Pasari Spinning Mills Limited has secured a significant legal victory with the Karnataka High Court granting a stay on execution proceedings that had threatened the company's assets. The Hon'ble High Court of Karnataka issued a stay order on January 9, 2026, halting the sale proceedings arising from the Proclamation of Sale issued by the Commercial Court, Mysuru.

Proclamation of Sale Details

The Commercial Court of Mysuru had issued a Proclamation of Sale dated November 3, 2025, which the company received on December 18, 2025. The proclamation pertained to enforcement proceedings for recovery of alleged dues totaling ₹7.03 crores in the execution case Com.Ex./249/2023 filed by Cotton Corporation of India Limited.

High Court Intervention and Stay Order

The Karnataka High Court, comprising Hon'ble Mrs. Justice Anu Sivaraman and Hon'ble Mr. Justice Vijaykumar A. Patil, granted the stay in Commercial Appeal No. 53/2022. The court's intervention came just days before a scheduled auction on January 12, 2026, providing crucial relief to the textile company.

Background of Legal Proceedings

The stay order relates to the original execution proceedings in Com.Ex./249/2023 filed by Cotton Corporation of India Limited against Pasari Spinning Mills and its Managing Director. The case stems from a Commercial Arbitration Suit No. 127/2006, where an arbitral award dated July 24, 2006, was upheld by the Commercial Court, Bengaluru on January 31, 2020.

Company's Legal Arguments and Court's Decision

Pasari Spinning Mills' legal counsel argued that the company was classified as a sick industry under The Sick Industrial Companies (Special Provisions) Act, 1985. The company contended that under Section 22 of this Act, the initiation and continuation of arbitration proceedings were impermissible, and the arbitrator's appointment was unilateral.

The High Court granted the stay subject to Pasari Spinning Mills furnishing security to the satisfaction of the executing court. The judges noted that the matter requires detailed consideration, leading to their decision to halt the execution proceedings pending further hearings.

Regulatory Compliance and Disclosure

The company received the court order on January 13, 2026, and promptly informed the BSE under Regulation 30 of SEBI (LODR) Regulations, 2015. Managing Director Krishna Kumar Gupta (DIN: 00003880) signed the disclosure, stating that the financial impact cannot be quantified at this stage and remains under examination. The company also provided clarification regarding the delay in submission of additional details, citing coordination with legal advisors in both Mysuru and Bengaluru.

The case is scheduled for the next hearing on February 11, 2026, where the High Court will conduct a detailed review of the appeal challenging the original arbitration proceedings and subsequent execution actions.