Rajasthan High Court – Jaipur
Prakash Prints vs M/S Advent Envirocare Technology Pvt. … on 17 March, 2026
[2026:RJ-JP:8372]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Civil Writ Petition No. 6884/2025
1. The State Of Rajasthan, Through Chief Secretary,
Government Secretariat, Jaipur
2. The District Collector, Jaipur.
----Petitioners
Versus
1. M/s Advent Envirocare Technology Pvt. Ltd., Ahmedabad,
Address A-1, 8Th Floor, Safal Profitaire, Corporate Road,
Satellite, Ahmedabad -Gujarat - 380015.
2. M/s Sanganer Enviro Project Development, Jaipur,
Address- Shop No.7, Maruti Colony, Opposite Chaudhary
Tent House, Sanganer, Jaipur - 302029.
3. Union Bank Of India, Through Its Branch Manager, K-13,
Brij Anukampa Building, Ashok Marg, Scheme Jaipur-
302001
----Respondents
Connected With
S.B. Civil Writ Petition No. 11823/2025
Devi Shanker Khatri S/o Late Shri Bheru Mal Khatri, Aged
About 73 Years, R/o House No. 651, Adarsh Nagar, Jaipur-
302004, Rajasthan.
—-Petitioner
Versus
1. M/s Advent Envirocare Technology Pvt. Ltd., A-1, 8Th
Floor, Sadal Profitaire, Corporate Road, Satellite,
Ahmedabad- 380015, Gujarat.
2. M/s Sanganer Enviro Project Development (SEPD), Shop
No. 7, Maruti Colony, Opp. Chaudhary Tent House,
Sanganer, Jaipur- 302029.
3. State Of Rajasthan Through The Chief Secretary,
Government Secretariat, Jaipur- 302001, Rajasthan.
4. State Of Rajasthan Through Chief Secretary, Secretariat,
Jaipur, Rajasthan- 302001.
—-Respondents
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S.B. Civil Writ Petition No. 2976/2025
Laxmi Dyeing, Through Its Sole Proprietor Badri Narayan
Gurjar, Aged-48 Years, R/o 79, Gurjaro Ki Talai, Muhana Mod,
Diggi Road, Sanganer
—-Petitioner
Versus
1. M/s Advent Envirocare Technology Pvt. Ltd, Ahmedabad,
Address- A-1, 8Th Floor, Safal Profitaire, Corporate
Road, Satellite, Ahmedabad- Gujarat 380015.
—-Execution Applicant/Award Holder/Respondent
2. M/s Sanganer Enviro Project Development, Jaipur,
Address- Shop No. 7, Maruti Colony Opposite Chaudhary
Tent House, Sanganer, Jaipur-302029.
—-Non-Applicant/Award Debtor/Respondent
S.B. Civil Writ Petition No. 3279/2025
1. Rajendra Kumar Jeendgar, S/o Late Shri Ram Chandra
Jeendgar, Aged About 74 Years, Resident Of E-123,
Babu Ji Dhani, Saraswati Nagar, Malviya Nagar, Jaipur,
Rajasthan, 302017.
2. Praveen Shah, S/o Shri Amar Nath Gupta, Aged About
50 Years, Resident Of 103, Jem Vihar Behind Stadium,
Sanganer Bazar, Sanganer, Jaipur, Rajasthan – 302029.
3. Chamatkar Jain, S/o Shri Harimohan Jain, Aged About
41 Years, Resident Of 44, Bhairav Colony, Sanganer
Bazar, Sanganer, Jaipur, Rajasthan – 302029.
4. Sanjay Sharma, S/o Shri Radha Mohan Sharma, Aged
About 54 Years, Resident Of Tikki Walo Ka Mohalla,
Kalyan Kunj Ke Pass, Ward No. 39, Sanganer, Jaipur,
Rajasthan – 302029.
5. Navratan Naraniya, S/o Shri Chanda Lal Naraniya, Aged
About 40 Years, Resident Of 323, Opp. DAL MILL, Near
Ramberi, Khatiko Ka Mohalla, Jaipur, Rajasthan –
302029.
—-Petitioners
Versus
1. M/s Advent Envirocare Technology Pvt. Ltd.,
Ahemadabad, Having Its Address – A-1, 8Th Floor, Sadal
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Profitaire, Corporate Road, Satellite, Ahmedabad,
Gujarat – 380015.
—-Respondent No.1/Award Holder
2. M/s Sanganer Enviro Project Development, Jaipur,
Having Its Address At Shop No. 7, Maruti Colony
Opposite Chaudary Tent House, Sanganer, Jaipur –
302029.
—-Respondent No.2/Judgment Debtor
3. State Of Rajasthan, Through Chief Secretary,
Secretariat, Jaipur, Rajasthan – 302001.
—-Respondent No.3
4. Sanganer Kapda Rangai Chapai Association, Having Its
Head Office At Prakash Textiles Building, Main Road,
Sanganer – 302029.
—-Respondent No.4/Applicant
S.B. Civil Writ Petition No. 4846/2025
Sanganer Kapada Rangai Chapai Association, Having Its Head
Office At Prakash Textiles Building, Main Road, Sanganer
Through Its President Devi Shanker S/o Shri Bherumal Aged
About 78 Years R/o 651, In Front Of Krishna Mandir, 20 Dukan,
Adarsh Nagar, Jaipur, Rajasthan-302004.
—-Petitioner
Versus
1. M/s Advent Envirocare Technology Pvt. Ltd.,
Ahmedabad, Address- A-1, 8Th Floor, Safal Profitaire,
Corporate Road, Satellite, Ahmedabad- Gujarat- 380015
2. M/s Sanganer Enviro Project Development, Jaipur,
Address- Shop No. 7, Maruti Colony Opposite Chaudhary
Tent House, Sanganer, Jaipur-302029.
—-Respondents
S.B. Civil Writ Petition No. 9108/2025
Vineet Print, Through Its Sole Proprietor Mr. Mahendra Khatri,
Aged about 63 years, R/o 28, Hajiyawala, Muhana Road, Jaipur,
Rajasthan.
—-Petitioner
Versus
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Respondent/Execution Applicant/Award Holder:
1. M/s Advent Envirocare Technology Pvt. Ltd.,
Ahmedabad, Address – A-1, 8Th Floor, Safal Profitaire,
Corporate Road, Satellite, Ahmedabad- Gujarat-380015.
Respondent/Non Applicant/Award Debtor:
2. M/s Sanganer Enviro Project Development, Jaipur,
Address-Shop No. 7, Maruti Colony Opposite Chaudhary
Tent House, Sanganer, Jaipur -302029.
Respondent/Objectioner- Applicant:
3. Sanganer Kapada Rangai Chapai Association, Having Its
Head Office At Prakash Textiles Building, Main Road,
Sanganer Through Its President.
Respondent:
4. The District Collector, Jaipur.
—-Respondents
S.B. Civil Writ Petition No. 9123/2025
Ambika Textiles Prints, Through Its Sole Proprietor Mr. Mohan
Lal Khatri, Aged about 64 years, R/o Jagannathpura, Diggi
Road, Jaipur, Rajasthan.
—-Petitioner
Versus
Respondent/Execution Applicant/Award Holder:
1. M/s Advent Envirocare Technology Pvt. Ltd.,
Ahmedabad, Address – A-1, 8Th Floor, Safal Profitaire,
Corporate Road, Satellite, Ahmedabad- Gujarat-380015.
Respondent/Non Applicant/Award Debtor:
2. M/s Sanganer Enviro Project Development, Jaipur,
Address-Shop No. 7, Maruti Colony Opposite Chaudhary
Tent House, Sanganer, Jaipur -302029.
Respondent/Objectioner- Applicant:
3. Sanganer Kapada Rangai Chapai Association, Having Its
Head Office At Prakash Textiles Building, Main Road,
Sanganer Through Its President.
Respondent:
4. The District Collector, Jaipur
—-Respondents
S.B. Civil Writ Petition No. 9182/2025
Salasar Creation, Through Its Sole Proprietor Sh. Gopal Lal(Uploaded on 19/03/2026 at 01:20:58 PM)
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[2026:RJ-JP:8372] (5 of 54) [CW-6884/2025]Agarwal S/o Satyanarayan Agarwal, Aged About 52 Years, R/o
171 Chikitshyalaya Marg, Govind Nagar Paschim, Amer Road,
Jaipur.
—-Petitioner
Versus
1. M/s Advent Envirocare Technology Pvt. Ltd, Ahmedabad,
Address-A-1, 8Th Floor, Safal Profitaire, Corporate Road,
Satellite, Ahmedabad- Gujarat 380015.
----Award Holder/Execution
Applicant/Respondent
2. M/s Sanganer Enviro Project Development, Jaipur,
Address- Shop No. 7, Maruti Colony Opposite Chaudhary
Tent House, Sanganer, Jaipur-302029.
—-Non Applicant/Award Debtor/Respondent
S.B. Civil Writ Petition No. 9266/2025
S.K. Desiging Works, Through Its Sole Proprietor Yusuf Khan
S/o Babu Khan Aged About 55 Years, R/o C-181 Sanjay Nagar,
Bhatta Basti, Shastri Nagar, Jaipur
—-Petitioner
Versus
1. M/s Advent Envirocare Technology Pvt. Ltd.,
Ahmedabad, Address- A-1, 8Th Floor, Safal Profitaire,
Corporate Road, Satellite, Ahmedabad- Gujarat 380015.
—-Award Holder/Execution Applicant/Respondent
2. M/s Sanganer Enviro Project Development, Jaipur,
Address- Shop No. 7, Maruti Colony Opposite Chaudhary
Tent House, Sanganer, Jaipur- 302029.
—-Non Applicant/Award Debtor/Respondent
S.B. Civil Writ Petition No. 9473/2025
Tirupati Udyog, Through Its Sole Proprietor Jitendra Jain, aged
about 54 years, R/o Khadi Gram, Udyog Road, Jaipur Gate,
Jaipur, Rajasthan.
—-Petitioner
Versus
1. M/s Advent Envirocare Technology Pvt. Ltd.,
Ahmedabad, Address-A-1, 8Th Floor, Safal Profitaire,
Corporate Road, Ahmedabad- Gujarat 380015.
