The fate of a controversial £1 billion portfolio of "enemy" assets seized by India when it went to war with Pakistan in 1971 is on course to be settled.

For nearly four decades, the Bombay-based Custodian of Enemy Property has held 2,943 "immovable properties" – buildings and plots of land located in India – and millions of Indian-listed securities that were confiscated from Pakistanis in the wake of the 1971 conflict.

Nothing approaching a comprehensive audit has been conducted since the 1980s, Dinesh Singh, the current custodian, told The Times. "We really have no good idea of how much the assets are worth," he said.

However, following an equities and real estate boom in India the holdings, which range from blue-chip shares to bungalows in some of the sub-continent's hottest neighbourhoods, are known to have flourished. Recent estimates have suggested a value of as much as £1.2 billion.

In return, during the same period, Pakistan commandeered assets from Indian citizens that Indian Home Ministry officials have claimed could be worth four times that sum.

The profile of India's enemy holdings has steadily grown this year, with some commentators suggesting the asset pile be used to foster goodwill between the two nuclear powers. The Indian Government recently transferred responsibility for the estate to the Home Ministry from the Commerce Ministry, a move believed to have paved the way for a decision on what to do with the assets. Mr Singh said: "There is now some movement. The Home Ministry is working on this".

At stake are several large personal fortunes. Two Pakistani investors, for instance, were parted from shares in Wipro – bought when India's third-largest IT outsourcer was a soap manufacturer – that are now worth about £60 million. Thirty-four investors in Cipla were forced to give up holdings, now worth an average of more than £1.5 million each, in the Indian pharmaceutical company.

The Custodian of Enemy Property also manages the Habib Bank and National Bank of Pakistan.

However, the chances of the original owners being reinstated appear slim. Indian officials are convinced that Pakistan liquidated much of its India-based assets in the 1980s, which would mean that some sort of asset swap is all but ruled out.

Instead, it is thought likely that India will sell its enemy properties and use a portion of the returns to compensate Indian nationals who fled Pakistan in the late 1960s and early 1970s. Earlier this year, the Indian Government held what was thought to be its first auction of enemy property – a sale of shares in Tata Steel.

Poor record keeping has hindered attempts to weigh a fiendishly complex web of competing claims, Mr Singh said. "Several claims have been made, but circumstances have almost made it impossible to ascertain their authenticity."

India's labyrinthine court system has also played a part: the country's enemy assets are the subject of nearly 3,000 legal proceedings.

Moreover, amid the breakneck pace of India's economic expansion, factors such as property rights often carry little weight. The new international airport at Hyderabad, a centre for India's IT industry, was found to have been built partly on land owned by Mohammad Karimuddin, a Pakistani national, that was under the custodian's control. Without Mr Singh's go-ahead, the land was acquired by the Andhra Pradesh government and leased for 60 years.

Many onlookers believe that India's enemy assets will be dissolved into the state's coffers. Bakht Ahmed, a prominent Muslim commentator and adviser to the Indian Government, said: "There is always hope that that people who lost assets will be compensated. Practically speaking, however, this is a utopian dream."

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