2001 (4) TMI 695 - HC - Customs

Summary

Issues Involved:
1. Whether the time granted to accomplish the export obligation is deemed to have been extended by virtue of the public notification issued by the Government of India on 6-4-1999.
2. Whether the invocation and enforcement of bank guarantees consequent to non-fulfillment of export obligation under EPCG license is barred or suspended by virtue of the pending proceedings under the SICA Act.

Issue-wise Detailed Analysis:

1. Extension of Time for Export Obligation:
The petitioner contended that the export obligation period was automatically extended by a public notification issued by the Government of India on 6-4-1999. The notification allowed license holders who failed to complete their export obligation to apply for an extension of 1.5 years, subject to certain conditions, including the submission of a bank guarantee covering customs duty and interest. The petitioner failed to comply with these conditions and did not apply for the extension within the stipulated time. Consequently, the court found no automatic extension of the export obligation period for the petitioner. The first point was answered against the petitioner, affirming that the petitioner could not avail the benefit of the public notice due to non-compliance with the stipulated conditions.

2. Invocation and Enforcement of Bank Guarantees:
The petitioner argued that the invocation of bank guarantees was barred under Section 22 of the SICA Act, which suspends certain proceedings against sick industrial companies. The court examined whether the invocation of bank guarantees falls under the scope of Section 22. It was determined that the guarantees in question were not related to loans or advances but were furnished to secure compliance with export obligations under the EPCG scheme. The court emphasized that Section 22 applies to the enforcement of guarantees in respect of loans or advances granted to the industrial company, not to guarantees furnished for other obligations. The court referred to various Supreme Court judgments, including Patheja Brothers Forgings and Stamping and Others v. ICICI Ltd., which clarified that Section 22 covers guarantees related to loans or advances, not all kinds of guarantees. Consequently, the invocation of bank guarantees for non-fulfillment of export obligations was not barred by Section 22 of the SICA Act. The court concluded that the bank guarantees were rightly invoked, and the petitioner was not entitled to any relief under Section 22. The second point was answered against the petitioner.

Conclusion:
The court dismissed the writ petition, holding that the petitioner was not entitled to any relief. The connected miscellaneous petitions were also dismissed, and no costs were awarded.