Court orders return of cancelled bank guarantee promptly, warns of penalty for non-compliance.Bank Guarantee – Return of bank guarantee - mere pendency of the Appeal filed by the Revenue cannot be a ground to refuse to return the bank guarantee, especially, when there is no financial recovery against the Petitioner - Respondents are put on notice that it always obligatory on the part of the Respondents to return the bank guarantee within a reasonable period with proper endorsement thereon if the purpose of security over - bank guarantee can only be withheld subject to the order of the Co... ... ... Issues:
Seeking return of bank guarantee with "cancelled" endorsement.

Analysis:
The petitioner sought the return of a bank guarantee with the endorsement "cancelled." The court noted that the mere pendency of an appeal by the Revenue was not a valid reason to withhold the return of the bank guarantee, especially when there was no financial recovery against the petitioner at that time. The court emphasized that it was the obligation of the respondents to return the bank guarantee promptly with the proper endorsement if the purpose of security was over, to discharge the guarantor's liability. The court clarified that the bank guarantee could only be withheld subject to the order of the Competent Tribunal or Superior Court.

The court directed the respondents to return the duly cancelled or discharged bank guarantee to the petitioner within seven days, failing which a penalty of Rs. 1000 per day would be imposed until the return. The penalty amount would be recoverable from the responsible officer's salary. The respondents' counsel acknowledged the order and agreed to communicate it to the relevant authority. Consequently, the petition was allowed, and the rule was made absolute with costs quantified at Rs. 5,000 to be paid to the petitioner. Bank Guarantee – Return of bank guarantee - mere pendency of the Appeal filed by the Revenue cannot be a ground to refuse to return the bank guarantee, especially, when there is no financial recovery against the Petitioner - Respondents are put on notice that it always obligatory on the part of the Respondents to return the bank guarantee within a reasonable period with proper endorsement thereon if the purpose of security over - bank guarantee can only be withheld subject to the order of the Competent Tribunal or Superior Court - Respondents to return the duly cancelled or discharged the bank guarantee to the Petitioner within a period of seven days – Penalty payable in case of delay - penalty recoverable from the salary of the officer, who may be responsible for implementation of order AVG IMPEX PVT. LTD. Versus UNION OF INDIA
Indian Laws
2010 (10) TMI 289 - BOMBAY HIGH COURT - 2010 (260) E.L.T. 173 (Bom.)
BOMBAY HIGH COURT - HC
Dated:- 27-10-2010
7926 of 2010 - -
Indian Laws
V.C. Daga and R.M. Savant, JJ. REPRESENTED BY : Shri Ashok Singh, Counsel, for the Petitioner. Shri G.N. Srinivasan, Counsel, for the Respondent. [Judgment per : V.C. Daga, J.]. - Rule, returnable forthwith. 2. Perused Petition. 3. Heard the Learned Counsel for the Petitioner and the Learned Counsel appearing for the Respondents. 4. The Petitioner is seeking the return of bank guarantee with the endorsement "cancelled". According to the submission made, by this time the department ought to have returned the bank guarantee duly cancelled, so as to enable the Petitioner to return it to its banker and get it discharged. 5. Needless to mention that mere pendency of the Appeal filed by the Revenue cannot be a ground to refuse to return the bank guarantee, especially, when there is no financial recovery against the Petitioner as on date. The Respondents are put on notice that it is always obligatory on the part of the Respondents to return the bank guarantee within a reasonable period with proper endorsement thereon if the purpose of security is over, so that the guarantor, who has given the guarantee can be discharged of the liability flowing from the bank guarantee. The bank guarantee can only be withheld subject to the order of the Competent Tribunal or Superior Court. 6. In the above view, we direct the Respondents to return the duly cancelled or discharged the bank guarantee to the Petitioner within a period of seven days from today, failing which the Department shall be liable to pay penalty quantified at Rs. 1000/- per day until it is returned. The amount of penalty shall be recoverable from the salary of the officer, who may be responsible to implement this order. The learned counsel for the Respondents takes note of this order and undertakes to communicate the same to the concerned authority. 7. The Petition is allowed. Rule is made absolute in terms of this order with costs quantified at Rs. 5,000/- to be paid to the Petitioner.
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