—-Execution Applicant/Award Holder/Respondent
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2. M/s Sanganer Enviro Project Development, Jaipur,
Address- Shop No. 7, Maruti Colony Opposite Chaudhary
Tent House, Sanganer, Jaipur-302029.
—-Non-Applicant/Award Debtor/Respondent
3. Collector, Collectorate, Bani Park, Jaipur.
4. Sanganer Kapada Rangai Chapai Association, Having Its
Head Office At Prakash Textiles Building, Main Road,
Sanganer Through Its Authorized Signatory Mahesh
Chandra Jhalani S/o Shri S.N. Jhalani R/o D-193,
Amrapali Marg, Hanuman Nagar, Jaipur, Rajasthan.
—-Respondents
S.B. Civil Writ Petition No. 10104/2025
Prakash Prints, Through Its Sole Proprietor Prakash Khatri,
Aged About 59 Years R/o Muhana Road, Sanganer, Jaipur,
Rajasthan.
—-Petitioner
Versus
1. M/s Advent Envirocare Technology Pvt. Ltd.,
Ahmedabad, Address-A-1, 8Th Floor, Safal Profitaire,
Corporate Road, Ahmedabad- Gujarat 380015.
—-Execution Applicant/Award Holder/Respondent
2. M/s Sanganer Enviro Project Development, Jaipur,
Address- Shop No. 7, Maruti Colony Opposite Chaudhary
Tent House, Sanganer, Jaipur- 302029
—-Non-Applicant/Award Debtor/Respondent
3. Collector, Collectorate, Bani Park, Jaipur.
4. Sanganer Kapada Rangai Chapai Association, Having Its
Head Office At Prakash Textiles Building, Main Road,
Sanganer Through Its Authorized Signatory Mahesh
Chandra Jhalani S/o Shri S.N. Jhalani R/o D- 193,
Amrapali Marg, Hanuman Nagar, Jaipur, Rajasthan.
—-Respondents
S.B. Civil Writ Petition No. 10706/2025
Aakash Dayars, Through Its Sole Proprietor Sh. Tikam Chand
Jain S/o Mohan Lal Jain Aged About 48 Years, R/o 18 Shyam
Vihar Colony, Behind Kohinoor Residency, Sanganer, Jaipur.
—-Petitioner
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Versus
1. M/s Advent Envirocare Technology Pvt. Ltd.,
Ahmedabad, Address- A-1, 8Th Floor, Safal Profitaire,
Corporate Road, Satellite, Ahmedabad- Gujarat 380015
—-Execution Applicant/Respondent
2. M/s Sanganer Enviro Project Development, Jaipur,
Address- Shop No. 7, Maruti Colony Opposite Chaudhary
Tent House, Sanganer, Jaipur 302029
—-Non-Applicant/Award Debtor/Respondent
S.B. Civil Writ Petition No. 11019/2025
R. K. Dyers, Through Its Sole Proprietor Sh. Suresh Kumar Jain
S/o Ratan Lal Jain, Aged About 55 Years, R/o 50 Shyam Vihar
Colony, Behind Kohinoor Residency, Sanganer, Jaipur.
—-Petitioner
Versus
1. M/s Advent Envirocare Technology Pvt. Ltd.,
Ahmedabad, Address- A-1, 8th Floor, Safal Profitaire,
Corporate Road, Satellite, Ahmedabad- Gujarat 380015
2. M/s Sanganer Enviro Project Development, Jaipur,
Address- Shop No. 7, Maruti Colony Opposite Chaudhary
Tent House, Sanganer, Jaipur 302029
—-Respondents
S.B. Civil Writ Petition No. 11020/2025
R K Bleaching Works, Its Sole Proprietor Devraj Jain S/o
Rakesh Kumar Jain, Aged About 51 Years, R/o 66, Milap Nagar,
Tonk Road, Jaipur.
—-Petitioner
Versus
1. M/s Advent Envirocare Technology Pvt. Ltd.,
Ahmedabad, Address- A-1, 8Th Floor, Safal Profitaire,
Corporate Road, Satellite, Ahmedabad- Gujarat 380015
2. M/s Sanganer Enviro Project Development, Jaipur,
Address- Shop No. 7, Maruti Colony Opposite Chaudhary
Tent House, Sanganer, Jaipur 302029
—-Respondents
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For Petitioner(s) : Mr. Rajendra Prasad, Advocate
General with Ms. Dhriti Ladha
Mr. Sheetanshu Sharma
Ms. Harshita Thakral
Mr. Tanay Goyal
Mr. Amit Puri with
Mr. Anant Shankar Sharma
Mr. Nikhil Simlote
Major R.P. Singh, Sr. Adv. with
Mr. Jaivardhan Singh Shekhawat
Mr. Ashrat Poonia
Mr. Punit Singhvi with
Ms. Shrada Mehta
Mr. Harish Kandpal
Mr. Ayush Singh
Ms. Disha Verma
Ms. Suhani Singh
Mr. Rahul Kamwar with
Mr. Shubham Rohila
Mr. Vaibhav Nirmal
Mr. Bharat Kumar Todi
Mr. Lakshya Sharma
Mr. Rhishi Raj Maheshwari with
Mr. Himanshu Jain
Ms. Apoorva Agarwal
Mr. Divyansh Choudhary
Mr. Yashraj Kumawat
Mr. Jatin Sharma
For Respondent(s) : Mr. N.K. Maloo, Sr. Advocate
Mr. Ashok Mehta, Sr. Advocate
assisted by Mr. Mudit Singhvi,
Mr. Arjun Seth through VC
Ms. Priya Khuomlavi
Ms. Anubha Singh
Mr. Hemant Kothari with
Mr. Shubham Vijay
Mr. Parneet Kaur
Ms. Suhani Tiwari
Mr.Ajay Singh Rajput
HON’BLE MR. JUSTICE SAMEER JAIN
Judgment
1. Arguments Concluded on: 22/01/2026
2. Judgment Reserved on: 22/01/2026
3. Full Judgment/Operative Part Full Judgment
Pronounced:
4. Pronounced on: 17/03/2026
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REPORTABLE:
1. In the present batch of writ petitions, the scope of the
controversy involved, albeit not limited to but is broadly and
predominantly defined by the challenge raised against the order
dated 14.02.2025 passed by Jaipur Metropolitan-II, Jaipur in
Execution Petition No. 1604/2023 (CIS No. 1643/2023) titled M/S.
Advent Envirocare Technology Pvt. Ltd. v. M/S Sanganer Enviro
Project Development Jaipur, thereby accepting the alternate
prayer of the award holder and issuing several directions which
are absolutely sans authority of law and having disastrous
consequences. Consequently, considering the fact that the writ
petitions warrant adjudication on common questions of law and
fact; with the consent of learned counsel appearing on behalf of all
the parties, S.B. Civil Writ Petition No. 6884/2025 titled as
State of Rajasthan and Anr. v. M/S Advent Envirocare
Technology Ovt. Ltd. & Anr., is being taken up as the lead case.
It is cautiously clarified that any discrepancies in the present batch
of writ petitions, pertain purely to the factual narratives contained
therein and not vis-a-vis the questions of law to be determined by
this Court; the instant judgment shall be applicable on all the
petitions connected herein/henceforth on mutatis mutandis basis.
2. For the sake of convenience and with a view to obtaining a
comprehensive bird’s-eye perspective of the controversy involved
in the present lis, the reliefs sought in the lead petition, along with
the impugned findings recorded in the order dated 14.02.2025,
are reproduced hereinbelow for ready reference and proper
adjudication:
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[2026:RJ-JP:8372] (10 of 54) [CW-6884/2025]The reliefs sought in the lead petition are as follows:
a) Issue an appropriate writ, order, or direction
whereby the impugned order dated 14.2.2025
(Annex.10) passed by the learned Commercial Court
No.1, Jaipur Metropolitan-II particularly the directions
issued in para 165 and its sub-paras may kindly be
quashed and set-aside;
b) Any other appropriate order or direction which the
Hon’ble Court may deem just, proper in the facts and
circumstances of the case may kindly be passed in
favour of the Petitioners;
c) Cost of the writ petition may also be awarded to the
Petitioners.”
The impugned findings recorded in the order dated
14.02.2025 passed in the Execution Petition No. 1604/2023 are as
follows:
“165. Therefore, while accepting the
alternative prayer of the award holder, it is
ordered as follows:
A. As a natural consequence of piercing/lifting
the corporate veil of the award debtor, i.e. the
SPV, the Directors and shareholders/members of
the award debtor, i.e. the SPV, who are also the
office bearers/members of the Association and
the Samiti and for that matter also the
Government of Rajasthan through the Collector
Jaipur, he being the Chairman of the Samiti are
held jointly and severely liable to pay off the
dues of the award holder as payable under the
award in question, subject, however, to the
principle ‘Pay and Recover’ in case the
Government of Rajasthan is made to pay off the
dues of award holder under the award in
question;
B. However, having regard to the principle
‘Polluter Pays’, in the first instance, the court is
inclined to proceed against the Directors and
shareholders/members of the award debtor, i.e.
the SPV, who are also the office
bearers/members of the Association. As such the(Uploaded on 19/03/2026 at 01:20:58 PM)
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[2026:RJ-JP:8372] (11 of 54) [CW-6884/2025]attachment of the very premises of the textile
units belonging to the Directors and
members/shareholders of the award debtor, i.e.
the SPV, who are also the office
bearers/members of the Association coupled with
the movable items lying therein is ordered, in
exercise of the powers conferred under Order XXI
Rule 54 and under XXI Rule 30 of the CPC,
respectively.
C. Further, the court, in exercise of powers
conferred by Section 51(e) r/w section 151 of the
CPC, also orders the simultaneous seizure of such
attached premises coupled with movables lying
therein.
D. Attachment and seizure as aforesaid shall be
carried out in the order in which it is shown in the
list of members of the award debtor, i.e. the SPV
as on 31.03.2023(page Nos. 655 to 673 as
marked in the red ink).
