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TMI Blog1988 (2) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... the Finance Act as illegal, unconstitutional, and invalid. In the said writ petition W.P. M.P. No. 5051/1982 was filed for staying the collection of duty calculated on the basis of effective rate of duty. On 18-5-1982, a Bench of this Court, of which one of us (Jeevan Reddy, J.) was a member, directed notice to the respondents, and ordered that "on condition that the petitioners herein pay excise duty as per the un-amended provisions and further furnish bank-guarantee in the appropriate form for the amount which is leviable as per the amendment, to the satisfaction of the assessing authority, the respondents herein..........be and hereby are directed to allow the 1st petitioner to clear the goods by paying duty on the basis of the assessable values declared by the 1st petitioner herein in the Price List No. 2/82 filed on 3-3-1982 and/or on the basis of assessable values which may be declared in future price lists without including the amount of excise duty and/or additional excise duty exempted under the notification issued by the Government of India in Notification No. 30/79-C.E., dated 1-3-1979 and the tariff rate, pending further orders on the petition.......". 2. After receivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rit petition continued to be prosecuted in the names of the original two petitioners, Duncans Agro-Industries Ltd., and Narendra Kumar Jain; only the bank-guarantees were being renewed from time to time by New Tobacco Company. It is evident that the said renewal of bank-guarantees by New Tobacco Company must be deemed to be for, and on behalf of the 1st petitioner only. New Tobacco Company also took no steps whatsoever during the pendency of the writ petition to implead itself as the writ-petitioner in the place of Duncans Agro-Industries Ltd., or to add itself as a writ-petitioner. 5. In the year 1986 Duncans Agro-Industries was in trouble. The factory at Biccavolu (in Andhra Pradesh) was closed. Apprehending that some of the bank-guarantees which were about to expire may not be renewed in the circumstances, the respondents in the writ petition filed W.P. M.P. No. 18826/86 to direct the writ-petitioners to pay "rupees 15,31,514.38Ps. directly to the Central Excise authorities in respect of the Bank Guarantee No. 0152/82 (furnished by the European Asian Bank) and further direct the United Bank, Calcutta, to pay the Central Excise authorities the amount covered by the 14 bonds exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came up before us on Wednesday, we called upon Mr. P. Ramachandra Reddy, learned counsel for the petitioner, to report day whether the petitioner has complied with the said order and whether he has renewed the two Bank-guarantees mentioned in the order, on or before 10th November, 1986. He agreed to do so. Today, the counsel has not reported compliance with the said order. In the circumstances, we think it appropriate to permit the petitioner (Central Government) herein to encash the two Bank guarantees i.e., Bank-Guarantees No. 44/82, dated 8-6-1982 and 48/82 dated 15-6-1982, each in a sum of Rs. 15,00,000/- (Rupees Fifteen Lakhs). We further direct the respondents (writ petitioners) to renew the Bank Guarantee No. 0152/82 within next four days. If there is default in complying with this order, the Court will consider the appropriate direction to be made in the main writ petition. The writ petition will be taken up for final hearing on Monday. The learned Standing Counsel for the Central Government is permitted to communicate this order to the Bank authorities.....". 7. The writ petition was heard on 17-11-1986 and Judgment delivered on 24-11-1986, dismissing the writ-petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank of India to pay the amount due under all the remaining bank-guarantees. This demand was made through a letter dated 27-11-1986. Under this letter, the Central Excise authorities called upon the Bank to pay a total sum of Rs. 1,80,00,000/-, covered by 12 Bank Guarantees. As stated above, the remaining three were already encashed during the pendency of the writ petition. On 22-4-1987 the United Bank of India wrote to the Central Excise authorities saying that, inasmuch as four of the 12 bank-guarantees, namely, Nos. 56/82, 61/82, 68/82, and 72/82 (referred to hereinbefore) had already expired, and because no claim was preferred for payment of the amount within the period prescribed, they are not liable to pay the amount covered thereby. They, however, paid up the amounts due in respect of other Bank Guarantees. According to the Central Excise authorities, it is only on receiving the said letter that they realized that in the said four Bank Guarantees the enforceability period of six months was not included, as was provided in other Bank-Guarantees. It is then that the Central Excise authorities came forward with the present Contempt Case No. 344/87 to punish the respondents for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 2 as a share-holder of Duncans Agro-Industries Ltd. It is emphasized that even according to the respondents, New Tobacco Company is a subsidiary of Duncans Agro-Industries, which is the holding company. 