Gujarat HC Rejects Sterling SEZ Plea Over Rs.500 Cr Land

Ahmedabad, Gujarat — In a decisive blow to the embattled Sterling SEZ and Infrastructure Limited, the Gujarat High Court has dismissed a petition filed by the company’s liquidator, effectively allowing the state government to reclaim possession of prime land worth over ₹500 crore. The land was previously held by the company, promoted by the fugitive Sandesara brothers—Nitin and Chetan Sandesara—who are accused in a massive ₹14,500 crore bank fraud.

The petition was filed under the Insolvency and Bankruptcy Code (IBC) framework, seeking to halt the state’s move to take back the land under Section 84 of the Gujarat Tenancy Act. However, a bench led by Chief Justice Sunita Agarwal and Justice Pranav Trivedi rejected the liquidator’s arguments, stating that state laws concerning land tenure and ceilings remain applicable even after liquidation begins.

The liquidator had contended that once the IBC process starts, the provisions of the Gujarat Agricultural Land Ceiling Act and the Urban Land Ceiling Act should not apply. But the court ruled firmly against this view, reinforcing the supremacy of state land laws in such matters.

“The IBC does not override state-enacted tenancy and land ceiling laws,” said government counsel G.H. Varke. “The liquidation process cannot be used to regularize or clear illegal ownership of government land. The state’s legal authority to reclaim land remains intact even during or after corporate liquidation.”

The land in dispute had been allotted to Sterling SEZ with conditional approval by the Gujarat government. However, following investigations into the Sandesara Group’s financial irregularities and their declaration as economic offenders, the state initiated proceedings under the Tenancy Act to reclaim the land.

With this verdict, the Gujarat government is now legally empowered to take back the land in question, marking a significant step in recovering public assets linked to major financial frauds. The judgment also sends a strong message to corporate defaulters and liquidators trying to bypass state laws under the guise of insolvency proceedings.