MMTC LTD Vs. VIKRAM BHARGAV SOLE PROPRIETOR

JUDGEMENT

(1.) The plaintiff has instituted this suit for recovery of a sum of Rs 26,48,406/- along with the pendent lite and future interest. Summons were issued and the defendant was served. However, despite service the defendant did not appear and he was directed to be proceeded with ex parte by virtue of an order dated 16.9.2002. The plaintiff was directed to lead ex parte evidence by filing an affidavit. The evidence affidavit was filed by the plaintiff and was taken on record. Documents were also filed and the same were marked as Ext. PW1/1 to PW1/6.

(2.) The case of the plaintiff is that in terms of a scheme notified by the Government of India, the plaintiff acting as a designated agent of the Government of India was authorised to advance duty free gold to various independent parties for the purposes of manufacture and export of gold jewellery. This scheme was part of the larger policy of the Government for generating foreign exchange for the country. It is the case of the plaintiff that the defendant represented himself as a jewellery manufacturer and exporter to the plaintiff by virtue of their applications dated 20.5.1993 and 11.10.1993 (Exts PW1/1 and PW1/2) respectively. The defendant requested the plaintiff for the grant of a loan of 6 Kg of gold on loan under the scheme. On the basis of the representations made by the defendant, the plaintiff supplied the defendant with 4 Kg of gold on 17.9.1993 and a further 2 Kg of gold on 4.2.1994. It was agreed between the plaintiff and the defendant that the said gold supplied by the plaintiff to the defendant would be converted into jewellery by the defendant and the same would be exported within 120 days. The gold was imported by the plaintiff without payment of duty under the scheme in terms of Notification No. 273/92-Cus of 16.1.1993 read with Notification No. 144/93-Cus dated 28.6.1993 (Ext. PW1/3). It was a condition of the scheme that the plaintiff would be entitled to import gold without payment of custom duty provided the same was converted into jewellery and re-exported within 120 days. Therefore, it was a necessary condition of contract between the plaintiff and the defendant that the gold provided by the plaintiff to the defendant would be re-exported in the shape of jewellery within 120 days. In case there was a default then the entire amount of duty and other penalties became payable in respect of the said import of gold. In the present case, the defendant, having undertaken to abide by the terms of the scheme and subjecting itself to penalty as stipulated in the Import Export Policy 1992-97 and other Regulations, failed to comply with the condition of re-export within 120 days. Due to this failure on the part of the defendant, the 6 Kg of gold imported by the plaintiff and handed over to the defendant under the scheme, immediately became the subject matter of levy of Customs Duty and other charges/penalties. It is in this context that the Customs Authorities issued a show cause notice on 28.12.1994 to the plaintiff raising a demand of customs duty. In the affidavit of evidence, it is stated that the Committee of Secretaries on 18.1.1998 directed the plaintiff to recover Customs Duty from the defendant by appropriate legal means and, thereafter, pay the customs duty to the Customs Department. It is in this context that the suit for recovery of a sum of Rs 26,48,406/- being the Customs Duty and other duty on the said 6 Kg of gold was filed before this Court.

(3.) The plaintiff has proved by way of its evidence that the said amount of Rs 26,48,406/- already stands recovered by the Customs Department from the plaintiff by virtue of encashment of the bank guarantee extended on behalf of the plaintiff to the Customs Department. Ext. PW1/4 is the bank guarantee and PW1/5 is the Certificate of Encashment. The bank guarantee was invoked and encashed on 10th February, 1999.