HC dismisses plea against DDA’s encashment of bank guarantees

December 20, 2010 04:24 pm | Updated November 17, 2021 05:29 am IST - New Delhi

File photo shows the Commonwealth Games Village in New Delhi.

File photo shows the Commonwealth Games Village in New Delhi.

The Delhi High Court on Monday dismissed a petition by joint venture construction company EMAAR-MGF challenging encashment of its bank guarantees by the Delhi Development Authority, saying it had no merit at all.

The DDA had cashed the bank guarantees to make up the loss it had suffered due to failure on the part of the company to the meet the deadline for construction of two residential towers in the Commonwealth Games Village.

Justice Vipin Sanghi dismissed the petition on all the counts raised by the joint venture company in the petition.

The argument that if the DDA was allowed to cash the bank guarantees it would have to give fresh guarantees otherwise its contract would be terminated was dismissed by the Court saying that it had no merit.

On the counts of the company getting completion certificate; invocation of the bank guarantees at the behest of the Union Ministry for Urban Development and the seven-day time was given before invoking them, the finding of the Court was also in the negative.

Of the total amount of Rs.183 of the bank guarantees, the DDA had cashed Rs. 90 crore. EMAAR-MGF had given this bank guarantee to the DDA as a security to complete the construction of the two residential towers—Milestone 8 and 9—within the stipulated time period and as per the building plan.

There had been acrimonious arguments by counsel for the petitioner and the DDA. Counsel for the petitioner had termed the DDA’s action as mindless while that of the DDA argued that it had given more than stipulated time to the company to complete the construction of the residential towers in the Games Village before cashing its bank guarantees.

The DDA also rebutted the charge of the company that it had cashed the bank guarantees arbitrarily without talking to it.

The company had further argued that the DDA could not calculate the alleged loss it had suffered on its own. Besides, the failure to remove the defects was covered by separate bank guarantees, counsel for the company submitted.

``…..I find no merit in this petition and dismiss the same. It is, however, made clear that no observation made by me in this order shall come in the way of either party at the time of determination of the their inter se disputes, claims and counter claims through arbitration,’’ Justice Sanghi said dismissing the petition.

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