E. However, the premises and movables lying
therein belonging to other textile units operating
in the Sanganer region shall also be liable for
attachment and seizure aforesaid, if the Board
and the Collector Jaipur find such units liable to
contribute the payment of dues under the award
in question in terms of the principle ‘Polluter
Pays’.
F. Attachment warrant with the endorsement
of seizure of aforesaid textile units be issued
accordingly returnable by 01.03.2025 after
submission of requisite process fee by the award
holder. The list of members of the award debtor,
i.e. the SPV as on 31.03.2023 (page Nos. 655 to
673 as marked in the red ink) be enclosed with
the attachment warrant for compliance of the
directions aforesaid.
G. In case the amount due to the award holder
under the award in question is not paid by such
unit holders within 03 months from today, then
the premises and movables so attached be put to
sale through open auction by the authorized
officer of the court with the assistance provided
by the Board and the Collector, Jaipur. However,
the attached premise shall be put to sale, not as
textile units, but merely as a structure like other
immovable property for any lawful use as
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permissible under the law after fulfilling all legal
requirements.
H. In such an eventuality as stated in Clause F
aforesaid, the recovery proceedings shall be
directed against the office bearers/members of
the Samiti and for that matter against the
Government of Rajasthan through the Collector
Jaipur and the Collector Jaipur shall then stand
restrained from drawing his salary till award in
question is fully satisfied, which is hereby
ordered in exercise of powers conferred by
Section 51(e) r/w Section 151 of the CPC.
I. The Regional Officer of the Board as well as
the Collector Jaipur are directed to provide
necessary support to the officer of the court as
authorized in this regard in his endeavor to
comply with the aforesaid directions of the court.
J. The Commissioner of Police, Jaipur
Metropolitan is also directed to provide necessary
police assistance, whenever asked by the
authorized officer of the court, if required in his
endeavor to comply with the aforesaid directions
of the court. An order in this regard be issued in
the name of the Commissioner of Police, Jaipur
Metropolitan and be given Dasti to the authorized
officer of the court for seeking police assistance,
if required.
K. However, in terms of the principle of ‘Pay
and Recover’ the Government of Rajasthan is
given an alternative option to first pay off the
dues as payable under the award in question
through its suitable instrumentality and then
recover the same from such textile units in the
similar fashion in which it is being recovered or
proposed to be recovered in respect of the
balance work being carried out by the JDA, if the
Government wishes the court not to adopt the
aforesaid course.
L. A notice be issued to the deponent of
additional affidavit dated 15.10.2024, i.e. Shri
Rajendra Kumar Jeendgar, one of the Directors of
the award debtor calling his explanation within
15 days from receipt of the notice as to why the
proceedings for filing aforesaid additional
affidavit with false averments vis-a-vis fully
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functional status of the CETP in respect of 192
textile units be not initiated against him.
M. A notice be also issued to the authors of the
present status report of inspection of the CETP
dated 16.01.2025, i.e. the RO, Shri Neeraj
Sharma, the Supdt. SO, Shri Vimal Poswal and the
JEE, Shri Ramswaroop Choudhary calling their
explanation within 15 days from receipt of the
notice as to why the proceedings for filing
aforesaid report with clever drafting using
maneuvering language to create a false
impression vis-a-vis partially functional status of
the CETP in the past in respect of 192 textile units
amounting to misleading the court thereby
obstructing the due course of justice further
amounting to criminal contempt be not initiated
against them.
N. A copy of this order be sent to the Chief
Secretary, Government of Rajasthan, Jaipur,
the Collector, Jaipur, the Regional Officer of
the Board and the Commissioner, JDA for
information and necessary action, who shall
submit the action taken report in the court by
1.3.2025.
O. The office is directed to proceed accordingly.
166. Accordingly, the objection applications filed
on behalf of the Bank and the award debtor are
hereby dismissed being devoid of merit.
167. Whereas, the objection application filed by
the Association is partly allowed and as of now
the action of attachment and sale of the CETP as
an initial measure is deferred till all other modes
of execution of the award in question are
exhausted/drained off.”
(Emphasis supplied)
3. At the very threshold, and before adverting to the merits and
intricacies of the controversy involved, this Court considers it
apposite to delineate, in a succinct manner, the relevant sequence
of events forming part of the present litigation:
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[2026:RJ-JP:8372] (14 of 54) [CW-6884/2025]3.1 That vide order dated 06.03.2025 passed in D.B. Civil
Miscellaneous Appeal No. 1048/2025, while taking note of the
preliminary objection raised with respect to the maintainability of
the appeal, the Division Bench was pleased to grant interim
protection in the following terms:
“In the meantime, the operation of the impugned order
to the extent wherein the corporate veil has been lifted
and the Directors, shareholders and members of the
SPV have been directed to pay the awarded amount,
shall remain stayed till the next date.”
3.2 That by virtue of the aforesaid interim order, the application
seeking leave to appeal was, at that stage, disposed of as having
been rendered infructuous.
3.3 That thereafter, on 22.04.2025, upon a prayer made by the
learned Advocate General under instructions, the appeal was
directed to be treated and converted into a writ petition.
BRIEF FACTS:
4. That a society in the name Sanganer Pradushan Niwaran
Samiti, Sanganer (hereinafter referred to as “the Samiti”) came to
be constituted with the avowed object of addressing and
mitigating the grave environmental concerns emanating from the
dyeing and printing activities undertaken by textile industries
situated in the Sanganer area. The primary purpose underlying
the constitution of the Samiti was to devise and implement a
structured mechanism for the treatment and disposal of industrial
effluents so as to ensure compliance with environmental norms
and statutory mandates governing pollution control.
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4.1 In furtherance of the aforesaid objective, the Samiti was
entrusted with the responsibility of establishing, commissioning,
and operating a Common Effluent Treatment Plant (hereinafter
referred to as “CETP”), intended to collectively process and treat
effluents generated by member textile units, thereby curbing the
discharge of untreated waste into the environment and
safeguarding public health and ecological balance.; an for the
purpose of facilitating the establishment of the CETP, the Jaipur
Development Authority (hereinafter referred to as “JDA”) allotted
in favour of the Samiti a parcel of land admeasuring 11,310.70
square metres at concessional rates, vide allotment letter dated
23.07.2013.
4.2 The said allotment was made specifically to enable the
Samiti to set up the CETP infrastructure and undertake its
operational activities in accordance with the applicable statutory
framework and environmental guidelines; and that the allotment
of land at concessional rates by JDA was intrinsically linked to the
public purpose sought to be achieved, namely, environmental
protection and pollution abatement in the Sanganer industrial
cluster.
5. The Sanganer Kapda Rangai Chapai Association, Sanganer
(hereinafter referred to as “the Association”) invited tenders for
engagement of a Project Execution Company for establishment of
a CETP at Sanganer; pursuant thereto, Respondent No. 1 was
selected and a contract dated 24.07.2015 was executed between
the parties for implementation of the Project at a total project cost
of Rs. 145 Crore for establishment of a 12.3 MLD system with
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Zero Liquid Discharge. Respondent No. 1 was appointed as the
Project Implementation Agent. The Association, with a view to
secure financial assistance for execution of the Project, applied for
grant-in-aid from the State Government and the Central
Government under the Integrated Processing Development
Scheme (hereinafter referred to as IPDS). In terms of the IPDS
guidelines, constitution of a Special Purpose Vehicle (SPV) was
mandatory for implementation of the Project. The funding pattern
prescribed under the Scheme envisaged:
50% contribution by way of Central grant-in-aid;
25% contribution by way of State grant-in-aid;
10% through bank loan; and 15% through members' contribution.
6. Consequentially, the actual financial contributions made
towards the Project were as follows:
Central Government: Rs. 37.5 Crore; State Government: Rs. 39.75 Crore; Bank Loan: Rs. 15 Crore; Members' Contribution: Rs. 29.25 Crore; Additional Contribution by Members: Rs. 8.11 Crore.
Making the total expenditure incurred aggregated to Rs. 129.61
Crore.
7. Respondent No. 2 was duly incorporated as a SPV for the
purpose of discharging the functions and obligations contemplated
under the IPDS, and the Samiti handed over possession of the
land allotted for establishment of the CETP to Respondent No. 2-
SPV on 28.12.2015. Subsequently, in furtherance of the Central
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Government Scheme, a fresh agreement dated 03.09.2016 was
executed between the SPV and M/s Advent Envirocare Technology
Pvt. Ltd. (hereinafter referred to as the “Project Execution
Company”), in supersession of the earlier contract. The said
agreement expressly delineated the earlier tender and execution,
rendering the same void. Consequentially, a notice to proceed was
issued on 08.09.2016. Further, it is noted that Respondent No. 2
had already disbursed a sum of Rs. 126.60 Crore to Respondent
No. 1, and the balance amount was payable upon completion of
the remaining work, out of the residual grants to be received from
the Central Government. However, the Central Government did
not accept the completion of the work and, consequently, did not
release the remaining grant.
8. Being aggrieved thereof, instead of invoking appropriate
legal remedies before the competent court for release of the said
grant, Respondent No. 1 preferred an application before the MSME
Council, and the same is ultra vires to the applicable jurisdiction
and scope of interference.
ERSTWHILE LITIGATION :
9. The impugned order dated 14.02.2025 (Annexure-10) has
been passed in the backdrop of prior proceedings initiated by
Respondent No. 1, who had earlier approached the National Green
Tribunal, Bhopal on 04.08.2023 in relation to the running of the
CETP; however, the NGT dismissed the said application as
misconceived and not maintainable, holding that it was filed in
furtherance of Respondent No. 1’s commercial interest and did not
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fall within the ambit of Sections 14, 15 and 18 of the National
Green Tribunal Act, 2010.
10. It is noted that Respondent No. 1, as Award Holder, had also
initiated proceedings before the Micro and Small Enterprises
Facilitation Council, Gujarat, which culminated in Arbitral Award
No. 11/2021 dated 03.09.2021 for a sum of Rs. 52,50,46,583/-,
whereafter execution proceedings were instituted against
Respondent No. 2-SPV (Award Debtor), transferred from the Court
of the Principal Senior Civil Judge, Gandhinagar to the Commercial
Court, Jaipur vide order dated 24.03.2023, and the objections
preferred therein by Respondent No. 2 and Union Bank were
subsequently dismissed.
