group, the government "resumed" it in 1967. But the decision was stayed on appeal before the higher authorities of the government, so the land remained in the possession of the group.

The stay was vacated by the revenue department finally in 1990, paving the way for authorities to take back the land.

But the group in the meantime mortgaged it to various financial institutions, including ICICI. When the company went into liquidation in 1997, the banks moved the court for sale of the land and recovery of their dues.

The government authorities came to know about the mortgage only when court appointed receivers to execute the sale.

They applied for discharge of the court receiver.