1988 (4) TMI 176 - HC - Customs

Summary

Issues Involved:
1. Delay in issuance of quota certificates.
2. Obligation to return bank guarantees.
3. Applicability of the principle of promissory estoppel.
4. Authority of the respondent to act upon bank guarantees.

Detailed Analysis:

1. Delay in Issuance of Quota Certificates:

The petitioners, a limited company recognized as an export house, applied for quota certificates in December 1978 in anticipation of contracts from Italy. They received the certificates on or about January 24, 1979. The delay in issuance was partly due to stay orders from various High Courts challenging the Policy. As a result, the petitioners' agent in Italy, Mr. Ferrari, informed them that the orders for 20,000 pieces of men's shirts were canceled due to the delay in obtaining the quota certificates.

2. Obligation to Return Bank Guarantees:

The petitioners argued that the respondent should cancel and return the bank guarantees, as the delay in issuing the quota certificates was not their fault. They cited a circular dated February 3, 1979, which suggested that the respondent would return the bank guarantees if exporters could not fulfill their obligations due to the delayed issuance of quota certificates. However, the court noted that the Policy for 1979 did not obligate the respondent to return the bank guarantees for non-performance under the quota certificates. Paragraph 16 of the Policy stated that if the utilization of the quota allocation was less than 90%, the full amount of the performance bond would be forfeited. Since the petitioners had zero utilization, they were bound to suffer forfeiture.

3. Applicability of the Principle of Promissory Estoppel:

The petitioners invoked the doctrine of promissory estoppel, arguing that the respondent should be bound by the promise in the circulars of February 3 and 12, 1979. However, the court found this contention misplaced. The doctrine applies when a party acts on a representation and alters its position prejudicially. The petitioners did not act upon the representation in a manner that altered their position to their detriment. The quota certificates had already become useless to them due to the cancellation of orders by their Italian customers.

4. Authority of the Respondent to Act Upon Bank Guarantees:

The petitioners claimed that an officer of the respondent, Mr. Sarjit Singh, promised to return the bank guarantees if the petitioners returned the quota certificates within 60 days. The court found no sufficient grounds to compel the respondent not to act upon the bank guarantees. Mr. Sarjit Singh's designation and authority to make such a promise were not established. Furthermore, any promise inconsistent with the Policy Statement governing the rights and obligations of the parties could not be legally upheld.

Conclusion:

The court discharged the rule and did not order costs. The order was stayed until June 15, 1988. The court expressed hope that the petitioners would not be debarred from future quota certificates merely because they had filed this petition and had not paid the amounts pending the petition.