YVONNE SURENDRANATH SINHA Vs. UNION OF INDIA

JUDGEMENT

(1.) This petition under Article 226 of the Constitution of India is filed by the two petitioners challenging the action of the respondent No. 2 forfeiting the bond at Ex. A dated 1-12-1965.

(2.) The petitioners are the present partners of the firm M/s. S.S.I. Films and are carrying on business at Agarwal Building, Room No. 14, 1st Floor, Kalina, Santa Cruz (East), Bombay 400 029. One Surendranath Sinha and one Irshad Ali both since the deceased were the partners of the said firm M/s. S.S.I. Films. Surendranath Sinha died in Bombay in or about the year 1971 and the petitioner No. 1 the widow was taken as the partner of the said firm along with Irshad Ali the other partner. Irshad Ali also died in Bombay on or about 16-1-1978 and thereafter petitioner No. 2 was taken as the partner in the said firm of M/s. S.S.I. Films along with the petitioner No.1.

(3.) Surendranath Sinha and Irshad Ali started the production of Motion Pictures in the name and style of S. S. I. Films. They decided to produce the Motion Picture named "SAAZ AUR AWAZ". For the purpose of production of the said film "SAAZ AUR AWAZ" the producers (hereinafter referred to as the "the petitioners") applied to the 2nd respondent for issue of licences for import of colour films. The 2nd respondent accordingly issued three licences to the petitioners. The first licence is dated 10-1-1963 for the value of Rs. 80,000/-, second is dated 2-3-1965 for the value of Rs. 1,53,356/- and the third is dated 29-9-1965 for the value of Rs. 1,00,125/-. While issuing the said three import licences the 2nd respondent put a condition upon the petitioners to the effect that the petitioners shall earn foreign exchange and/or export the said Motion Picture to the extent of about 133.33 per cent of the value of the films imported under the said licences. It is no more in dispute that the value in respect of the first two licences was made good by the petitioners. It is also no more in dispute that the petitioners have imported the goods under the third licence and exhausted the same to the extent of Rs. 98,091/-. The petitioners, therefore, say that the obligation of the petitioners under the said import licences respectively was to earn foreign exchange to the value of Rs. 1,00,000/-, Rs. 1,91,695/- and Rs. 1,30,788/-. Thus the petitioners were under the obligation to earn foreign exchange to the extent of or equivalent to a sum of Rs. 4,22,483 /-. While issuing the said import licences the 2nd respondent used to take a bank guarantee to the extent of about 50 per cent of the value of import allowed in favour of the President of India. As stated earlier the dispute only centers round the import licence dated September 29, 1965 which was for a sum of Rs. 1,00,125/-. The petitioners imported colour positive cinema films worth Rs. 98,091/-. The 2nd respondents for allowing the said import of the value of Rs. 98,091/- required the petitioners to furnish a bank guarantee to the extent of Rs. 49,046/- in favour of the President of India. Accordingly the petitioners through respondent No. 4 furnished a bank guarantee on 1-12-1965 for Rs. 49,046/-. The guarantee bond is at Ex. A. The petitioners accordingly produced the Motion Picture and released the same in India and also exported the same outside India. Due to unavoidable difficulties the petitioners could not earn foreign exchange and the time was extended by the 2nd respondent from time to time and the bank guarantee was accordingly renewed from time to time. The 2nd respondent by his last letter dated 24th June 1968 extended the bank guarantee for a further period upto 1st December 1969. The same is produced and annexed and marked at Ex. C. The petitioners by their letter dated July 1, 1968 informed the 2nd respondent about the export of the said motion picture and earning of foreign exchange to the tune of Rs. 30,603.14 Ps. The petitioners by their another letter dated December 2, 1968 applied to the 2nd respondent for further extension. Thereupon the 2nd respondent by his letter dated January 4, 1969 informed the petitioners that further extension will be considered provided the petitioners produced a letter from the Reserve Bank of India permitting time for realisation of the proceeds of export. On January 10, 1969, the petitioners by their letter informed the 2nd respondent about the realisation of foreign exchange worth Rs. 22,000/-. The petitioners further by their letter dated January 23, 1969 enclosed the documents or evidence of having earned the foreign exchange worth Rs. 17,983.94. It is relevant to note here that on June 6, 1966 the Indian currency was devalued. The 2nd respondent by his letter dated April 26, 1969 at Ex. P asked the petitioners for higher export due to the devaluation. The petitioners replied to the said letter by their letter dated May 3, 1969 stating, inter alia, firstly that the said film was a flop picture, therefore, the foreign buyers were not even willing to take delivery on the contracted price; secondly as they have practically fulfilled the obligation of earning the foreign exchange excepting to the extent of Rs. 2,036.08 and thirdly that it was not possible for them to earn the foreign exchange on the enhanced basis due to devaluation of the rupee. On June 2, 1969 the petitioners produced documents showing additional foreign exchange which they had earned by exporting the said film to the extent of Rs. 22,915/-. The 2nd respondent felt that the petitioners have failed to comply with the terms and conditions of the bond to get the foreign exchange as agreed and therefore by his letter dated January 22, 1971 asked the bank why the said bond should not be forfeited. It may be stated that the 2nd respondent did not inform the petitioners in this behalf. The bank in its own turn informed the petitioners about the letter received from the 2nd respondent in connection with the forfeiture of the bond by the bank. On the request of the petitioners the time of the bond was extended upto November 31, 1971 [sic]. The petitioners in their letter also stated that they have exceeded the amount and therefore the third bond should be discharged. It is then alleged by the petitioners that there was no reply from the 2nd respondent. However, on January 25, 1971 the petitioners sent a letter to the 2nd respondent stating that one foreign bill of Rs. 55,000/- was lying unpaid and that the bond should not be forfeited.