Mumbai HC issues restraining order against sugar factory controlled by BJP MP's family

The court said Karkhana’s forceful operation of the power plant was illegal and the parties would lose faith in the system if their contractual rights are taken away using political power.

Published: 12th April 2022 06:06 PM  |   Last Updated: 12th April 2022 06:14 PM   |  A+A-

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For representational purpose. (File Photo)

Express News Service

MUMBAI: The Mumbai High Court has passed a restraining order against the prominent Vikhe Patil family-owned sugar factory in Ahmednagar asking the promoters not to enter the premises of a local power plant, and not to carry out any work/activity therein.

The Vikhe Patil family, to which the sitting local Member of Parliament Sujay Vikhe Patil belongs, controls the Padamshri Dr Vitthalrao Vikhe Patil Sahakari Sakhar Karkhana in Ahmednagar district.

Pravara Renewable Energy Ltd (PREL) had set up the power plant at the sugar factory premises of Padamshri Dr Vitthalrao Vikhe Patil Sahakari Sakhar Karkhana. Late last year, the Vikhe Patil family’s Karkhana allegedly ousted the PREL and forcefully occupied the power plant and started running it.

PREL filed a commercial arbitration petition number 2325/2021 before the Bombay High Court.

The court has said in its order that the Karkhana’s forceful operation of the power plant was illegal and the parties would lose faith in the system if their contractual rights are taken away using political power.

“Irreparable damage will be caused to the plant if the Karkhana continues to operate the plant. As such, the court ordered as follows: “That pending the hearing and final disposal of the arbitral proceedings, making of the arbitral Award and until final execution of the arbitral Award, this Hon'ble Court be pleased to restrain the Respondent, its board of directors, promoters, partners, employees, agents, representative and anyone acting on behalf of the Respondent, in any manner from entering the premises of the  petitioner's Co-generation plant and from carrying out any work/activity for the repairs/maintenance/ operation of the Petitioner Co-generation plant.”

The High Court had reserved its order in the case on March 3, 2022, and the order was issued today.

The court said in its order “a petition was filed under Section 9 of the Arbitration and Conciliation Act, 1996 whereby the petitioner had prayed for interim measures pending the arbitral proceedings. An interesting question, which has arisen for consideration in the present case before the initiation of arbitral proceedings, is as to whether the respondent has any legal right under the contractual scheme the parties stand, to interfere in the petitioner’s managing and operating its Co-generation plant and attempt to lock, stock and barrel, oust the petitioner from operating and managing its own Co-generation Power Plant.”

The court said the “the petitioner’s case is of coercive actions having taken place to oust the petitioner from the Co-generation plant by the respondent after the present petition was filed on 12 October 2021. The respondent using its dominating position as a powerful sugar factory.”

The court further said prima facie, it is quite apparent that there is a systematic commercial modus operandi on the part of the Karkhana to take over the co-gen plant. This firstly, by permitting PREL to set up the co-gen plant for which the PREL incurred substantial expenditure of Rs 274 crores by borrowing funds fully to the knowledge of the Karkhana, and thereafter by not supplying the agreed amount of bagasse and biogas, the basic raw-material for generation of power and steam, thereby depriving PREL of a normal functioning of the plant to recoup its investments and earn profits.

The court also made adverse remarks about the dismantling of the biogas pipeline and using it for the captive generation facility, which was a clear indication that there was no intention to supply biogas thereby crippling PREL. All such actions which appear to be systematically planned, have resulted in serious financial difficulties for PREL

The court said this is a classic case where the cooperative sugar factory stated to be of repute, is not only acting by taking law into its hands, in brazen breach of the terms and conditions of the PDA but also completely oblivious to the rule of law as noted above.

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