Rajasthan High Court Overturns Auction Order for 848 Sanganer Textile Units
In a significant legal development, the Rajasthan High Court has set aside a Jaipur commercial court order that directed the seizure, attachment, and auction of properties belonging to 848 textile units in Sanganer. This decision comes in a dispute involving non-payment of Rs 33 crore related to a common effluent treatment plant (CETP).
High Court Directs Fresh Adjudication
The high court has instructed the commercial court to reconsider the matter, ensuring all parties are given an opportunity to be heard. In its order dated March 17, Justice Sameer Jain emphasized that the commercial court, functioning as an execution court, must limit its actions strictly to the scope of execution proceedings and cannot create new liabilities beyond the original decree or arbitral award.
Quashing all enforcement actions that followed the initial order, the high court sent the case back for fresh adjudication. This move came after petitions were filed by the state government and factory operators, which the high court allowed, stressing the need for a fair hearing confined to execution matters.
Background of the CETP Dispute
The dispute originated from a project to establish a 12.3-million-litres-per-day CETP in Sanganer. The contract for this project was awarded in 2015 to Advent Envirocare Technology Pvt Ltd, which completed the plant but later alleged non-payment of Rs 33 crore in outstanding dues.
In February, the commercial court in Jaipur issued stringent directions, holding not only the directors and board members of the textile units but also the state government financially responsible. The court ordered that if the awarded amount was not paid within three months, properties of all 848 units should be attached, sealed, and auctioned. Additionally, it directed the state to pay the amount first and recover it later from the factory operators.
High Court's Jurisdictional Ruling
In its March 17 order, the high court concluded that the lower court had exceeded its jurisdiction. Justice Jain reiterated that execution proceedings are solely for enforcing an award and not for determining new rights or liabilities. This ruling underscores the legal boundaries of execution courts in such disputes.
The high court's decision provides relief to the textile units and the state government, pending a fresh hearing that will focus on the proper execution of the award without imposing additional financial burdens.
