1982 (3) TMI 76 - HC - Customs

Issues Involved:
1. Forfeiture of bond by respondent No. 2.
2. Compliance with foreign exchange earning obligations.
3. Delay in registering export contracts by respondent No. 2.
4. Impact of currency devaluation on foreign exchange obligations.
5. Legality of respondent No. 2's actions regarding bond forfeiture.

Detailed Analysis:

1. Forfeiture of Bond by Respondent No. 2:
The petitioners challenged the action of respondent No. 2 in forfeiting the bond dated 1-12-1965. The petitioners had imported color films under three licenses issued by respondent No. 2, with a condition to earn foreign exchange equivalent to 133.33% of the import value. The main dispute centered around the import license dated 29-9-1965, under which the petitioners imported color positive cinema films worth Rs. 98,091 and furnished a bank guarantee for Rs. 49,046.

2. Compliance with Foreign Exchange Earning Obligations:
The petitioners were required to earn foreign exchange totaling Rs. 4,22,483 from the imported films. They claimed to have earned Rs. 30,603.14 and Rs. 22,000 through exports, and further Rs. 17,983.94, but faced difficulties due to the film being a commercial failure. Despite repeated extensions granted by respondent No. 2, the petitioners could not meet the enhanced foreign exchange obligations post the devaluation of the Indian currency in 1966.

3. Delay in Registering Export Contracts by Respondent No. 2:
The petitioners alleged that respondent No. 2's delay in registering export contracts resulted in the cancellation of contracts worth Rs. 40,500, which impeded their ability to earn the required foreign exchange. They claimed that respondent No. 2's insistence on earning 57.5% more due to devaluation further complicated their compliance.

4. Impact of Currency Devaluation on Foreign Exchange Obligations:
The devaluation of the Indian currency on June 6, 1966, increased the petitioners' foreign exchange earning obligations from Rs. 1,30,788 to Rs. 2,05,991. The petitioners contended that the devaluation made it impossible to meet the enhanced obligations, especially since the film was not commercially successful abroad.

5. Legality of Respondent No. 2's Actions Regarding Bond Forfeiture:
The Court considered whether the petitioners had fulfilled their obligations under the bond. The petitioners provided evidence of foreign exchange earnings and claimed that the unregistered contracts caused a shortfall. The Court found respondent No. 2's affidavit unsatisfactory and accepted the petitioners' statements. The Court concluded that the petitioners had earned Rs. 1,77,577 out of the required Rs. 2,05,990, with the shortfall attributable to respondent No. 2's delay in contract registration. Thus, the forfeiture of the bond by respondent No. 2 was deemed illegal.

Conclusion:
The petitioners succeeded in their claim. The Court ruled that respondent No. 2's action to forfeit the bond was illegal and made the rule absolute in terms of prayers (a) and (b), with no order as to costs.

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