SUBMISSIONS BY LEARNED COUNSEL REPRESENTING THE
PETITIONERS :
11. At the outset, learned counsel appearing in behalf of the
petitioners have contended that the Executing Court acting beyond
its jurisdiction, upon noticing that the responsibility of making
CETP functional was of the government of Rajasthan (hereinafter
referred to as “government”), issued directions vis-à-vis the
government, which is wholly sans jurisdiction and contrary to the
settled principles governing execution proceedings. It was
submitted that the Executing Court cannot travel beyond the
decree/award, as it is a settled proposition of law that an
Executing Court is bound by the decree/award and cannot go
behind or beyond it. Execution proceedings are required to be
carried out strictly in accordance with the provisions of the Code
of Civil Procedure, 1908 (hereinafter referred to as “CPC“) and the
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powers of the Executing Court are circumscribed by the decree
sought to be executed and by the statutory framework under the
CPC.
12. At this juncture, the attention of the Court was drawn upon
the fact that in terms of Section 47 CPC, the questions that are to
be determined by the Executing Court are limited to those relating
to the execution, discharge, or satisfaction of the decree, and the
Executing Court cannot adjudicate fresh liabilities, nor can it
determine the rights of third parties who were not parties to the
decree or award, as in the matter at hand is the government. It
was further argued that the Respondent No. 1-Award Holder filed
an execution application against Respondent No. 2-Award Debtor
before the learned Commercial Court seeking attachment and
other reliefs. However, no specific averments were made in the
execution application seeking lifting of the corporate veil for the
purposes of execution; and despite the absence of such pleadings
or prayer to that effect, the learned Executing Court proceeded to
pierce the corporate veil while executing the award passed by the
MSME Council.
13. It was submitted that even otherwise, the Executing Court
was required to examine whether such a relief could at all be
granted in execution proceedings and whether it possessed the
requisite jurisdiction to do so, however, the said exercise was not
undertaken. Therefore, it can be deduced that the action by the
learned Executing Court, while executing the award, and lifted the
corporate veil of Respondent No. 2-Award Debtor and making its
Directors, shareholders, and members personally liable, is
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arbitrary and beyond the permissible jurisdiction. The liability was
extended even to the members of the SPV who also functioned as
office bearers of the Samiti and the Association. Further, the
Government, through the Collector, Jaipur (in his capacity as
Chairman of the Samiti), was held jointly and severally liable by
invoking the principle of “pay and recover” and the “polluter pays”
principle, and consequently, directions were issued for attachment
of the premises of the textile units along with their movable
assets. It was further ordered by the learned Executing Court that
in the event of non-payment within the stipulated period, the
textile units would be attached and sold as regular immovable
property rather than as functioning industrial units. Additionally,
the Collector, Jaipur, was restrained from drawing his salary until
full satisfaction of the award. Howsoever, none of the aforesaid
persons were parties either before the MSME Council or in the
execution proceedings. Therefore, fastening liability upon them in
execution amounts to adjudicating fresh rights and obligations, is
impermissible in law.
14. In support of the said arguments, learned counsel have
placed reliance upon the ratio encapsulated in Topanmal
Chhotamal v. Kundomal Gangaram & Ors.:AIR 1960 SC 388,
Rameshwar Das Gupta v. State of U.P. & Ors. 🙁1996) 5 SCC
728, Rajasthan Finance Corporation v. Man Industrial
Corporation Ltd. (2003) 7 SCC 522, and Meenakshi Saxena
& Ors. v. ECGC Ltd. & Ors.: 2018 (7) SCC 479, and it was
further contended that these precedents unequivocally hold that
an Executing Court cannot go beyond the decree, cannot enlarge
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its scope, and cannot determine questions unrelated to execution,
discharge, or satisfaction thereof. However, in the present case, as
the award was passed by the MSME Council, the Executing Court
was duty-bound to execute the award strictly as it stood. By lifting
the corporate veil, fastening personal liability on Directors,
shareholders, SPV members, and even the Government
functionary, and by issuing coercive directions including
attachment and restraint on salary of the Collector, Jaipur, the
learned Executing Court has clearly exceeded its jurisdiction.
15. Learned counsel for the petitioners further submitted that
under Order XXI Rule 46D CPC (Procedure where debt belongs to
third person), where a debt is alleged to belong to a third party,
notice is mandatorily required to be issued to such party, and in
case of non-appearance, the procedure under Order XXI Rule 46E
CPC (Order as regards third person) is to be followed. In the
present case, from paragraphs 18 and 19 of the impugned order, it
is evident that the learned Executing Court neither issued notice
to any third party nor followed the prescribed procedure. Instead,
it merely observed that an opportunity be afforded to the State
Government to explore satisfaction of the award amount through
alternative arrangements and directed Respondent No. 2 to file a
detailed affidavit regarding the status of the CETP and its movable
and immovable properties. Ultimately, the learned Executing
Court passed directions shifting the entire liability, beyond the
award, upon the petitioners by applying the “pay and recover”
principle, which is arbitrary and contrary to the settled principles
governing execution proceedings as per the ratio encapsulated in
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[2026:RJ-JP:8372] (22 of 54) [CW-6884/2025]Ramesh Singh V. State of Haryana and Ors. : (1996) 4 SCC
469 and Panihati Municipality & Ors. V. Manjiri Brahma &
Ors.: 2015 (3) CalLJ 141. For the sake of handiness, the
relevant extract as referred herein during the course of arguments
is reproduced hereinbelow:
“18. At the same time upon having noticed that the
responsibility of making the CETP fully functional was
ultimately that of the Government of Rajasthan, the
court also deemed it expedient in the interests of
justice to make the Government of Rajasthan through
the Chief Secretary as well as the District Collector,
Jaipur aware of the proposed action of attachment and
sale of the CETP itself.
19. It was with a view of affording an opportunity to
the State Government to explore and ensure if the
amount payable to the award holder under the award
in question is paid by making some alternate
arrangement.”
16. It was further contended that Section 51 of the CPC (Powers
of Court to enforce execution) delineates the powers of the Court
in the matter of execution and enumerates the various modes by
which a decree may be enforced. The said modes are applicable
only against the judgment-debtor/award-debtor and do not extend
to fastening liability upon third parties. It was submitted that the
learned Executing Court has purportedly exercised powers under
Section 51(e) CPC while passing the impugned order and issuing
the directions contained therein. However, the said provision does
not confer jurisdiction upon the Executing Court to execute an
award beyond the terms of the decree or to grant reliefs not
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forming part of the award. It was further urged that a conjoint
reading of Order XXI Rule 30 (Decree for payment of money) with
Rule 64 CPC (Power to order property attached to be sold and
proceeds to be paid to person entitled) makes it unequivocally
clear that the Executing Court may order attachment and sale of
such property as it deems necessary for satisfaction of the decree.
The statutory scheme thus contemplates that any attachment or
sale must be strictly confined to the extent required to satisfy the
decretal amount, and no sale can be permitted beyond the
decretal liability.
17. Unfolding the submissions further, it was contended that the
doctrine of piercing the corporate veil can be invoked only in
exceptional circumstances, namely where there are specific
allegations or apprehensions of fraud, improper conduct, or where
the governing statute itself contemplates lifting of the corporate
veil. It was submitted that even in such circumstances, the veil
may be lifted only qua the persons who are in-charge of and
responsible for the management of the affairs of the company,
and not against each and every member or shareholder. It was
apprised to the Court that Respondent No. 1 – the award holder
did not implead the State, the Samiti, or the Association as parties
to the claim petition before the MSME Council, nor were any
pleadings raised against them therein. Likewise, the Directors
were not parties to the proceedings culminating in the award and
were also not impleaded in the execution petition. It was further
submitted that in the execution proceedings there are no
averments whatsoever alleging fraud or improper conduct. In such
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circumstances, the learned Executing Court has unjustifiably
invoked the provisions of Order XXI Rules 54 (Attachment of
immovable property) and 30 CPC and directed attachment of the
properties of persons who are not award-debtors. It was also
submitted that by issuing such directions, without affording an
opportunity of hearing, the learned Executing Court has proceeded
to adjudicate upon the rights and liabilities of parties who were
complete strangers to the execution proceedings, which action is
wholly unsustainable in law.
18. It was further contended that Section 8 of the Rajasthan
Societies Registration Act, 1958 expressly stipulates that no
personal liability can be fastened upon the office bearers and
members of the Samiti in respect of the obligations of the society.
It was submitted that the Association is also a body corporate
within the meaning of the Industrial Code, 2020 as well as under
the repealed Industrial Disputes Act, 1947, and thus possesses a
distinct legal personality separate from its members. In view
thereof, the members of the Samiti and the Association cannot, in
law, be treated as personally liable for the liabilities of such
entities. For the sake of handiness the relevant provision is
reproduced herein below:
8. Enforcement of judgment against society: – (1)
If a judgment shall be recovered against a person or
officer on behalf of the society, such judgment shall not
be put in force against the property movable or
immovable, or against the body of such person or
officer but against the property of the society.
(2) The application for execution shall set forth the
judgment, the fact of the party against whom it shall
have been recovered having sued or having been sued,
as the case may be, on behalf of the society only and
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shall require to have the judgment enforced against the
property of the society.
19. Auxiliary, placing reliance upon Clause 7 of the Memorandum
of Association, it was urged that the liability of the members is
expressly limited. Further, Clause 8 thereof provides that, in the
event of winding up of the company, the liability of each member
shall not exceed a sum of Rs. 5,000/-. Therefore, even assuming,
arguendo, that any liability could be fastened upon the members,
the learned Executing Court could not have directed attachment
and sale of all the textile units. It was also fairly conceded that the
members have, in fact, already contributed amounts in excess of
what they were otherwise liable to contribute under the governing
documents. For the sake of convenience the relevant clauses from
the MoA are reproduced herein below:
“8. Each member undertakes to contribute to the
assets of the company in the event of its being wound-
up while he is a member or within one year afterwards,
for payment of the debts or liabilities of the company
contracted before he ceases to be a member and the
costs, charges and expenses of winding up and for the
adjustment of the rights of the contributories among
themselves such amount as may be required not
exceeding Rs. 5,000/- (Rupees five thousand).”