12. Mr. K. Nagaraja Rao next contended that the respondents are guilty of violating the orders of this Court dated 17-9-1982, 27-10-1986, and 14-11-1986, and have thereby caused a loss of Rs. 60 lakhs to the Central Government, covered by the four Bank Guarantees referred to above. As per the order dated 17-9-1982 the writ-petitioners were obliged to execute bonds undertaking to pay the differential excise duty in case the writ petition was dismissed. That they did not do. They chose to furnish Bank Guarantees. This was accepted by the Central Excise authorities, but it also meant that the writ-petitioners shall keep the bank-guarantees alive and shall keep on renewing them during the pendency of the writ petition. In any event, the order of this Court dated 27-10-1986 expressly directed them to renew all the bank-guarantees on or before 20-11-1986. It is brought to our notice that at the time the said order was being passed, counsel for the writ-petitioners did not deny the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to New Tobacco Company. The impleading of Duncans Agro-Industries and its Directors as respondents 1 and 2 in the Contempt Case is said to be mala fide on the part of the Central Excise authorities. 14. Shri P.R. Ramachandra Rao, the learned counsel appearing for respondents 3 and 4, equally denied their liability in any manner. He submitted that New Tobacco Company was not a party to the writ petition, nor is it a party to any order passed therein. Sri Narendra Kumar Jain was no doubt a party to the writ petition, but that was in his capacity as a share-holder of Duncans Agro-Industires Ltd. He is no doubt a Director of the New Tobacco Company, in which capacity he is now impleaded as the 4th respondent in this Contempt Case, but inasmuch as New Tobacco Company is not responsible in any manner either for the alleged contempt or for not complying with the orders of this Court, neither New Tobacco Company nor its Directors can be proceeded against. Secondly, he submits that renewal of Bank Guarantees by New Tobacco Company was under the instructions and directions of Duncans Agro-Industries, which was its holding company. Being a subsidiary company, New Tobacco Company merely o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plated by the said order were to be effective and valid for the period of pendency of the writ petition. Furnishing Bank-Guarantee for one year and failing to renew the same thereafter, would not be compliance with the said order. Taking up such a stand really means using this Court, which cannot be permitted. A party who comes to this Court seeking its assistance should play fair. He cannot take a stand - even if it is technically correct which has the effect of using this Court to defeat the rights of the opposite parties. Indeed, the said obligation of the writ-petitioners was reiterated and the writ-petitioners were expressly directed to renew all the remaining bank-guarantees on or before 20-11-1986, by order dated 27-10-1986. Admittedly, the four Bank Guarantees concerned herein were not renewed even in pursuance of the said order. In fact, they ought to have done so even without the order dated 27-10-1986 directing them to do so. The writ petition has since been dismissed. The petitioners are liable to pay the entire differential duty, including the sum of Rs. 60 lakhs, covered by the said four Bank-Guarantees. But for the orders of this Court the department would have proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness has been taken over by New Tobacco Company. Even on 27-10-1986 when the question of renewal of Bank Guarantees came up and a direction to renew them was given, this Court was not informed that all that has to be done by the New Tobacco Company, and not by Duncans. New Tobacco Company also never took care to implead itself as a writ-petitioner in place of, or in addition to Duncans Agro-Industries. It was taking advantage of the said orders all-the-same, passed at the instance of Duncans Agro-Industries. But for the said orders obtained by Duncans, the department would have collected the said amount by proceeding against the factory or the assets of Tobacco Division. Now that Biccavolu factory is closed, and the respondent-Company appears to be in some financial trouble, they are trying to take advantage of that situation and thereby deprive the State of the legitimate duty in a sum of Rs. 60 lakhs, payable to it. Inasmuch as Duncans never informed this Court that is is no longer interested in the subject-matter of the writ petition, and took no steps to walk out of the writ petition, or to implead the New Tobacco Company as a writ-petitioner, it must be held that it continued ..... X X X X Extracts X X X X X X X X Extracts X X X X
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