Commissioners of Customs (Export) Vs Bank of India & Anr. (Bombay High Court)
Conclusion: Expired bank guarantee couldn’t be enforced post CIRP (corporate insolvency resolution process) as no claim was lodged by authority during the validity period of the guarantee.
Held: Commissioner of Customs filed a writ petition under Article 226 seeking a mandamus directing the respondent Bank to pay ₹1,95,41,000 secured under four Bank Guarantees. Authorities argued that the bank/respondent at whose request the Bank Guarantees were provided, had gone into CIRP and the claim during CIRP was rejected due to limitation, however, it could still pursue the reliefs, considering the wording of the Bank Guarantee and the fact that the Bank in this case was the personal guarantor. Respondent Bank contended that bank guarantees expired on 31 May 2011 (and at best, extended till 2013). No claim was made within their validity. The authorities claim during CIRP was rejected and not challenged further hence, the writ petition was misconceived and barred by limitation. It was held that the guarantees clearly stated that liability was restricted to claims lodged on or before 31 May 2011. No such claim was made during validity. A Bank Guarantee was a contractual obligation; ordinarily, writ jurisdiction was not invoked for such enforcement. Even if maintainable, no relief could be granted since the guarantee had expired and no timely claim was lodged.
