2002 (7) TMI 747 - HC - Indian Laws

Court Orders Timely Decision on Bank Guarantee Extension

The court directed the 2nd respondent to decide on the extension application within two months, vacating the interim stay order on the bank guarantee ... EXIM - Bank guarantee - Non-fulfilment of export obligation - Invocation of - Fraud Issues:1. Export Promotion Capital Goods Scheme - Non-fulfillment of export obligation by the petitioner.2. Delay in deciding on the extension application by the 2nd respondent.3. Invocation of bank guarantee by the 2nd respondent.4. Lack of response from respondents 1 and 2.5. Stay order on the invocation of the bank guarantee.6. Direction to the 2nd respondent to decide on the extension application.7. Consideration of fraud in the matter.Issue 1: Export Promotion Capital Goods Scheme - Non-fulfillment of export obligation by the petitioner:The petitioner, a company registered under the Companies Act, participated in the Export Promotion Capital Goods Scheme, which allowed the import of capital goods for manufacturing at a concessional rate of duty. An export obligation was attached, requiring the company to export goods worth three times the value of the machinery within four years. Due to various reasons, the petitioner could only fulfill a small portion of its export obligation, leading to the filing of an extension application to honor the obligation.Issue 2: Delay in deciding on the extension application by the 2nd respondent:The petitioner filed an extension application in 1995 due to difficulties in meeting the export obligation. However, the 2nd respondent did not respond to the application for an extended period, causing uncertainty for the petitioner regarding the status of the extension request. This delay in decision-making hampered the petitioner's ability to export goods and fulfill its obligation.Issue 3: Invocation of bank guarantee by the 2nd respondent:Despite the pending extension application, the 2nd respondent invoked the bank guarantee provided by the petitioner through a bank. The petitioner contested this action, highlighting the lack of a decision on the extension application and the consequent inability to fulfill the export obligation. The court stayed the invocation of the bank guarantee, emphasizing the need for a prompt decision on the extension application.Issue 4: Lack of response from respondents 1 and 2:The respondents, particularly the 1st and 2nd respondents, displayed apathy by not filing a counter or responding to the allegations made by the petitioner. This lack of engagement from the respondents further complicated the situation and delayed the resolution of the matter.Issue 5: Stay order on the invocation of the bank guarantee:An interim stay order was issued on the invocation of the bank guarantee, preventing immediate action by the 2nd respondent. However, the lack of progress or counter-petition from the respondents prolonged the legal proceedings, leaving the petitioner in a state of uncertainty.Issue 6: Direction to the 2nd respondent to decide on the extension application:The court directed the 2nd respondent to make a decision on the extension application within two months of the court order. This directive aimed to provide clarity to the petitioner regarding the extension of time to fulfill the export obligation and to ensure a timely resolution of the matter.Issue 7: Consideration of fraud in the matter:The court noted that there was no allegation or evidence of fraud in the case related to obtaining the bank guarantee or the export obligation. The delay and apathy displayed by the authorities were not indicative of fraudulent behavior, leading to the partial success of the writ petition and the vacation of the interim stay order on the bank guarantee invocation.In conclusion, the judgment addressed the challenges faced by the petitioner in meeting its export obligation under the Export Promotion Capital Goods Scheme, emphasizing the need for timely decisions by the concerned authorities and highlighting the importance of clarity and responsiveness in such matters.