Continuing security obligation in writ proceedings survives expiry of bank guarantees and a business transfer

Security furnished to obtain interim protection in a writ petition was treated as a continuing obligation for the whole pendency of the proceeding, so expired bank guarantees without renewal did not satisfy the condition for retaining the excise duty in abeyance. The subsequent transfer of the tobacco division to another company did not relieve the original petitioners of liability, particularly where the change was not disclosed and the renewed guarantees continued to support the interim benefit. The Court stressed that the department and the public exchequer should not be left unsecured while the disputed amount remained protected by the Court's interim orders, and directed deposit of the amount covered by the expired guarantees into Court.

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Issues: Whether the respondents were bound to keep alive the security furnished during the pendency of the writ petition and could be directed to deposit the amount covered by the expired bank guarantees despite the transfer of the tobacco business.

Analysis: The writ petition had enabled the petitioners to withhold part of the excise duty only on the footing that the disputed amount remained secured throughout the proceedings. The Court treated the bond or bank guarantee requirement as continuing for the entire pendency of the writ petition, and held that furnishing guarantees for a limited term without renewal would not amount to compliance. The subsequent transfer of the tobacco division to another company did not relieve the original petitioners of liability, especially as the Court had not been informed of the change and the renewed guarantees had continued to be used to obtain the benefit of the interim orders. The Court also held that the department and the public exchequer should not be left without the amount that had been kept in abeyance by the Court's own interim protection.

Conclusion: The respondents were held liable to deposit Rs. 60,00,000 into Court towards the amount covered by the four expired bank guarantees, and the contempt matter was kept open for further orders in default.

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