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IN THE HIGH COURT OF DELHI
Prathiba M. Singh, J.
DM South India Hospitality Pvt. Ltd. - Appellant
Versus
Union of India - Respondent
W.P.(C) 16551 of 2022 and CM Appls. 52040 of 2022, 52041 of 2022 and 52042 of 2022
Decided On : 01-12-2022
The court emphasized the necessity of following procedural safeguards in the invocation of bank guarantees under EPCG, especially during the pandemic, ensuring prior notice and due consideration of the Petitioner's representation.
Headnote:(A) Export Promotion Capital Goods (EPCG) Scheme - The invocation of bank guarantees under EPCG has been challenged due to non-redemption of authorizations, amid the COVID-19 pandemic which impacted the hospitality sector. - The Petitioner had claimed to redeem several authorizations and requested extension for the remaining. (Paras 3, 7, 9, 10)
(B) Judicial Review - The Court ensured compliance with prior orders prohibiting invocation without notice and mandated timely consideration of the representation by the Director General of Foreign Trade (DGFT). (Paras 9, 10)
Facts of the case:
The Petitioner, operating a hotel, sought to restrain the invocation of bank guarantees related to EPCG authorizations due to delays in export obligations caused by pandemic disruptions.
Findings of Court:
The Court directed that the representation be treated comprehensively and decided by DGFT, maintaining the status quo on the bank guarantees pending DGFT's decision.
Issues: The core questions involved the validity of the invocation of bank guarantees and the compliance with the Court's prior orders.
Ratio Decidendi: The Court ruled that the enforcement of bank guarantees must adhere to procedural requirements set by prior Court orders, ensuring due consideration of the Petitioner's representation.
Result: Writ petition disposed of with directions for decision by DGFT.
| Table of Content |
|---|
| 1. details of the petitioner's background and previous case. (Para 2 , 3) |
| 2. previous court orders regarding the bank guarantee. (Para 4 , 7) |
| 3. status of the representation and decision timelines. (Para 5 , 6) |
| 4. court's directives on representation and invocation. (Para 8 , 9) |
| 5. final disposal of the writ petition. (Para 10 , 12) |
JUDGMENT
Prathiba M. Singh, J. (Oral)--This hearing has been done through hybrid mode.
2. The Petitioner-D.M. SOUTH INDIA HOSPITALITY PVT. LTD., which is in the hospitality industry and operates the Raddison Blu hotel in Mysore, has approached this Court in the second round of litigation by way of the present writ petition. The Petitioner is aggrieved by the invocation of bank guarantee bearing no. 5079411BG000138 by Respondent No.4-Dept. Commissioner of Customs by way of impugned letters dated 17th October, 2022 and 16th November, 2022 due to non-redemption of Export Promotion Capital Goods (EPCG) authorisations which it had availed of earlier.
3. In the earlier round, the Petitioner herein had preferred W.P.(C) 5197/2021 titled D.M. SOUTH INDIA HOSPITALITY PVT. LTD. v. UNION OF INDIA & ORS.. The said writ petition, relating to almost an identical issue, was disposed of by this Court vide order dated 11th May, 2021 in the following terms:
1. This hearing has been done through video conferencing.
2. The present petition has been filed by the Petitioner seeking restraint against the invocation/encashment of the bank guarantee, bearing No. 003GM09140100001, furnished by the Petitioner to the Respondent, in respect of the Export Promotion Capital Goods (hereinafter, `EPCG') authorisation no. 0530161985. The said bank guarantee has been invoked by the Respondent's letter dated 7th April, 2021.
3. The case of the Petitioner is that it had obtained 58 EPCG authorisations and had to fulfil its export obligations in respect of the same. Out of the said 58 EPCG authorisations, the Petitioner claims that it has already redeemed 33 EPCG authorisations and has surrendered 3 authorisations. Insofar as the remaining 22 authorisations are concerned, there has been a delay in satisfying export obligations, owing to the COVID-19 pandemic, since last year. It was submitted on behalf of the Petitioner that the license of the Petitioner is valid till December 2021 and hence the invocation of the bank guarantee could not have been done while the time for fulfilling the export obligations was still there.
4. Vide last order dated 6th May 2021, the following directions were issued after hearing parties:
8. The matter needs to be heard on the question of whether the Petitioner has time till December, 2021 to fulfil its export obligation and whether the invocation of the Bank guarantee is justified. Since the ld. counsel for the Respondent wishes to seek instructions to assist this Court, it is directed that the Demand draft shall not be encashed by the department till the next date.
9. Accordingly, status quo in respect of the demand draft, which has been issued in favour of the Principal Commissioner of Customs, shall be maintained, and the same shall not be encashed until the next date before this court."
5. Further to the last order, Mr. Kurup, ld. Counsel appearing for the Respondent Nos.1 to 3, today, submits that he had sought instructions in respect of the validity of the license to the Petitioner till 20th December, 2021. After examining the same, the demand draft, which was prepared in favour of the Principal Commissioner of Customs, due to the invocation of the Bank Guarantee, has now been returned to Yes Bank.
6. Accordingly, the amount of the demand draft may be re-deposited by Yes Bank, and the Bank Guarantee shall be re-issued in favour of Respondent Nos.1 & 2, for a validity period of at least two years, on the same terms and conditions on which it was issued before. This would satisfy the prayers (a) and (b) of the petition.
7. The other prayers in this petition are for granting an extension
