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HomeIndirect TaxesCustoms Dept’s Plea to Enforce Expired Bank Guarantees Against Bank of India...

Customs Dept’s Plea to Enforce Expired Bank Guarantees Against Bank of India Dismissed: Bombay HC

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The Bombay High Court has dismissed a writ petition filed by the Commissioner of Customs (Export) seeking to recover Rs. 1.95 crore from the Bank of India under four bank guarantees issued more than a decade ago, ruling that the claims were lodged long after the guarantees had expired.

The bench of Justice M.S. Sonak and Justice Jitendra Jain observed that the guarantees—originally valid until May 31, 2011, and allegedly extended until 2013—could not be enforced since no written demand for payment was made within their validity period.

The bench emphasised that the contractual terms explicitly discharged the bank from liability unless a claim was lodged before expiry.

The dispute arose when the Customs Department sought a writ of mandamus directing Bank of India to release the guaranteed amount, arguing that the bank acted as a personal guarantor and that such guarantees survive insolvency proceedings.

 The bank countered that the guarantees had long expired and that a similar claim during the Corporate Insolvency Resolution Process (CIRP) of the second respondent—the entity on whose behalf the guarantees were issued—was rejected and never challenged.

The bench noted that the department’s attempt to enforce the guarantees came almost ten years after expiry, observing that, “No claim, whether in writing or otherwise, was lodged by the petitioner on or before 31 May 2011… Lodging a claim almost seven years after expiry did not oblige the Bank to honour the guarantee.”

Even after counsel for Customs pointed out that the guarantees had been extended till 2013, the court maintained that no timely demand was made, making the petition untenable. The judges further remarked that writ jurisdiction is ordinarily not invoked to enforce commercial contracts such as bank guarantees, especially when barred by limitation.

Case Details

Case Title: Commissioners of Customs (Export) Versus Bank of India & Anr. 

Case No.: Writ Petition No.620 Of 2021

Date:  6 August 2025

Counsel For  Petitioner: Maya Majumdar

Counsel For Respondent: Anant B. Shinde

Read More: Maharashtra Govt. Can Levy Entertainment Duty on Online Ticket Convenience Fees: Bombay High Court

Mariya Paliwala
Mariya Paliwalahttps://www.jurishour.in/
Mariya is the Senior Editor at Juris Hour. She has 7+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started her career as a freelance tax reporter in the leading online legal news companies.

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