2024 (9) TMI 1043 - SCH - Customs

Discontinuation of the bank guarantee seeking refund of the bank guarantee amount - HELD THAT - What emerges is the fact that pursuant to the order of this Court dated 11.11.2002, the appellant herein submitted the bank guarantee but what is of crucial importance is since November, 2002 and till date, there has been no conclusion of the lis between the parties one way or the other. The fact that the bank guarantee has been renewed and kept alive from time to time for the last twenty two years without there being any conclusion of the lis has in fact caused prejudice to the appellant herein who has, for no fault of his but on account of the protraction in litigation, been deprived of a huge amount which is a subject of the bank guarantee. The portion of the impugned order is set aside and the appellant herein permitted to discontinue the bank guarantee and direct refund of the said amount of the guarantee - Since the bank guarantee is permitted to be discontinued, the appellant to file an Affidavit of Undertaking before the High Court within a period of two weeks and thereafter permission will be granted to discontinue the bank guarantee, thereafter the appellant may discontinue the bank guarantee. Appeal allowed.

Summary

Issues:
1. Appeal against rejection of prayer for discontinuation of bank guarantee and refund.
2. Application seeking direction to discontinue bank guarantee maintained for 22 years.
3. Dispute regarding inconclusive lis and renewal of bank guarantee.
4. Prejudice caused to the appellant due to prolonged litigation.
5. Consideration of High Court's decision on CESTAT's reference.
6. Permission granted to discontinue bank guarantee subject to High Court's decision.

Analysis:
The Supreme Court heard an appeal challenging the rejection of the appellant's prayer for discontinuation of a bank guarantee and refund of the guaranteed amount. The appellant had complied with a previous court order by furnishing the bank guarantee, which had been renewed for 22 years despite no conclusion in the ongoing litigation. The appellant argued that the retention of the bank guarantee was unjust as no statement of case had been made before the High Court, causing prejudice. The respondent contended that the matter was still pending before the High Court based on a CESTAT reference, and the appellant could not avoid the earlier court order until a decision was reached. The Court acknowledged the prolonged litigation and the prejudice suffered by the appellant, leading to the decision to set aside the impugned order and allow the appellant to discontinue the bank guarantee, directing the refund of the guaranteed amount. However, this decision was subject to the High Court's consideration of the CESTAT reference submitted. The appellant was required to file an Affidavit of Undertaking before the High Court and would be liable to make any payment as decided by the High Court if unsuccessful. The Court emphasized the importance of an expeditious decision by the High Court on the pending reference and requested the High Court to hear and dispose of the matter promptly, while not interfering with the rest of the High Court's order due to the ongoing proceedings.

This judgment addressed the issues of prolonged retention of a bank guarantee, prejudice caused to the appellant, and the need for a prompt decision by the High Court on the pending reference. It balanced the interests of both parties by permitting the appellant to discontinue the bank guarantee while ensuring compliance with any future High Court decision. The Court's decision aimed to mitigate the appellant's unjust loss due to the extended litigation period and provided a framework for further proceedings based on the High Court's determination.