20. Further, in support of the submissions noted insofar, learned
counsel had placed reliance upon a catena of judgments, inter
alia, LIC V. Escorts Ltd. & Ors. [AIR 1986 SC 1370], Steel
Authority of India Ltd. V. National Union Water Front
Workers & Ors. [AIR 2001 SC 3257], Balwant Rai Saluja &
Anr. V. Air India Ltd. & Ors. [AIR 2015 SC 375], Mitsui OSK
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Lines Ltd. (Japan) V. Orient Ship Agency Pvt. Ltd. [2020
SCC Online Bom 217], Balmer Lawrie & Co. Ltd. V.
Saraswathi Chemicals Proprietors [2017 SCC Online Del
7519], V.K. Uppal V. Akshay International Pvt. Ltd. [2010
SCC Online Del 538], Delhi Chemicals & Pharmaceutical
Works Pvt. Ltd. & Anr. V. Himgiri Realtors Pvt. Ltd. & Anr.
[2021 0 Supreme (Del) 401] & P. Nachimuthu Gounder
(Died) & Ors. V. M/s Terra Manufacturing & Sales [2023 0
Supreme (Mad) 1353].
21. It was further contended that the invocation of the “Polluter
Pays” principle in the present matter is wholly arbitrary and
unsustainable in law. The said principle mandates that the
financial burden of preventing or remedying pollution must fall
upon the undertaking responsible for causing such pollution. In
the present case, the contractual stipulations clearly provide that
the operation and management of the CETP were to be
undertaken by Respondent No. 1, and therefore, any liability
arising therefrom cannot be shifted upon the Government. It was
urged that the attempt to invoke the said principle is merely an
effort on the part of Respondent No. 1 to evade its own
contractual obligations. It was submitted that the learned
Executing Court lacks jurisdiction to adjudicate and fasten liability
upon third parties, particularly without affording them an
opportunity of hearing i.e. sans following the principle of audi
alteram partem, and that too on the basis of the “Polluter Pays”
principle, which would require a substantive adjudication beyond
the scope of execution proceedings. It was also brought to the
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[2026:RJ-JP:8372] (27 of 54) [CW-6884/2025]notice of this Court that, in view of the provisions of Sections 14,
15 and 18 of the National Green Tribunal Act, 2010, the learned
Tribunal had dismissed the application made by the respondents.
However, the respondents have concealed the said fact in the
proceedings before the learned Executing Court.
22. It was further submitted that certain directions with regard
to the establishment of a CETP were issued Vijay Singh Punia v.
Rajasthan State Board and Ors. [DB Civil Writ Petition
No.2075/1994]. Pursuant thereto, the tender for establishment
of the CETP was awarded to Respondent No. 1, and a contract was
executed inter-se Respondent Nos. 1 and 2, clearly delineating
their respective roles, obligations, and responsibilities. It was
contended that Respondent No. 1, under the guise of the
directions issued in Vijay Singh Punia (supra), has sought to
divert and shift the contractual liability arising out of the
establishment of the CETP upon the Government and the owners
of the textile units, despite the obligations being specifically
governed by the terms of the contract entered into between the
parties. It was further urged that if the respondents were
genuinely concerned with ensuring environmental compliance in
light of the directions issued in Vijay Singh Punia (supra), the
appropriate course of action could be to institute contempt
proceedings in accordance with law. Instead, the said judgment is
invoked merely as a shield to justify their own failure to discharge
contractual obligations and to deflect responsibility for their own
acts and omissions.
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23. It was further contended that the extent and nature of
liability of the members of a company incorporated under Section
8 of the Companies Act, 2013 is specifically governed by Section
8(11) of the said Act. The provision clearly stipulates that any
liability arises on account of default committed by the company or
by its Directors and Officers. The proviso to Section 8(11) further
delineates that action may be taken against those Officers who
have conducted the affairs of the company in a fraudulent manner.
It was averred that the corporate veil of a company cannot be
lifted merely for the purpose of recovery or repayment of money,
and invocation of such an extraordinary doctrine necessitates
specific allegations and establishment of fraud, misconduct, or
improper conduct on the part of an Officer of the company who is
in control of its operations and management. In the absence of
such foundational pleadings or findings, the piercing of the
corporate veil is impermissible in law.
24. In view of the aforesaid submissions and the settled position
of law, it was earnestly contended that the present petitions
deserve to be allowed, and the impugned judgment and
consequential directions be quashed and set aside.
SUBMISSIONS MADE BY LEARNED COUNSEL REPRESENTING THE RESPONDENTS : 25. At the outset, learned counsel appearing for the respondents, while vehemently opposing the submissions
advanced on behalf of the petitioners, contended that the
Association comprises 807 textile industries approximately. It was
submitted that, in furtherance of the objective to establish a CETP,
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the State and its instrumentalities called upon the Association to
initiate the tendering process. As a result, a tender dated
22.05.2015 was issued for establishment of a CETP having a
capacity of 12.3 MLD, pursuant to which the work was awarded to
Respondent No. 1 – the award holder, on 06.07.2015.
26. It was submitted that the construction and commissioning of
the CETP were duly undertaken and completed by Advent;
however, the payments due and payable to it were not released. It
was further submitted that on 12.08.2019, Advent invoked the
provisions of the Micro, Small and Medium Enterprises
Development Act, 2006 (MSME-D Act) by filing its claim for
recovery of the outstanding amount, the principal sum being
approximately Rs. 32,66,69,370/-, against SEPD. It was pointed
out that the statutory scheme of the MSME-D Act provides for a
mechanism of statutory arbitration at the instance of the Supplier
for recovery of delayed payments along with interest from the
Buyer. Since SEPD was the Buyer within the meaning of the Act,
the claim was necessarily and exclusively filed against SEPD. It
was contended that the MSME-D Act contemplates proceedings
only against the Buyer, and other parties cannot be impleaded
therein. It was further submitted that the Ministry of Textiles
declined to release the second tranche of payment amounting to
Rs. 22.50 crores on the ground that SEPD had failed to fulfill
certain contractual obligations, most notably the completion of the
intermediate pumping stations and the allied pipeline
infrastructure, as the requisite land for the pumping stations had
not been made available. Additionally, it was apprised to the Court
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that even at present, the plant is being operated merely in a
nominal or partial capacity, and approximately 1.25 crore litres of
polluted water are being discharged daily. It was contended that
the State has not proposed any viable alternative mechanism for
ensuring payment of the decretal/awarded amount to the award
holder. It was stoutly asserted that the conduct of the State
demonstrates an unwillingness to ensure that the legitimate dues
of the award holder are satisfied.
27. It was further submitted that the respondents had, at the
appropriate stage and well prior in point of time, specifically
sought the relief of piercing the corporate veil in the execution
petition itself. It was also contended that three separate objectors
entered appearance and filed objections in the execution
proceedings. Firstly, SEPD filed its objections on 08.12.2023
(Annexure R-6), inter alia stating that the immovable property of
the CETP was not liable to attachment as the same belonged to
the Samiti. Secondly, the Union of India filed objections in April
2024, asserting that it had extended credit facilities upon
mortgage and hypothecation of the CETP, and that the lending
bank held a first charge over the said plant. Thirdly, the
Association filed its objections in April 2024 (Annexure – R-7),
contending that the Hon’ble Supreme Court is monitoring the
progress and functioning of the CETP and, therefore, the same
ought not to be attached, though execution could be pursued
through other assets of SEPD. It was stated therein that neither
the Samiti nor the State Government were impleaded as parties to
the execution proceedings. Pursuant thereto, it was submitted that
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while adjudicating upon the objections raised by the Association in
the execution proceedings, and for the purpose of examining
whether the corporate veil could be pierced in execution as well as
to ascertain whether the CETP was, in fact, functional, the learned
Commercial Court issued notices to the Chief Secretary, State of
Rajasthan, the Collector, Jaipur, and the Rajasthan State Pollution
Control Board. It was contended that despite due service of
notices, none of the aforesaid authorities entered appearance
before the learned Court. Save and except the filing of a status
report by the Rajasthan State Pollution Control Board, the
remaining authorities failed to avail themselves of the opportunity
of hearing afforded by the learned Executing Court.
28. Resultantly, the objections preferred by SEPD and the
concerned bank came to be dismissed. The objections filed by the
Association were partly allowed vide order dated 14.02.2025. It
was submitted that, upon an elaborate consideration of various
judicial precedents, the learned Court arrived at the conclusion
that the corporate veil could be pierced even at the stage of
execution proceedings. In doing so, the learned Court took note of
the fact that the textile industries, acting collectively through the
Association, had awarded the contract to Advent, and that SEPD
was, in essence, an alter ego constituted for the purpose of
availing subsidy benefits. It was further contended that the
learned Court invoked and expounded the well-recognized
principle of “polluter pays” while justifying the piercing of the
corporate veil in the facts and circumstances of the case. In
support the contentions noted insofar, reliance was place upon the
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ratio encapsulated in Bhatia Industries and Infrastructure
Ltd. v. Asian Natural Resources (India) Ltd. and Anr. : 2016
SCC OnLine Bom R 132, Delhi Airport Metro Express Private
Limited Vs. Delhi Metro Rail Corporation Ltd. : 2023 SCC
Online Del 1619, State of UP and Ors. Vs. Renusagar Pawer
Co. and Ors. : (1988) 4 SCC 59, 1988 SCC Online SC 29,
Delhi Development Authority Vs. Skipper Construction Co.
Pvt. Ltd. and Anr. : (1996) 4 SCC 622, State of Rajasthan
and Ors. Vs. Gotan Lime Stone Khanij Udyog Private
Limited and Anr.: (2016) 4 SCC 469, Latest Judgment-
Aligarh Muslim University Vs. Naresh Agarwal : 2025 (6)
SCC 1, and AC Choksi Share Broker Vs. Jatin Pratap : 2025
(5) SCC 321.
