2009 (11) TMI 635 - HC - Central Excise

Bank Guarantee - respondents has filed undertaking that they will deposit the amount of Rs. 17.61 lakh with the same bank from which bank guarantee was issued and encashed by the department - In the event of such deposit, the petitioner undertakes to furnish fresh bank guarantee - officer encashing the bank guarantee will be personally held liable for the preach of the order and circular, Writ petition is disposed of in terms of this order with no order as to costs

Summary

Issues:
Violation of guidelines in encashing bank guarantee, Non-compliance with court judgment, Personal liability of officer encashing bank guarantee

Violation of guidelines in encashing bank guarantee:
The High Court noted that the respondents had filed an undertaking to deposit a specified amount with the same bank from which the bank guarantee was issued and encashed by the department. The court did not delve into the merits of the petition due to this undertaking. However, the court emphasized that the department must adhere to its own guidelines regarding bank guarantees and the court's judgment in a specific case. The court warned that failure to follow guidelines and court judgments in the future would result in serious consequences, with the officer encashing the bank guarantee being held personally liable for breaching the order and circular.

Non-compliance with court judgment:
The judgment highlighted that the department was not following its own guidelines and the court's previous judgment in a specific case related to bank guarantees. The court issued a notice to the respondents, cautioning that any future instances of encashing bank guarantees without adhering to guidelines and court judgments would be severely dealt with. The court emphasized that it would take a serious view of such non-compliance, potentially holding the officer responsible for encashing the bank guarantee personally liable for breaching the order and circular.

Personal liability of officer encashing bank guarantee:
The court specifically mentioned that if it observes any future instances where the department encashes a bank guarantee without following the prescribed guidelines and court judgments, it would hold the officer responsible for encashing the guarantee personally liable for the breach of the order and circular. The respondents were put on notice regarding this potential consequence, emphasizing the importance of compliance with guidelines and court decisions in such matters.

In conclusion, the High Court's judgment in this case primarily focused on the importance of adhering to guidelines and court judgments when dealing with bank guarantees. The court issued a stern warning to the department and its officers, emphasizing the potential personal liability of the officer responsible for encashing a bank guarantee in case of non-compliance with established guidelines and court decisions.