In a significant development, the Gujarat High Court intervened on Mar 27 to halt the auction proceedings concerning around 300 shops at the Surat Diamond Bourse complex, reputedly the world’s largest commercial building, spanning an expansive 67 lakh square feet.

The stay was granted in response to an appeal filed by the Surat Diamond Bourse (SDB) against an order of the Surat Commercial Court directing the bourse management to furnish a bank guarantee of ₹125 cr to PSP Projects, the company behind constructing this landmark complex.

The HC stated that “until the bank guarantee is furnished, the SDB will not be able to grant any third-party rights on the remaining part of the complex, transfer it, or auction it.”

The court also directed PSP Projects to take steps within the next three months, failing which the SDB would be allocated a provision to challenge the ruling.

The HC also directed the commercial court to take steps as early as possible through an arbitral tribunal concerning the agreement between the parties.

SDB’s payment-due case

Previously, the HC bench, comprising Justices Umesh Trivedi and Niral Mehta, quashed the ruling of the Surat Commercial Court, which directed the Surat Diamond Bourse to furnish the bank guarantee within seven days.

PSP Projects had earlier filed a suit in the Surat court claiming that it had constructed and handed over the “world’s largest and historic complex” to the Surat Diamond Bourse, but the latter had not made the final payment of ₹538.39 cr.

It further alleged that the SDB management has not been making payments to the company or approving the bills submitted by it.

The total amount due to the company, with interest levied, has surmounted to ₹931.32 cr. The company had therefore demanded ₹108 cr from SDB. Over which this appeal was filed.

The HC had set aside the Commercial Court’s order regarding the guarantee amount as both parties agreed to expedite the resolution of the dispute in the lower court.

The Bourse said that out of the total 4,600 shops in the bourse, 4,300 have been auctioned. However, with the commercial court staying the auction, the project’s financial prospects are now stalled.

After hearing the parties, the High Court reserved its judgment in the case along with the stay order.

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