Section 22 protection does not cover guarantees for export obligations under an import-export scheme, the court held.

A bank guarantee furnished under an EPCG import licence, given to secure export-performance obligations, was held outside the protection of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 because the section applies only to guarantees connected with loans or advances to a sick industrial company. The court also held that the public notice dated 6-4-1999 did not create an automatic extension of time to fulfil export obligations; the licence-holder had to apply within the prescribed time and satisfy the stipulated conditions, including furnishing the required bank guarantee. On that basis, the guarantee invocation was not barred and the challenge failed.

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Issues: (i) Whether the public notice dated 6-4-1999 conferred an automatic extension of time to fulfil the export obligation and enabled the petitioner to claim its benefit. (ii) Whether invocation and enforcement of the bank guarantees furnished for the EPCG import licence were barred or suspended by Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.

Issue (i): Whether the public notice dated 6-4-1999 conferred an automatic extension of time to fulfil the export obligation and enabled the petitioner to claim its benefit.

Analysis: The extension contemplated by the public notice was conditional. It required the licence-holder to apply within the prescribed time and to comply with the stipulated requirements, including furnishing the required bank guarantee. The petitioner did not comply with those conditions and did not secure an extension under the notice. Mere issuance of the notice did not operate as an automatic enlargement of the export-obligation period.

Conclusion: The petitioner was not entitled to the benefit of the public notice, and the plea of automatic extension failed against the assessee.

Issue (ii): Whether invocation and enforcement of the bank guarantees furnished for the EPCG import licence were barred or suspended by Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: Section 22 protects proceedings relating to recovery of money, enforcement of security, or enforcement of guarantees only in respect of loans or advances granted to the sick industrial company. The bank guarantees here were furnished to secure performance of export obligations under the import-export scheme and not to secure any loan or advance. The liability arose from non-fulfilment of a statutory performance obligation under the policy and notifications governing duty-free import of capital goods. Such a guarantee was outside the statutory protection of Section 22.

Conclusion: Invocation and enforcement of the bank guarantees were not barred by Section 22, and the petitioner was not entitled to injunction or mandamus.

Final Conclusion: The challenge to the invocation of the guarantees failed, and the writ petition was liable to be dismissed.

Ratio Decidendi: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 applies only to guarantees in respect of loans or advances granted to the sick industrial company and does not extend to bank guarantees securing performance of export obligations under an import-export scheme.

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