29. It was further submitted that the order dated 14.02.2025
was passed in proceedings for enforcement of an arbitral award,
as contemplated under Section 36 of the Arbitration and
Conciliation Act, 1996, which were pending before the learned
Commercial Court. It was contended that the statutory scheme of
the Arbitration and Conciliation Act, 1996 does not envisage the
filing of a writ petition against orders passed in enforcement
proceedings under Section 36. The Act provides for appeals only in
the limited circumstances enumerated under Section 37 thereof,
and the impugned order does not fall within any of the categories
of appealable orders prescribed under the said provision. Whilst
placing reliance upon Section 5 of the Arbitration and Conciliation
Act, 1996, it was submitted that judicial intervention is expressly
restricted to those instances specifically provided under the Act,
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[2026:RJ-JP:8372] (33 of 54) [CW-6884/2025]
and since the impugned order is not appealable under Section 37,
the present petition is barred and not maintainable in law. For the
sake of handiness the relevant provisions are reproduced
hereinbelow:
“5. Extent of judicial intervention.–
Notwithstanding anything contained in any other law
for the time being in force, in matters governed by this
Part, no judicial authority shall intervene except where
so provided in this Part.
37. Appealable orders.–
(1) [Notwithstanding anything contained in any other
law for the time being in force, an appeal] shall lie from
the following orders (and from no others) to the Court
authorised by law to hear appeals from original decrees
of the Court passing the order, namely:–
[(a) refusing to refer the parties to arbitration under
section 8;
(b) granting or refusing to grant any measure under
section 9;
(c) setting aside or refusing to set aside an arbitral
award under section 34.]
(2) An appeal shall also lie to a court from an order of
the arbitral tribunal–
(a) accepting the plea referred to in sub-section (2) or
sub-section (3) of section 16; or
(b) granting or refusing to grant an interim measure
under section 17.
(3) No second appeal shall lie from an order passed in
appeal under this section, but nothing in this section
shall affect or take away any right to appeal to the
Supreme Court.”
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[2026:RJ-JP:8372] (34 of 54) [CW-6884/2025]
30. In continuation of the aforesaid submissions, it was
contended that a judicial order passed by a Civil Court is not
amenable to writ jurisdiction under Article 226 of the Constitution
of India. It was urged that the law is well settled that judicial
orders of civil courts stand on a distinct footing from orders
passed by statutory authorities or tribunals. It was further
submitted that there exists no procedure in law enabling the High
Courts to issue writs against subordinate courts in respect of their
judicial orders. Judicial orders of civil courts are not subject to
challenge by way of a writ of certiorari under Article 226 of the
Constitution. In support of the said contention, reliance was
placed upon the judgments enunciated in Shalini Shyam Shetty
v. Rajendra Shankar Patil, reported in (2010) 8 SCC 329, and
Radhey Shyam v. Chhabi Nath, reported in (2015) 5 SCC
423.
31. It was submitted on behalf of the petitioners that, as per the
Memorandum of Association, the liability of each member is
expressly limited to a sum of Rs. 5,000/- in the event
contemplated therein. It was contended that even assuming such
clause to be invoked, the maximum exposure of any member
cannot exceed the stipulated amount. It was further argued that
shareholders of a company who have duly paid the entire call
money on the shares held by them cannot, in law, be called upon
to make any further payment merely on account of the corporate
veil having been lifted. It was also contended that the concept of
limited liability of members is inherent in the Memorandum of
Association of a company limited by shares as well as of a
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[2026:RJ-JP:8372] (35 of 54) [CW-6884/2025]
company limited by guarantee. The stipulation in the
Memorandum restricting the liability of members operates within
the statutory framework governing such companies and does not
ipso facto render members personally liable for the debts and
obligations incurred by the company. In support of the aforesaid
submissions, reliance was placed upon the judgment passed in
Bhatia Industries and Infrastructure Limited v. Asian
Natural Resources India Limited & Anr.: 2016 SCC OnLine
Bom 10695.
32. In summation of the aforesaid submissions, it was contended
that the individual textile industries, acting through the
Association, were mandated by the State Government and its
instrumentalities to establish CETP by initiating and participating
in the tender process. For this purpose, a Committee comprising
representatives of the Government authorities as well as industry
stakeholders was constituted to facilitate, inter alia, allotment of
land by the State. Subsequently, a SPV was also created for the
purpose of availing benefits. It was submitted that the Association,
the Committee, the SPV, and other related entities were
essentially alter egos of one another, constituted to fulfill different
regulatory and financial requirements in the process of
establishing the CETP. Having regard to various orders passed by
the High Court and the Hon’ble Supreme Court, as well as the
active involvement of the judgment-debtor, the State, and its
instrumentalities, it was contended that the establishment and
functioning of the CETP constituted a joint venture and joint
responsibility of all concerned stakeholders.
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[2026:RJ-JP:8372] (36 of 54) [CW-6884/2025]
33. It was urged that the Court must take into account the
substance and realities of the arrangement to prevent any party
from evading its liability through technicalities. In these
circumstances, it was submitted that the corporate veil was rightly
pierced by the learned Court, and the impugned order warrants no
interference.
DISCUSSION AND FINDINGS :
34. Having bestowed anxious consideration to the rival
submissions advanced at the Bar, perused the impugned order
dated 14.02.2025 passed by Jaipur Metropolitan-II, Jaipur in
Execution Petition No. 1604/2023 (CIS No. 1643/2023) titled M/S.
Advent Envirocare Technology Pvt. Ltd. v. M/S Sanganer Enviro
Project Development Jaipur, examined the material available on
record, and scanned the judgments cited at the Bar, this Court
proceeds to render its findings as under:
35. While it is correct that judicial orders of civil courts are
generally not amenable to writ jurisdiction under Article 226, as
held in Shalini Shyam Shetty (supra) but the dictum
enunciated in Radhey Shyam (supra), categorically states that
the supervisory jurisdiction under Article 227 survives where,
there is patent lack of jurisdiction, grave miscarriage of justice or
violation of settled law. In the matter at hand it is noted that an
Executing Court has traveled beyond the award and imposed
liability on strangers to the decree, jurisdictional error is manifest,
as in a matter which pertains to commercial dispute learned
Executing Court adjudicated the merits of the case as a matter of
Public Interest Litigation, resulting into an ultra vires exercise of
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[2026:RJ-JP:8372] (37 of 54) [CW-6884/2025]
jurisdiction, and violating the principles of natural justice. Thus,
interference is warranted. The constitutional purpose of Article 227
is supervisory and not appellate in character. The High Court does
not act as a court of appeal to correct every error of fact or law
committed by subordinate courts. Rather, the jurisdiction is
intended to keep subordinate courts and tribunals within the
bounds of their jurisdiction and to ensure that they exercise their
authority in accordance with law; and as in the matter at hand the
petition taken up as the lead case is filed under Article 227 of the
Constitution of India, this Court is, cautiously deciphering that
these petitions predominantly are filed, to invoke the supervisory
jurisdiction of the High Court. The Hon’ble Supreme Court in
Surya Dev Rai v. Ram Chander Rai, (2003) 6 SCC 675,
explained that supervisory jurisdiction may be exercised where a
subordinate court assumes a jurisdiction which it does not
possess; fails to exercise jurisdiction which it is vested with; or
exercises jurisdiction in a manner not permitted by law, resulting
in grave injustice.
“227. Power of superintendence over all courts
by the High Court
(1) Every High Court shall have superintendence over
all courts and tribunals throughout the territories
interrelation to which it exercises jurisdiction.”
(Emphasis laid)
36. Further, reliance can also be placed upon the ratio
encapsulated in Whirlpool Corporation V. Registrar Of Trade
Marks, Mumbai & Ors. : AIR 1999 SUPREME COURT 22,
relevant extract from which is reproduced hereinbelow:
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[2026:RJ-JP:8372] (38 of 54) [CW-6884/2025]“15. Under Article 226 of the Constitution, the High
Court, having regard to the facts of the case, has a
discretion to entertain or not to entertain a Writ
Petition. But the High Court has imposed upon itself
certain restrictions one of which is that if an effective
and efficacious remedy is available, the High Court
would not normally exercise its jurisdiction. But the
alternative remedy has been consistently held by this
Court not to operate as a bar in at least three
contingencies, namely, where the writ petition has
been filed for the enforcement of any of the
Fundamental Rights or where there has been a
violation of the principle of natural justice or where the
order of proceedings are wholly without jurisdiction or
the vires of an Act is challenged. There is a plethora of
case-law on this point put to cut down this circle of
forensic Whirlpool, we would rely on some old decisions
of the evolutionary era of the constitutional law as they
still hold the field.
16. Rashid Ahmad v. Municipal Board, kairana, AIR
1960 SC 163, laid down that existence of an adequate
legal remedy was a factor to be taken into
consideration in the matter of granting writs. This was
followed by another Rashid case, namely, K.S. Rashid &
Son v. The Income- tax Investigation Commissioner,
AIR 1954 SC 207, which reiterated the above
proposition and held that where alternative remedy
existed, it would be a sound exercise of discretion to
refuse to interfere in a petition under Article 226. This
proposition was, however, qualified by the significant
words, “unless there are good grounds therefor”, which
indicated that alternative remedy would not operate as
an absolute bar and that writ petition under Article 226
could still be entertained in exceptional circumstances.”
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[2026:RJ-JP:8372] (39 of 54) [CW-6884/2025]
37. Having considered the objection with regard to
maintainability, this Court is of the view that the bar contained in
Section 5 of the Arbitration and Conciliation Act, 1996, which
restricts judicial intervention in arbitral matters except where so
provided under the Act, cannot be construed in a manner so as to
render the supervisory jurisdiction of this Court nugatory. Section
36 of the said Act merely provides that an arbitral award shall be
enforced in the same manner as if it were a decree of a civil court,
thereby attracting the procedure governing execution under the
Code of Civil Procedure, 1908. The executing court, therefore,
derives only such authority as is necessary to enforce the award
as it stands and cannot travel beyond the contours of the decree.
