High Court stresses expediting appeals, deems Bank Guarantee encashment illegal, directs refund to petitioner.

The High Court condemned the delay in disposing of an appeal filed in 1978 under the Central Excise Act, emphasizing the duty to expedite appeals. The Court directed the first respondent to dispose of the appeal promptly within two weeks. Additionally, the encashment of the Bank Guarantee during the appeal was deemed arbitrary and illegal. The Court ordered the respondents to refund the encashed amount to the petitioner with interest and maintained the General Security Bond pending the appeal's final outcome.

---

---

Issues involved:
1. Delay in disposal of appeal filed in 1978 under the Central Excise Act.
2. Encashment of Bank Guarantee (BG) by the third respondent during the pendency of the appeal.

Issue 1: Delay in disposal of appeal
The petitioner, an assessee under the Central Excise Act, filed an appeal in 1978 against an order disallowing certain discounts claimed. Despite the appeal pending for over thirty-three years, the first respondent failed to dispose of it promptly. The High Court condemned the delay, emphasizing that quasi-judicial authorities have a duty to expedite appeals. Sections 35A(4A) and 35(1A) of the Act impose time limits for disposal, which were overlooked. The Court directed the first respondent to dispose of the appeal within two weeks, considering the petitioner's circumstances, such as the demise of the petitioner's Counsel and loss of appeal records.

Issue 2: Encashment of Bank Guarantee during appeal
In 1978, the first respondent directed the petitioner to furnish a Bank Guarantee (BG) for a stay on duty collection during the appeal. In 2009, the third respondent encashed the BG despite the appeal still pending. The High Court deemed this act arbitrary and capricious. Referring to previous judgments, the Court held that encashing the BG illegally entitles the petitioner to seek restitution. The Court rejected arguments to protect revenue interests, stating that encashment violated circulars and constituted an illegality. The Court ordered the respondents to refund the encashed amount of Rs.1,00,800/- with interest as per Section 11BB of the Act. The General Security Bond furnished by the petitioner would remain in force pending the appeal's final outcome.

In conclusion, the High Court found the delay in appeal disposal and encashment of the Bank Guarantee during the pendency of the appeal to be unjust and illegal. The Court directed the first respondent to expedite the appeal's disposal and ordered the refund of the encashed amount to the petitioner with interest.

---