Back
2025 Supreme(Bom) 1126
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
M.S. SONAK, JITENDRA JAIN, JJ.
Commissioners of Customs (Export) - Petitioner
Versus
Bank of India & Anr. – Respondents
Writ Petition No. 620 of 2021
Decided On : 06-08-2025
For the Petitioner: Ms Maya Majumdar a/w Ms. Akanksha Shukla.
For the Respondent: Mr Anant B. Shinde
A writ petition to enforce expired Bank Guarantees is invalid if no claims were lodged within the validity period, affirming that continuity of guarantees hinges on timely claims.
Headnote:(A) Constitution of India - Article 226 - Writ of Mandamus - Enforcement of expired Bank Guarantees - The petitioner sought to enforce Bank Guarantees after their expiration and failure to file claims within the validity period. The court ruled that no claims were lodged on or before the expiry date, hence the guarantees could not be enforced. (Paras 3, 8, 10, 17)
(B) Contract Law - Continuity of guarantees - The court emphasized that a continuing guarantee requires a claim to be made during its valid period and the absence of a claim negates enforcement options. (Paras 9, 11, 19)
Facts of the case:
The Commissioner of Customs seeks payment of Rs 1,95,41,000/- based on Bank Guarantees which expired in May 2011. The claimed amount arose after the expiration and the lodging of claim in 2018 was beyond the stipulated timeframe.
Findings of Court:
No written claim was made either on or before the expiry of the guarantees; hence, there was no merit in enforcing the guarantees through a writ petition.
Issues: Key issues included the enforcement of expired Bank Guarantees and the implications of the absence of timely claims.
Ratio Decidendi: The court concluded that failure to lodge a claim within the specified period eliminates the obligation of the Bank to honor the Guarantees.
Result: Petition dismissed without any order for costs.
| Table of Content |
|---|
| 1. the substantive relief sought relies on the conditions set in bank guarantees. (Para 2 , 3 , 4) |
| 2. the necessity for timely claims under the bank guarantee is emphasized. (Para 5 , 6 , 11) |
| 3. the court discusses the interpretation of the guarantee clauses. (Para 7 , 10 , 14) |
| 4. stricter compliance to conditions of the bank guarantee is necessary. (Para 12 , 17) |
| 5. the final ruling reiterated the rejection of the petition due to non-compliance. (Para 18 , 20) |
Judgment :
M.S. Sonak, J.
1. Heard and learned counsel for the parties.
2. The Commissioner of Customs has instituted this writ petition seeking the following substantive reliefs: -
“(a) Rule be issued (b) This Hon'ble Court be pleased to issue a Writ of Mandamus under Article 226 of the Constitution of India directing the Respondent No. 1 to pay total amount of Rs 1,95,41,000/- Rupees One Crore Ninety Five Lakhs Fourty One Thousands only secured by it under 4 Bank Guarantees [Exhibit-"C(Colly)"] to the petitioner.”
3. Ms. Majumdar, the learned counsel for the petitioner, refers us to the Bank Guarantees at Exhibit “C(colly)”. She submits that the wording of all these Bank Guarantees is identical. She further submits that these Bank Guarantees state that they shall continue and shall not be revoked by the surety during their currency without the consent of the Commissioner of Customs. She submits that the Bank Guarantee should be regarded as the personal guarantee of the Bank.
4. Ms. Majumdar submitted that although the 2nd respondent, at whose request the Bank Guarantees were provided, has gone into CIRP and the petitioner's claim during CIRP was rejected due to limitation, the petitioner can still pursue the reliefs, considering the wording of the Bank Guarantee and the fact that the Bank in this case was the personal guarantor.
5. Ms. Majumdar, without placing any citation on record, submitted that personal guarantees continue despite the resolution plan being finalised under the Insolvency and Bankruptcy Code, 2016.
6. Mr. Shinde learned counsel for the 1st respondent Bank submits that the Bank Guarantees expired on 31 May 2011. They were never revoked during their currency. There is no question of now raising any claim based upon expired Bank Guarantees. Such a claim was specifically raised during CIRP but was rejected. Such rejection was never challenged. He, therefore, submitted that the relief in this petition is misconceived and this petition may, therefore, be dismissed.
7. We have considered the rival contentions and perused the material on record. The material includes the Bank Guarantees, which are now sought to be enforced after about 10 years from their expiry by instituting this writ petition.
8. The two crucial clauses of the Bank Guarantees which were relied upon by the learned counsel for the parties read as follows.
“The guarantee hereby given shall be continuing one and shall not be revoked by the surety during its currency without the consent of Commissioner of Customs. We, Bank of India, Andheri Large Corporate Branch, M.D.I. Building, 1st Floor, 28, S. V. Road, Andheri (West), Mumbai - 400 058, further declare that the above subject bank guarantee will be valid up to 31/05/2011 and we undertake to renew this bank guarantee till the matter is settled and fully discharged by the Commissioner of Customs, Mumbai.
Notwithstanding anything contained hereinabove our liability under this guarantee is restricted to Rs. 1,02,11,000/- (Rupees One Crore Two Lacs Eleven Thousand Only) and this guarantee is valid upto 31/05/2011 and we shall be released and discharged from all liabilities thereunder unless a written claim for payment under this guarantee is lodged on us in writing on or before 31/05/2011 irrespective of whether or not the original guarantee is returned to us.”
9. The first clause quoted above provides that the guarantee shall be a continuing one and shall not be revoked by the surety during its currency without the consent of the Commissioner of
