Hc Rejects Gtc Plea Over Bank Guarantee

The Delhi High Court has rejected GTC's application for a modification of the court's earlier order directing banks to invoke bank guarantees, amounting to Rs 17 crore, for payment to the excise department. The High Court's decision was taken on Wednesday.

GTC had requested the court to modify its earlier decision in favour of keeping the bank guarantees alive till the special leave petition, which it intends to file in the Supreme Court, is disposed off.

The rejection of GTC's application by the High Court comes close on the heels of an earlier decision by the court to send notices to the Bank of Tokyo and Canara Bank for not obeying the court's order directing them to invoke bank guarantees of GTC for payment to the excise department.

The excise department's adjudicating authority had earlier ruled that GTC industries must pay up Rs 69 crore against excise duty confirmed.

The Sanjay Dalmia-promoted Golden Tobacco Company has already paid Rs 18 crore of the total outstanding amount as pre-deposit.

With the invoking of Rs 17-crore bank guarantee, the excise department would be able to recover at least 50 per cent of the total dues payable to it by the company.

The Delhi high court's earlier order, directing the banks to invoke the bank guarantees, was stated in a release issued by the Central Excise department on last Friday.

The directorate general -- anti evasion had filed a petition with the Delhi High Court for directing three banks -- Punjab & Sind Bank, Canara Bank and Bank of Tokyo -- for paying Rs 17 crore against the bank guarantees given by them to the department for GTC Industries.

The excise department's move against these banks comes close on the heels of Golden Tobacco Company being referred to the Board for Industrial and Financial Recon-struction as a "sick company" which implies that the accumulated losses of the company had surpassed its total net worth.