Further, although Section 37 of the Act enumerates the limited
categories of orders which are appealable, the absence of a
statutory appeal against a particular order does not ipso facto bar
the exercise of constitutional supervisory jurisdiction where the
subordinate court is alleged to have acted without jurisdiction or in
excess thereof. In the present case, the grievance raised by the
petitioners is not directed against the arbitral award itself, but
against the manner in which the learned Executing Court, while
acting under Section 36 of the Act, is alleged to have travelled
beyond the award and fastened liability upon entities who were
neither parties to the arbitral proceedings nor judgment-debtors
under the award. Such a contention raises a pure jurisdictional
issue touching the legality of the execution proceedings. In these
circumstances, the embargo under Section 5 cannot be read so
expansively as to exclude the constitutional jurisdiction of this
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[2026:RJ-JP:8372] (40 of 54) [CW-6884/2025]
Court to correct patent jurisdictional errors committed by courts
subordinate to it. Accordingly, this Court is satisfied that the
present petitions, assailing the jurisdictional exercise of the
executing court, are maintainable in the limited supervisory
jurisdiction of this Court.
Issues for Consideration :
Upon a conspectus of the pleadings and arguments, the
following issues arise for determination before this Court:
I. Whether the learned Executing Court, in proceedings before
it could travel beyond the arbitral award and fasten liability upon
persons/entities who were neither parties to the award nor
impleaded as judgment-debtors amounting to apparent violation
of the principles of natural justice and audi alteram partem?
II. Whether the corporate veil could be pierced in execution
proceedings in the absence of pleadings or findings of fraud,
improper conduct, or statutory mandate?
III. Whether invocation of the “Polluter Pays” principle was
legally sustainable in execution proceedings so as to impose
liability upon third parties without substantive adjudication?
IV. Whether the procedure contemplated under Order XXI CPC,
particularly Rules 30, 46D, 46E and 64, was duly complied with
before attachment and consequential directions were issued?
V. Whether the application of principle of alter ego for lifting of
corporate veil, as stated by the respondents is justified?
38. Having formulated the issues for consideration, this Court
proceeds to determine each issue independently and in detail,
upon a comprehensive analysis of the statutory framework,
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[2026:RJ-JP:8372] (41 of 54) [CW-6884/2025]binding precedents, and the admitted factual matrix placed on
record.
I. Whether the learned Executing Court, in proceedings
before it could travel beyond the arbitral award and fasten
liability upon persons/entities who were neither parties to
the award nor impleaded as judgment-debtors, amounting
to apparent violation of the principles of natural justice and
audi alteram partem?
39. It is trite law that an Executing Court cannot go behind the
decree. The decree must be executed as it stands. The jurisdiction
is ministerial, not adjudicatory in the plenary sense. Section 36 of
the Arbitration and Conciliation Act, 1996 governs the
enforcement of arbitral awards. By virtue of Section 36(1), once
the time for making an application under Section 34 has expired,
or such application has been refused, the arbitral award ‘shall be
enforced in accordance with the provisions of the Code of Civil
Procedure, 1908 in the same manner as if it were a decree of the
Court.’ Thus, enforcement proceedings under Section 36 are
execution proceedings in substance, and the Executing Court
derives its jurisdiction strictly from the decree or award sought to
be enforced. The Executing Court therefore cannot assume a
jurisdiction wider than what is contained in the award itself. Thus,
enforcement proceedings assume the character of execution
proceedings under the Code of Civil Procedure, 1908. For the sake
of handiness the relevant provision from the Act of 1996 is
reproduced hereinbelow:
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[2026:RJ-JP:8372] (42 of 54) [CW-6884/2025]“36. Enforcement.–(1) Where the time for making
an application to set aside the arbitral award under
section 34 has expired, then, subject to the provisions
of sub-section (2), such award shall be enforced in
accordance with the provisions of the Code of Civil
Procedure, 1908 (5 of 1908), in the same manner as if
it were a decree of the court.
(2) Where an application to set aside the arbitral award
has been filed in the Court under section 34, the filing
of such an application shall not by itself render that
award unenforceable, unless the Court grants an order
of stay of the operation of the said arbitral award in
accordance with the provisions of sub-section (3), on a
separate application made for that purpose.
(3) Upon filing of an application under sub-section (2)
for stay of the operation of the arbitral award, the
Court may, subject to such conditions as it may deem
fit, grant stay of the operation of such award for
reasons to be recorded in writing:
Provided that the Court shall, while considering the
application for grant of stay in the case of an arbitral
award for payment of money, have due regard to the
provisions for grant of stay of a money decree under
the provisions of the Code of Civil Procedure, 1908 (5
of 1908).][Provided further that where the Court is satisfied that
a Prima facie case is made out that,–
(a) the arbitration agreement or contract which is the
basis of the award; or
(b) the making of the award, was induced or effected
by fraud or corruption, it shall stay the award
unconditionally pending disposal of the challenge under
section 34 to the award.
Explanation.–For the removal of doubts, it is hereby
clarified that the above proviso shall apply to all court
cases arising out of or in relation to arbitral
proceedings, irrespective of whether the arbitral or
court proceedings were commenced prior to or after
the commencement of the Arbitration and Conciliation
(Amendment) Act, 2015 (3 of 2016).]”
40. The Hon’ble Supreme Court in Topanmal Chhotamal
(supra) held that the Executing Court must execute the decree as
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[2026:RJ-JP:8372] (43 of 54) [CW-6884/2025]
it stands and cannot question its correctness or enlarge its scope.
Similarly, in Rajasthan Financial Corporation (supra), it was
reiterated that the Executing Court cannot grant relief not
contained in the decree. In the present case, upon perusal of the
material available on record it is noted that the MSME award was
passed against SEPD as the Buyer; the State, Samiti, Association,
Directors, shareholders and members were not parties before the
MSME Council; the MSME-D Act contemplates statutory arbitration
between Supplier and Buyer only; no decree exists against the
petitioners herein; yet, the learned Executing Court fastened
liability upon them by lifting the corporate veil and applying “pay
and recover.” Such an exercise amounts to adjudicating fresh
liability in execution which is not only ultra vires to the jurisdiction
an Executing Court possess, but also clearly transgresses the
permissible contours of execution. It is a settled principle of law
that ‘executio est finis et fructus legis’ (meaning execution is the
end and fruit of law) signifying that execution enforces adjudicated
rights; it does not create new ones. Execution is the culmination
of adjudication, not a fresh forum for determining new rights and
liabilities.
41. Therefore the present issue is answered against the
respondents.
II. Whether the corporate veil could be pierced in
execution proceedings in the absence of pleadings or
findings of fraud, improper conduct, or statutory mandate?
42. The doctrine of lifting the corporate veil is an exception to
the foundational principle of corporate personality established in
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[2026:RJ-JP:8372] (44 of 54) [CW-6884/2025]
Salomon v. Salomon & Co. Ltd.: [1897] AC 22. It is invoked
sparingly. Indian jurisprudence recognizes lifting of the veil only
where fraud is alleged and established, where statute expressly
contemplates, or where corporate form is used to defeat public
interest or evade law.
43. In the present matter, upon perusal of the material available
on record it is noted that no categorical averments of fraud or
misconduct were pleaded in the execution proceedings, no
findings of fraudulent conduct were recorded. Moreover, the
Directors were not parties to the award, and the Members’ liability,
as per Clause 7 and Clause 8 of the Memorandum of Association,
is limited, and in winding up not exceeding Rs. 5,000/- per
member.
44. It was conceded that members have already contributed
more than their stipulated liability by the respondents herein
before the learned Executing Court. The stance to this opinion, is
stoutly drawn from the ratio encapsulated in Balwant Rai Saluja
& Anr. v. Air India Ltd. & Ors. : AIR 2015 SC 375. Moreover,
in the matter at hand it is noted that the learned Executing Court
cannot travel beyond the decree to determine the liabilities under
the doctrine of lifting of corporate veil, as it is vital that all the
concerned individuals be made parties to the proceedings and be
afforded an opportunity of hearing, sans such an opportunity, the
rights and liabilities of third parties cannot be adjudicated. For the
sake of handiness, the relevant extract from the relied upon
judgment is reproduced hereinbelow:
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[2026:RJ-JP:8372] (45 of 54) [CW-6884/2025]“70. The position of law regarding this principle in India
has been enumerated in various decisions. A
Constitution Bench of this Court in Life Insurance
Corporation of India v. Escorts Ltd. and Ors. : (1986)
1 SCC 264, while discussing the doctrine of corporate
veil, held that:
90…. Generally and broadly speaking, we
may say that the corporate veil may be
lifted where a statute itself contemplates
lifting the veil, or fraud or improper
conduct is intended to be prevented, or a
taxing statute or a beneficent statute is
sought to be evaded or where associated
companies are inextricably connected as
to be, in reality, part of one concern. It is
neither necessary nor desirable to enumerate
the classes of cases where lifting the veil is
permissible, since that must necessarily
depend on the relevant statutory or other
provisions, the object sought to be achieved,
the impugned conduct, the involvement of the
element of the public interest, the effect on
parties who may be affected etc.
71. Thus, on relying upon the aforesaid decisions, the
doctrine of piercing the veil allows the Court to
disregard the separate legal personality of a company
and impose liability upon the persons exercising real
control over the said company. However, this
principle has been and should be applied in a
restrictive manner, that is, only in scenarios
wherein it is evident that the company was a
mere camouflage or sham deliberately created by
the persons exercising control over the said
company for the purpose of avoiding liability. The
intent of piercing the veil must be such that
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[2026:RJ-JP:8372] (46 of 54) [CW-6884/2025]would thus depend upon the peculiar facts and
circumstances of each case.”
(Emphasis supplied)
45. Thus, this Court finds that piercing the corporate veil at the
execution stage, without pleadings, evidence, or trial on fraud,
amounts to adjudicating substantive rights beyond jurisdiction,
and in view thereof, the present issue is also answered against the
respondents.
III. Whether invocation of the “Polluter Pays” principle
was legally sustainable in execution proceedings so as to
impose liability upon third parties without substantive
adjudication?
46. The “Polluter Pays” principle is an environmental
jurisprudential doctrine requiring adjudication of factual
responsibility. Its invocation requires, determination of who
caused pollution; Quantification of environmental harm; and
assignment of remedial costs. However, in the matter at hand
Contractual stipulations provided operation and management of
CETP to Respondent No. 1; Ministry of Textiles withheld second
tranche (Rs. 22.50 Crores Approx) due to incomplete obligations
including intermediate pumping stations and pipeline, and the
claim was filed under MSME-D Act only against SEPD. Moreover,
NGT proceedings under Sections 14, 15 and 18 were dismissed.
