Mahindra and Mahindra Ltd. vs Union of India

Rule returnable forthwith, Mr. Sethna waives service for the respondents. By consent petition placed on board and called out for hearing.

Heard Counsel for the parties.

The impugned order of the Tribunal directing the Department to hold the money realised in deposit till disposal of the appeal, is unsustainable. In this case, the petitioners have filed appeal on 6th January 1992, challenging the legality and correctness of the order of the Collector dated 5th December 1991 received on 10th December 1992. Appeal period prescribed for appeal to the Tribunal is three months. In fact, petitioners have filed appeal on 6th January 1992 and also filed stay application. On 18th January 1992, petitioners applied for early hearing of the stay application and accordingly it was fixed on 17th February 1992. In the meantime, on 29th January 1992, petitioners informed the Collector that the hearing of stay application is fixed on 17th February 1992 and, therefore, pending the stay application no coercive action should be taken pursuant to the order dated 5th December 1992. Despite this application/request, it appears that Respondents Nos. 2 and 3 encashed the bank guarantee given by the petitioners on 3rd February 1992.

In our opinion, it was highly improper on the part of the Collector and Assistant Collector to encash the bank guarantees before expiry of the statutory period of three months and in particular when petitioners had specifically informed that the stay application is fixed for hearing on 17th February 1992. Be that as it may, we accordingly direct Respondents Nos. 2 and 3 to pay entire amount recovered by encashing bank guarantees to the petitioners within 10 days from today. On receipt of the said amount by the petitioners, they shall execute bank guarantee in favour of the Collector of Central Excise within two weeks thereafter. It is also made clear that until disposal of the stay application bank guarantee will continue and in the event if the Tribunal rejects the application for stay, the said order shall not be executed for a period of two weeks from the date of its service on the petitioners.

The Tribunal is also directed to hear and dispose of the stay application of the petitioners as expeditiously as possible and preferably before 30th May 1992.

In the result, petition succeeds. The impugned order dated 17th February 1992 (Ex. L) is quashed and set aside. Stay application made by the petitioners to the CEGAT, West Regional Bench, Bombay, may be disposed of as indicated above. Rule made absolute in the above terms. No order as to costs.

Certified copy of the order if applied for, be furnished out of turn within one week.