DAEWOO MOTORS INDIA LTD. versus UNION OF INDIA AND ORS.

DAEWOO MOTORS INDIA LTD. versus UNION OF INDIA AND ORS.

Where the bank guarantee is unconditional and absolute, and there is no prospect of fulfilling export obligations, the invocation and encashment of the guarantee is neither premature nor unlawful, regardless of contractual extensions that have been revoked.

Parties
Appellant Company: Daewoo Motors India Ltd.; Appellant Bank: HDFC Bank Limited (formerly Times Bank Limited); Respondent: Union of India
Jurisdiction
India
Judgment Date
20 February 2003
Procedural Posture
Civil Appeal / Appeal Against Delhi High Court Order Dismissing Writ Petition
Outcome
Appeals dismissed.
Legal Topics
Bank Guarantee, Export Promotion Capital Goods Scheme, Encashment of Bank Guarantee, Export Obligation, Unconditional Guarantee
Customs Law Banking Law Export Import Law Bank Guarantee Export Promotion Capital Goods Scheme Encashment of Bank Guarantee Export Obligation Unconditional Guarantee

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Parties

Daewoo Motors India Ltd.

Appellant Company

HDFC Bank Limited (formerly Times Bank Limited)

Appellant Bank

Union of India

Respondent

Procedural Posture

Civil Appeal / Appeal Against Delhi High Court Order Dismissing Writ Petition

Legal Issues

  1. 1 Whether the Union of India can invoke and encash the bank guarantees despite extension/revocation of export obligation period under the EPCG Scheme
  2. 2 Whether the bank or company can resist encashment of the bank guarantee based on extension and non-fulfilment allegations

Ratio Decidendi

Where the bank guarantee is unconditional and absolute, and there is no prospect of fulfilling export obligations, the invocation and encashment of the guarantee is neither premature nor unlawful, regardless of contractual extensions that have been revoked.

Court Disposition

Appeals dismissed.

Orders

  • No order as to costs.
  • Union of India permitted to encash bank guarantees for licences with CIF value exceeding Rs. 100 crore.