Bank guarantee condition for pre-deposit waiver set aside where a sick company could not feasibly comply and appeal needed merits hearing.

A sick industrial company that could not feasibly furnish a bank guarantee was held not to be bound by a condition attaching waiver of pre-deposit where that condition would prevent the appeal from being heard on merits. The Tribunal had exempted deposit but made the exemption dependent on a bank guarantee, and that requirement was found unsustainable on the facts. The bank guarantee condition was quashed, and the appeal was directed to proceed on merits without insisting on pre-deposit.

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Issues: Whether a company declared sick by the Board for Industrial and Financial Reconstruction could be required to furnish a bank guarantee as a condition for waiver of pre-deposit before its appeal could be heard on merits.

Analysis: The petitioners had been declared a sick industrial company and the record showed that furnishing a bank guarantee was not feasible for them. The Tribunal had granted exemption from deposit but made it conditional upon furnishing a bank guarantee, which effectively prevented the appeal from being heard. In these circumstances, the condition attached to the exemption was found to be unsustainable.

Conclusion: The condition requiring furnishing of a bank guarantee was quashed and the appeal was directed to be decided on merits without insisting on pre-deposit.

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