Execution of Bonds and guarantees - regarding - Customs - 09/2007

Execution of Bonds and guarantees - regarding CUS CIR NO. 09/2007 DATE 09/02/2007 The Hon'ble High Court of Gujarat in its' Order dated 25.11.2005 in Special Civil Application No.14427 of 2005 in the case of Lalbhai Trading Company v/s Union of India has made observations on the concept of execution and attestation of Bonds accepted by the Department under the Customs Act, 1962. 2. This is a case where the petitioner disputed its liability as a surety. The Hon'ble High Court of Gujarat in para 25 observed that " In law "execution" means signing, sealing and delivery of a document. The term "execution" may be defined as a formal completion of a deed. It is the last act or series of acts which completes it. Mere registration of a document is not in itself sufficient proof of its execution. Under Section 68 of the Indian Evidence Act, 1872, the proof of execution of document required by law to be attested is provided for. The concept of the term "attested" means that a person has signed the document by way of testimony to the fact that the said person saw it being executed. An attesting Witness is one, who signs the document in the presence of the executant after seeing the execution of the document or after receiving a personal acknowledgment of the execution on the document by the executant. A document cannot be attested by a party to it." These observations of the Hon'ble High Court are in light of the fact that the said bond was signed for and on behalf of the partnership concern by its partners and as witnesses by the very partners in their individual capacities. 3. Keeping in view the aforesaid Order of the Hon'ble High Court of Gujarat, it is emphasised that there is need to take utmost care while accepting bonds so as to avoid such issues in litigation. The Bonds should not only be signed properly by the executants and witnesses, it should also be ensured that the executants and witnesses to the Bonds should not be the same persons. 4. Chief Commissioners of Customs and Central Excise are, therefore, requested to issue necessary instructions to the field formations to ensure that the Bonds are properly signed and executed keeping in view the aforesaid observations. F.No.473/14/2006-LC Yours faithfully, (M.K. SINGH) DIRECTOR(LC)