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2014 (12) TMI 194 - HC - CustomsEnforcement of the bank guarantees - Obligation of bank towards expired BG - Non fulfilment of its obligations under the BGs - interpretation of the BGs issued by IOB in favour of the President of India to secure the Customs Authorities against any loss, damage caused or suffered on account of failure on the part of Alpine to comply with any terms and conditions as contained in the provisional assessment test bond - Held that:- The latter part of clause 5 of the BGs clearly indicate that the BGs would be in force only for a limited period of time and would be renewed at the request of the customer i.e. Alpine. If clause 7 of BGs is read harmoniously with clause 5, the inescapable conclusion is that while IOB is obliged to keep the BGs alive and not permit the same to be revoked by Alpine, the said obligation is limited only during the valid tenure of the BGs. The obligation of IOB to renew the BGs – as expressed in the opening words of clause 7 – is subject to compliance with clause 5, that is, subject to request of Alpine. Alpine has not made any request for renewal of the BGs and the respondent authorities have also not ensured that Alpine take the necessary steps for IOB to renew the BGs and the BGs lapsed. It is difficult to accept that clause 7 of the BGs would enjoin IOB to renew the BGs without any request from IOB’s customer at whose instance the BGs had been issued. Notably, the opening words of clause 8 contain a non obstante clause which expressly indicates that IOB would be liable to pay the guaranteed amount only if a written claim was served on IOB before the last date of the validity of the BG - no claim had been received by IOB during the validity period of the BGs and thus IOB has no obligation to pay any amount to the Customs Authorities. In this view, the present petition is allowed and the communications dated 22.04.2012 and 12.05.2014 issued by respondent no.1 stand quashed - Decided in fsvour of assessee.
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