47. In the present case, the Tribunal having declined to entertain
or having dismissed the proceedings initiated before it, no
determination of liability came to be recorded against the
petitioners, the Samiti, the Association or the individual textile
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[2026:RJ-JP:8372] (47 of 54) [CW-6884/2025]
units. In spite of the said position, the learned Executing Court
appears to have invoked the principle of “polluter pays” while
dealing with the execution of a monetary award arising out of
contractual obligations. In the considered view of this Court, such
an approach raises serious concerns, for the executing court
cannot assume the role of an adjudicatory forum to determine
environmental liability, particularly when the specialised statutory
forum vested with such jurisdiction had already declined to grant
relief. Equally significant is the fact that the respondents did not
fairly disclose before the learned Executing Court the outcome of
the proceedings before the Tribunal. The omission to place the
complete factual position before the executing court had the effect
of presenting an incomplete picture of the legal landscape
governing the dispute. This Court is therefore of the considered
opinion that once the proceedings before the Tribunal stood
dismissed and no liability was determined therein, the invocation
of environmental doctrines such as the “polluter pays” principle in
execution proceedings, that too without any independent
adjudication after affording an opportunity of hearing to the
affected parties, could not have been resorted to by the learned
Executing Court.
48. Therefore, in opinion of this Court the application of principle
of “Polluter Pays” in execution proceedings to shift contractual
liability, without environmental adjudication, is impermissible.
Execution cannot substitute for substantive environmental
determination. In support of the said finding this Court is inclined
to draw strength from the ratio encapsulated in Indian Council for
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[2026:RJ-JP:8372] (48 of 54) [CW-6884/2025]
Enviro-Legal Action & Ors. v. Union of India & Ors. : (1996)
3 SCC 212, and the famous principle “actus curiae neminem
gravabit” (meaning that an act of court shall prejudice no one),
which reinforces that judicial expansion beyond jurisdiction must
not harm non-parties.
49. Thus, application of “Polluter Pays” to shift contractual
liability in execution, without trial, amounts to substituting
adjudication with assumption, and thence, the instant issue is also
answered against the plea of the respondents.
IV. Whether the procedure contemplated under Order XXI
CPC, particularly Rules 30, 46D, 46E and 64, was duly
complied with before attachment and consequential
directions were issued?
50. From a bare perusal of the provisions of Order XXI of CPC, it
is noted that Order XXI Rules 46D and 46E CPC mandate notice to
third parties in garnishee proceedings, and in the matter at hand
no such statutory compliance is demonstrated. Order XXI Rule 64
CPC permits sale only to the extent necessary to satisfy the
decree. Upon scanning the contents of the decree in question it is
noted that the same was for a quantified amount and attachment
and sale beyond decretal satisfaction is impermissible. It is also
noted that the learned Execution Court while superseding its
powers under execution, directed to attach and sale all the textile
units as ‘non-functional units’, without acknowledging the actual
award amount to be paid to the respondent no. 1, which is per-se
in violation of the dictum passed in Balakrishnan v. Malaiyandi
Konar: (2006) 3 SCC 49.
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[2026:RJ-JP:8372] (49 of 54) [CW-6884/2025]
51. Further, it is noted that the respondents contended that
SEPD submitted their objections before the Executing Court
objected (Annexure R6), Union of India objected claiming first
charge through mortgage/hypothecation and the objections by the
Association (Annexure R7) were also recorded. However,
Objections of SEPD and bank were dismissed; Association partly
allowed. However, upon doing the needful this Court is of a stern
view that albeit notices were issued to Chief Secretary, Collector
and Pollution Control Board, and though objections were filed by
SEPD, Union of India, and Association, the fundamental defect
remains, liability was imposed absent decree against them.
52. The record shows that liability was shifted by invoking “pay
and recover” and the “Polluter Pays” principle/doctrines requiring
substantive adjudication, and herein only execution-based
determination is made sans following the principles of natural
justice and in violation of the principle of audi alteram partem.
53. In view thereof, the instant issue is also decided against the
plea made by the respondents.
V. Whether the application of principle of alter ego for
lifting of corporate veil, as stated by the respondents is
justified?
54. The respondents have sought to justify the lifting of the
corporate veil qua all members of the company by invoking the
doctrine of alter ego, contending that the Association, the Samiti,
and the Special Purpose Vehicle (Respondent No. 2) are, in
substance, indistinguishable from their members and therefore
liable jointly and severally. This Court is unable to accede to the
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said contention. The doctrine of alter ego is an exceptional
principle, applied sparingly and only in circumstances where the
corporate form is demonstrably used as a mere facade for
perpetrating fraud, evading statutory obligations, or defeating
public policy. The existence of organizational interlinkages or
overlapping membership does not, ipso facto, efface the distinct
legal personality conferred by law. The Association, as placed on
record, is a body corporate possessing an independent juristic
identity separate and distinct from its members. It is a settled
proposition that a corporate body has a legal existence
independent of the individuals composing it, and its rights and
liabilities are not automatically transmissible to its members. A
judgment or award against the corporate entity cannot, in the
absence of specific adjudication, be enforced against its members.
55. Similarly, Respondent No. 2 is a company duly incorporated
under the Companies Act, 2013, thereby acquiring a separate and
distinct legal personality from its shareholders and members. The
corporate character of a company cannot be disregarded merely
on account of common membership or shared objectives between
allied entities. The mere fact that the Association, the Samiti, and
their members are shareholders or stakeholders in Respondent
No. 2 does not render them personally liable for the debts and
obligations of the company. Corporate liability is that of the
incorporated entity itself. Personal liability of members can arise
only in circumstances expressly contemplated by statute or upon a
judicial determination by a competent forum, founded upon
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pleadings, evidence, and findings of fraud, misconduct, or
statutory violation.
56. In the absence of such adjudication by the appropriate
forum, fastening liability upon the members under the guise of the
alter ego doctrine amounts to disregarding the foundational
principle of separate legal personality. The corporate veil cannot
be pierced merely to facilitate recovery, nor can the doctrine of
alter ego be invoked as a substitute for substantive determination
of liability.
57. Accordingly, this Court holds that the Association, the Samiti,
and the individual members thereof cannot be made liable for the
liabilities of Respondent No. 2 unless such liability is duly
established and determined in accordance with law by a
competent adjudicatory forum; and the instant issue is decided in
favor of the petitioners.
58. Upon addressing the issues formulated hereinabove, this
Court deems it apposite to jot down the key takeaways from the
afore-discussed; the same can be delineated as :
a) that supervisory jurisdiction of High Court remains intact as
discussed hereinabove;
b) that the Executing Court travelled beyond the award and
fastened liabilities upon non-parties;
c) that the Corporate veil was pierced without pleadings or
findings of fraud;
d) that the mandatory CPC safeguards were not adhered to;
e) that the environmental doctrines were invoked without
substantive adjudication;
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f) that the attachment directions exceeded decretal framework;
g) that separate legal identity of corporate bodies must be
respected;
h) that execution proceedings cannot become adjudicatory
proceedings;
i) that dismissal of proceedings before the NGT is material;
j) that maintainability of the petitions is not barred;
k) that there is apparent violation of principles of natural justice,
resultantly the impugned order suffers from jurisdictional infirmity.
59. It is further noteworthy that the judgments relied upon by
the learned counsel appearing for the respondents operate in a
clearly distinguishable factual and legal matrix. The ratio
decidendi of the said decisions does not advance the respondents’
case, as the circumstances therein warranted invocation of
principles which are not attracted in the present matter.
Consequently, the reliance placed upon those authorities is
misplaced and does not render assistance to the respondents’
submissions.
CONCLUSION AND DIRECTIONS :
60. At the outset, this Court is of a view that Corporate
personality is not a veil to be lifted at convenience, nor a shield to
be shattered in execution without trial. Equity follows the law,
“aequitas sequitur legem.” Execution is the handmaid of justice,
not its architect.
61. In view of the foregoing analysis, this Court is of the
considered opinion that the impugned order dated 14.02.2025
cannot be sustained in the eyes of law. The learned Executing
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Court, while exercising jurisdiction under Section 36 of the
Arbitration and Conciliation Act, 1996, read with Order XXI Rule
11 of the CPC has travelled beyond the confines of the arbitral
award and the settled parameters governing execution
proceedings. The fastening of liability upon entities and individuals
who were neither parties to the award nor adjudged as judgment-
debtors, the invocation of doctrines requiring substantive
adjudication at the stage of execution, and the expansion of the
decree beyond its terms, collectively constitute jurisdictional
overreach. Execution is a mechanism for enforcement of an
adjudicated liability and not a forum for creation or enlargement
thereof. Consequently, the impugned order warrants interference,
and the matter stands remanded for reconsideration strictly in
accordance with law.
62. Accordingly, the present batch of petitions is allowed.
63. The impugned order dated 14.02.2025 passed by the learned
Commercial Court in enforcement proceedings under Section 36 of
the Arbitration and Conciliation Act, 1996 is quashed and set
aside. The matter is remanded to the learned Commercial Court
for fresh consideration strictly within the parameters of:
63.1 The arbitral award,
63.2 The provisions of Order XXI CPC,
63.3 The statutory scheme governing limited liability,
63.4 Principles of natural justice and audi alteram partem.
64. The learned Court shall decide afresh, after affording
adequate opportunity to all necessary parties and confining itself
to execution in accordance with law.
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65. In view of the foregoing discussion and findings recorded
hereinabove, the instant batch of petitions deserves to be and is
accordingly allowed. The impugned order(s) dated 14.02.2025
are hereby set aside. Registrar (Judicial) is directed to transmit a
copy of this order forthwith to the concerned Executing Court for
necessary information and compliance.
66. The learned Executing Court, as well as all parties to the
proceedings, are directed to act in terms of this order with due
expedition and without any avoidable delay.
67. Pending applications, if any, shall stand disposed of
accordingly.
68. A copy of this order be separately placed in each connected
file.
(SAMEER JAIN),J
Preeti Asopa
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