SEZ exit application can be processed on bank guarantee extension and undertaking despite pending penalty challenge.

An SEZ exit application could be processed despite a pending penalty challenge where the petitioner had already furnished a bank guarantee equal to the penalty amount. The Delhi High Court accepted an undertaking to extend the bank guarantee for two more years and to file an affidavit confirming compliance within the time granted. Subject to that compliance, the respondents were directed to process the exit request under Rule 74, and the pending penalty order was not to prevent consideration of the application.

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Issues: Whether the petitioner's application for exit from the Special Economic Zone could be directed to be processed subject to extension of the bank guarantee and filing of an undertaking, notwithstanding the pending challenge to the penalty order and the respondents' reliance on Rule 74(2)(i) of the Special Economic Zone Rules, 2006.

Analysis: The petition challenged the vires of Rules 53 and 80 of the Special Economic Zone Rules, 2006 and also questioned the penalty order. For the limited purpose of processing the exit application, the decisive consideration was that the petitioner had already furnished a bank guarantee for an amount equivalent to the penalty imposed. The Court accepted the petitioner's undertaking to extend the validity of the bank guarantee for a further two years and to file an affidavit to that effect within the time granted. Subject to this compliance, the respondents were directed to process the exit application under Rule 74, and the pending penalty was not to obstruct consideration of that request.

Conclusion: The petitioner was granted conditional relief for processing of the exit application, and the respondents were directed to consider the application in accordance with law after compliance with the bank guarantee undertaking.

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