Full Text
HIGH COURT OF DELHI
Date of Decision: 1st December, 2022
D M SOUTH INDIA HOSPITALITY PVT LTD ..... Petitioner
Through: Mr. Rajshekhar Rao, Sr. Advocate with Mr. Aditya Chatterjee, Mr. Nirvikar Singh & Ms. Nitya K., Advocates. (M:7337844424)
Through: Mr. Arnav Kumar, CGSC for R-1 to
JUDGMENT
3. (M:9873657406) Mr. Vineet Malhotra, Advocate. CORAM: JUSTICE PRATHIBA M. SINGH Prathiba M. Singh, J. (Oral)
1. 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 of the said EPCG authorisation, by a reasonable period, in order to enable the Petitioner to fulfil its obligations. The reason for non-fulfilment of the same, as captured in the order dated 6th May 2021, is the COVID-19 pandemic, because of which the hospitality sector has been adversely hit.
8. Accordingly, considering the fact that the COVID- 19 pandemic has reduced tourism, as also the occupancy levels in hotels including that of the Petitioners, the present writ petition, insofar as it relates to prayers (c), (d) & (e), may be considered as a representation, by the Director General of Foreign Trade (hereinafter “DGFT”). The said prayers for extension of the EPCG authorizations may be considered by DGFT, after giving a hearing to the Petitioner and a decision in respect thereof would be taken in accordance with the law on or before 31st July, 2021.
9. The decision taken, shall be communicated to the Petitioner and the Petitioner’s remedies, if any, in respect of the said decision that may be taken, are left open to be availed of in accordance with law.
10. It is further directed that if in the interregnum, i.e., prior to the decision being taken by 31st July, 2021, any invocation of Bank Guarantee is resorted to, at least two weeks’ notice shall be given to the Petitioner to avail of its remedies, in accordance with law. It is made clear that this Court has not examined the merits of the case of either of the parties.
11. With these observations, the present petition, along with pending applications, is disposed of. uploaded on the official website of the Delhi High Court, www.delhihighcourt.nic.in, shall be treated as the certified copy of the order for the purpose of ensuring compliance. No physical copy of orders shall be insisted by any authority/entity or litigant.
4. As it is evident from the above order, the Petitioner had originally obtained 58 EPCG Authorisations out of which 33 were redeemed by it. The Petitioner had further surrendered 3 authorisations. At the time when the said writ was considered, 22 authorisations were remaining. The Court after considering the fact that foreign tourism was almost at a nil position during the pandemic had directed the Petitioner to approach the Director General of Foreign Trade (hereinafter “DGFT”) by way of a representation. The invocation of the bank guarantee for non-redemption of the EPCG was also stayed by this Court.
5. The Petitioner was again constrained to approach this Court by way of an application wherein the order dated 12th August, 2021 was passed and the Court held that the directions given in paragraph 10 of order dated 11th May, 2021 shall be complied with. The relevant portion of the said order reads as under:
6. The representation filed by the Petitioner is still pending and has not been decided. Mr. Rao, ld. Sr. Counsel for the Petitioner submits that thereafter, five more EPCG have been redeemed and there are only 17 which are remaining.
7. In the present writ petition, it is the grievance of the Petitioner that recently, letters have been issued by the Department of Revenue, Office of the Commissioner of Customs- Import, in violation of this Court’s orders, invoking the bank guarantee submitted by the Petitioner without considering the Petitioner’s representation. Further, it is the case of the petitioner that two weeks’ advance notice, in terms of the order extracted above, has not been given to invoke the bank guarantee. When the Petitioner learnt of the invocation, it brought the orders passed by this Court to the notice to the Customs Authorities upon which, the following e-mail was sent by the Deputy Commissioner:- “Dear Sir/Madam, We have duly dispatched the subject letters dated 16.10.2022 and 16.11.2022. The details of High Court order had been brought to our notice by today only by the esteemed State Bank. As per the orders of Hon'ble High Court and based on communication with you through mobile, we have sent the scanned copies of the letter with a copy marked to the Bank. Kindly acknowledge the receipt of the subject letters through mail. We will adhere to High Court Orders and request bank to keep enforcement at abeyance once you acknowledge the receipt of letters through mail please”
8. From the above e-mail, it is clear that the enforcement of the invocation has been kept in abeyance by the Customs Authority. Mr. Vineet Malhotra, ld. Counsel appearing for DGFT submits that the representation is still pending and if a time bound schedule is fixed by this Court, the representation would be decided within the said period.
9. Heard. Considering the fact that the enforcement of the impugned letters has already been put in abeyance by the Customs Authorities after the orders of this Court was brought to their notice, and the submissions made by ld. Counsel for the parties today, the following directions are issued:-
(i) The representation dated 11th June, 2021 as also the averments made in Writ Petition (C) 5197/2021 and the present writ petition shall be considered comprehensively as one representation of the Petitioner by the DGFT.
(ii) Decision shall be taken in the said representation by 31st January, 2023.
(iii) In the meantime, the bank guarantee/s submitted by the
Petitioner shall not be invoked without two weeks’ advance notice given to the Petitioner on the e-mail address manjul.cs@dmgfi.com and sushen@dmgfi.com.
(iv) If the Petitioner redeems any further EPCGs in the interregnum, the same shall be also brought to the notice of the DGFT.
(v) If the representation of the Petitioner is rejected, the Petitioner would be given four weeks time to avail of its remedies in accordance with law and for the said four week period, the Bank guarantees shall not be invoked.
10. With these directions, the present writ petition is disposed of along with all pending applications, if any.
PRATHIBA M. SINGH JUDGE DECEMBER 1, 2022 MR/SK