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The Delhi High Court single judge bench, Hon’ble Mr. Justice Jayant Nath in the case, Bhubaneshwar Expressways Pvt. Ltd. v. National Highway Authority of India entertained an Interlocutory Application (IA) moved by Bhubaneshwar Expressways Pvt. Ltd against the National Highway Authority of India. The Delhi High Court gave a very important decision by directing the National Highway Authority of India to deposit Rs. 3,37,73,19,434.10 in the Applicant’s designated Escrow Account.
The High Court in its previous order last year asked the applicant to provide an unconditional and irrevocable bank guarantee favoring the National Highway Authority of India undertaking to pay them, the above-highlighted amount towards an unsettled debt. On such an order, after providing the bank guarantee, the National Highway Authority of India was under an obligation to deposit the sum of money in Applicant’s designated account and the encashment of the same bank guarantee was supposed to be conditioned by the Arbitral Tribunal on its final Award.
The applicant contended that in accordance with the order of the Court, it was supposed to provide for an unconditional and irrevocable bank guarantee issued by Hong Kong and Shanghai Banking Pvt. Ltd at the request of the applicant’s lender, i.e. Arcelor Mittal India Pvt. Ltd., and the same was done by them. However, on the other hand, the National Highway Authority of India opposed the bank guarantee on two grounds, i.e. non- compliance of court’s order and issuance of bank guarantee at the presence of third-party and not realizing the concept of ‘privity of contract’. They asserted that the bank guarantee issued by Hong Kong and Shanghai Banking Pvt. Ltd at the request of the applicant’s lender, i.e. Arcelor Mittal India Pvt. Ltd was invalid as it violates section 126 of the Indian Contract Act.
The court realized that the respondent’s arguments were “misleading” and “non -technical arguments were made” in order to discharge their own liabilities coming from Court’s previous order. The court was of the opinion that for a bank guarantee, the National Highway Authority of India was supposed to deal that Hong Kong and Shanghai Bank was the guarantor and ‘not’ Arcelor Mittal. The court to make things more transparent directed Arcelor Mittal to sign an affidavit that it will abide by decisions of the Court or Award of Arbitral tribunal ‘unconditionally’.
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